For the greater good – profitable partnerships

Non-profits and businesses often form partnerships to reach common goals. We look at some successful examples.

TOMS shoes are comfortable, stylish and – best of all – the manufacturer promises that for every pair you purchase they will help a person suffering from poverty – ‘one for one’. TOMS was, until recently, held up as a classic case study in profitable cause marketing. What could be better than that?

Then researchers from the University of San Francisco ran an experiment with a distribution of TOMS shoes in El Salvador. The 2014 paper, Do In-Kind Transfers Damage Local Markets? The Case of TOMS Shoe Donations in El Salvador, found that the company’s products could often be harmful to local markets by undermining local producers – with TOMS giving away shoes for free, there was less demand for their goods. This piece of news that appeared to blow a hole in TOMS’ entire raison d’etre.

More on TOMS – and how they solved this issue, turning a potential problem into a strength – later on.

Yet, despite this painful example, partnerships between businesses and non-profits remain popular. Research shows that 91% of people worldwide would switch brands to one associated with a good cause.

Corporate social responsibility programmes can benefit from this type of uplift. Outside the PR department, CSR has often been seen as disingenuous, especially when one recalls the crises that hit two of its strongest champions – Enron and BP.

Partnerships can be a practical way to do good, without accidentally getting it wrong through inexperience. Product Red, for instance, is a thumping success. The brand was created to support The Global Fund to Fight AIDS, Tuberculosis and Malaria, and has attracted companies such as Apple, Motorola, Giorgio Armani, and The Gap as participants.

From these businesses’ point of view, the benefits of teaming up with a non-profit are substantial.

By identifying a common vision – one shared with a partner charity – corporate companies are able to make a difference and create social value, while also defining, enhancing, or even repairing their image.

In such a partnership, you can save on advertising and promotion costs because the alliance often brings free publicity and plenty of PR opportunities. Meanwhile, the charity can fulfil its remit by raising money and boosting its visibility through you, or even by helping you to improve your practices.

The business also gains access to the non-profit’s clientele, staff, trustees, and donors, all of whom are potential customers.

One successful example of a partnership is that between Age UK and Innocent. Over the last 10 years, Age UK groups around the UK have knitted little woollen hats for Innocent smoothie bottles. For every ‘behatted’ smoothie that’s sold, Innocent donates 25p to Age UK. Of course, things don’t always go so well. Non-profits that team up with corporations may find themselves associated with superficial campaigns or overpriced, inferior products and services. Nevertheless, there are still many who argue that non-profit organisations must develop explicit ties with for-profit corporations in order to survive. Dr Barnardo’s, for example, sees them as central, partnering with multiple corporations each year.

According to the classic study Cause-Related Marketing: A Coalignment of Marketing Strategy and Corporate Philanthropy by P Rajan Varadarajan and Anil Menon, there are three principal kinds of alliance available to business and non-profits who want to team up.

First there’s transaction-based promotions. For example, in just four years, Noble Foods has raised £880,000 for Help for Heroes by donating 15p for every pack of branded free range eggs it sells.

Then there’s joint issue promotions. Pampers has donated the cost of one tetanus vaccine to UNICEF for every branded pack it sells. The nappy company also donates each time someone watches a campaign video on its YouTube channel. Altogether, it has given 300 million vaccines around the world.

The third kind of cause-related marketing alliance is the licensing of the names and logos of non-profits to corporations, in return for a fee or percentage of revenues.

For example, The American Heart Association’s food certification programme grants use of its ‘Heart Check’ icon and name to dozens of cereals and juices to indicate that the product meets its low-fat, low-cholesterol standards.

And TOMS? The shoes company has dealt with its problem with a kind of partnership, too. It has shifted some of its manufacturing from China into developing, so its shoes are now manufactured in six countries, including Ethiopia, Kenya and Haiti. This way, it helps local people in two ways rather than one – giving them jobs as well as shoes – and thus rather neatly addresses the issue identified by the University of San Francisco. By the end of this year, TOMS says 30% of its products will be made in the countries where they are given away.

For more information about successful partnership strategies, sign up for our training course, Partnership & Channel Marketing Strategies, here.