Posts or Comments 18 July 2024

Funding Bill Brieger | 08 Feb 2008 06:27 am

Seeing Red

Corporate responsibility can take many forms. An increasingly popular approach is a promise to donate funds to a charity when a consumer buys a particular product. (Product)Red has taken this concept to scale and crosses corporate boundaries to bring many options to consumers who ultimately want to donate to the HIV work of the Global Fund to Fight AIDS, TB and Malaria (GFATM). According to the New York Times, this philanthropic effort has contributed about 2% of the Global Fund’s revenues. The Global Fund itself notes that, “So far PRODUCT(RED) partners have raised more than $57 million, which is already at work as part of Global Fund (HIV) grants in Ghana, Rwanda and Swaziland.”

mosquito-cdc-sm.jpgWhile one would associate Red with the HIV/AIDS red ribbon, one could also not help recall the red blood that mosquitoes consume in the process of spreading malaria. Hopefully (Product)Red efforts may extend to supporting malaria control, even if it starts by ensuring that people living with HIV/AIDS and vulnerable children get prompt malaria treatment and bednets. But that is another matter.

Concern has been raised about the amount of advertising that has gone into promoting Red products compared with the money that has ultimately been donated. The Times quotes a communications professor who says that, “The ads seem to be more about promoting the companies and how good they are than the issue of AIDS.” Various reports of advertising (fundraising) costs range from $100 million to produce $18 million to $50 million to raise $25 million. Defenders are quick to point out that people would buy these products anyway and that the corporations involved are businesses not philanthropies.

By the way, the American Institute of Philanthropy (AIP) states that it is good when an organization spends 60% or more of the funds it generates on the actual charitable purpose. The AIP also rates as good charitable organizations that spend less that $35 to raise $100. I don’t need to do the math here for people to realize that were (Product)Red a charity, it would have a very low rating from the AIP.

The Global Fund has recently launched its challenge to the corporate world, and some large businesses have already become ‘corporate champions.’ The first donor, Chevron, made a $30 million commitment over three years. A few more contributions of this size would more than equal what (Product)Red has contributed, generate positive publicity for the companies and reduce the added advertising costs and consumer culture that in itself may have negative consequences on the environment and disease control efforts. Consumers in fact seem quite satisfied with charities that given them the opportunity for more direct involvement, such as purchasing insecticide treated bednets.

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