Run Time: 3 minutes
We are in the midst of a charity boom. Americans gave more than $390 billion to worthy causes in 2016, a 4.2% increase from 2015, according to Giving USA. That sum sets a new record, and puts American giving at about 2% of total GDP. Religions enjoyed the largest share of American charity, followed by education and human services.
What’s striking about this trend is that the growth was led primarily by individual giving. Individuals gave $281 billion, or about 72% of all charitable investment. That people opened their wallets so generously in 2016, a year that was full of political and global uncertainty, says a lot.
Not surprisingly, marketers have increased their spending on cause-related programs. If you think back to the Super Bowl this year you will remember a large number of commercials featuring cause elements—from messages supporting gender equality to stands on immigration policy and health care.
I am often asked about the effectiveness of these programs. It’s a tough question to answer because it depends largely on how you measure success, and that metric spans a wide gamut. Some marketers view cause-related tie-ins as little more than a way to align with the emotional mindset of their audience. It’s simply a marketing tactic. Others view them as wise investments in their future. For example, many technology companies are rallying around causes connected to STEM education in response to a growing shortage of engineering talent in the US. Still others engage because the causes are vital to the social mission of their business. In just these three scenarios you will find vastly different key performance indicators, from a lift in sales to forward movement on a vital societal issue.
There’s an even trickier question embedded in these activities. Many clients have asked me over the years about the means of their cause-related investments. Should they contribute cash or in-kind services? Which contribution will create the biggest brand benefit? Some worry that cash contributions can appear cold and clinical, and there is always concern that the amount contributed may be scrutinized. Managers also worry that in-kind contributions may seem too intangible to brand audiences because they are often hard to quantify. There is also the worry that an in-kind contribution can feel self-serving.
In my research, I’ve rarely found either approach to be risky. Consumers are mostly pleased to see their favorite brands stepping up to be better corporate citizens. These initiatives only raise suspicion when they are egregiously self-serving or tone deaf to the broader social conversation (see Pepsi and the infamous Kendall Jenner ad that ran this summer).
Fortunately, we have some new insight to guide such decisions. A study published in the current issue of the Journal of Consumer Research provides an intriguing answer to the ever-present question of cash or service? Looking specifically through the lens of disaster relief, the study’s authors found that the decision of how to contribute was highly correlated with respondents’ perception on the nature of the disaster. Was it a controllable or uncontrollable event?
For example, a devastating earthquake is often seen as uncontrollable—an “act of God” in legalese. In contrast, a deadly fire that engulfs a sweatshop due to poor safety conditions is seen as controllable. These distinctions are anything but arbitrary. Previous social science research has provided methods for measuring this perception, and the current study authors incorporated this methodology into their approach.
What they found was that cash contributions produce greater sentiment towards the brand when the nature of the disaster is perceived as controllable. When the nature of the disaster feels uncontrollable, in-kind contributions generate a more favorable reaction. These distinctions were very significant, although it is important to note that they only mattered when respondents could easily sort out that controllable vs. uncontrollable dimension. Many disasters are not so easy to process. For example, imagine a wildfire in a national forest caused by a stray campfire. Is that a controllable or uncontrollable disaster? Similarly, how do consumers parse the devastation of a hurricane in a city constantly on a hurricane path?
Despite this murky caveat, the study serves as an effective guideline. Cause-related marketing has been gaining a lot of attention by the media and the marketing community. Yet best practices are unclear, variable and hard to measure. In the end, any contribution matters if it benefits a worthy cause. But in an ideal world brands should contribute to the world in which they operate while also strengthening their bond with their target audiences. This is the very definition of win-win.