It’s likely you’re already in touch with your deeply altruistic values, so you won’t be surprised to learn that many of us prefer to buy products from companies donating a portion of proceeds to charities. Even when shopping for hedonistic items that make us look or feel good, many of us look for companies that promise fair-trade practices, help protect the environment or aid hurricane-ravaged Puerto Rico.
New research from Northwestern University takes that concept further, proving that when we purchase from providers who support causes we like, we’re pleased not only with our own generosity but also with our acquisitions. In other words, we believe that seemingly philanthropic products taste, perform or wear better.
But before we get too satisfied with ourselves, it’s worth examining whether we’re spending for the purpose of making only insignificant — if any — contributions to our causes. And perhaps, which organization — the for-profit or the non-profit? — that we truly are boosting.
“In addition to benefiting society, corporate social responsibility can contribute to a company’s bottom line,” write authors Alexander Chernev and Sean Blair from Northwestern’s Kellogg School of Management, “by improving consumer evaluations of their products.”
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In one of four studies, consumers rated red wine as tasting better when told about a winery’s charitable donation to the American Heart Association. In others, consumers said that merchandise such as running shoes, tooth whiteners and hair loss treatments performed better after they were told the companies donated to charity.
Before declaring this a colossal win for both consumers and charities, it’s worth considering whether our philanthropic efforts are as helpful as we’d like to believe. While some companies commit to a set donation that’s not tied to sales, others will cap donations at either a dollar amount or on the number of products sold, says Sara Nason, spokeswoman at CharityNavigator.org, which ranks charities on financials, accountability and transparency. That means that if the company has already hit its maximum contribution, our purchases won’t raise the donation by even a penny.
And while this type of donation is a way to toss some money into charity coffers, it’s likely to better serve the corporation than the cause it’s supporting. Just think: if the company has committed to donate 10 percent of proceeds, you’re talking about 10 cents per dollar of profit, not the purchase price. So if we’re talking about, say, buying a $30 T-shirt from an organization that donates 5 percent of its profit to charity, that could be as little as $1.25 to the cause. (That assumes a generous profit of $25 with only $5 in production costs. If the production cost $10, the donation from the resulting $20 in profit would be $1.)
It’s better than nothing, but you can’t really give too great a cheer about your making the world a better place.
“The most effective way to give to a charity is to give directly,” Nason said. “This is a way to continue a conversation about a cause on a day-to-day basis. If you had to choose between the two, giving to the organization is itself is more connective and effective. That said, it’s usually not one of the other.”
Brett Graff is a former U.S. government economist and the author of “Not Buying It: Stop Overspending and Start Raising Happier, Healthier, More Successful Kids.” Follow her @brettgraff.