Non-profit retail sales plummet

Non-Profit Times, March 16, 2009

Nonprofit-Related Sales Plummet

By Michele Donohue

Consumers might have just had enough of buying coffee, wristbands and anything else from
nonprofit organizations - in stores, on the Web or anywhere else.

In a national survey by The NonProfit Times conducted during January, only 23 percent of
survey respondents made a purchase from a charitable organization, a 43 percent nosedive
from when the same question was asked during the same time period three years ago.

The surveying was conducted for The NonProfit Times both times by Opinion Research Corporation. The question was identical and polling was performed during the same time frame.

And for those who blame the economy for the decline in nonprofit sales -- retail sales
overall decreased only 6.4 percent from January 2006 to December 2008.

All retail sales for January 2006 were nearly $326.2 billion, compared to December 2008 at
nearly $305.4 billion, according to the U.S. Census Bureau. Retail sales for January 2009 were not available before publication. When they are buying it tends to be at a consumer
location, rather than directly from the charity. In the survey completed this past January, 13
percent said they bought something at a consumer retail location compared to 8 percent at the
charity's retail location.

Women were slightly more inclined in 2009 to make the purchases, at 26 percent, compared to men, at 20 percent, across all buying locations. Women also made double the purchases men did online at the consumer retail Web site (6 percent to 3 percent) and the charity's Web site (2 percent to 1 percent) in 2009.

Those in the middle of the age categories seemed more likely to make a charitable purchase in the new study. Ages 35 to 44 had the highest response (29 percent), followed by ages 55 to 64 (22 percent) and ages 45 to 55 (25 percent). The 18 to 34-year-old demographic reached 21 percent, beating out the 65 and older demographic at 17 percent.

The conventional wisdom that those with greater household incomes would be more prone to make charitable purchases did not hold up in the 2009 survey. Household income from $75,000 to $100,000 had the best number at 33 percent, followed closely by those with household incomes of $35,000 to $50,000 at 29 percent, which beat the $50,000 to $75,000 (21 percent) and $100,000 or more (24 percent). Household incomes from $35,000
and less came in at 18 percent.

Between 2006 and 2009, the largest decrease for charity purchases in age demographic came from the 65 plus group with 46 percent, followed by ages 18 to 34 at nearly 45 percent and ages 45 to 54 by nearly 44 percent.

The West saw the largest decrease from 2006 to 2009 in purchases, nearly 50 percent, followed by North Central area with 44 percent and the Metro area with nearly 44 percent.

Purchases at special events decreased more than 63 percent from 2006, followed by consumer retail, down nearly 57 percent. Retail overall decreased 44 percent.

Online faired better than in-person purchases, with only a 21 percent overall decrease, but only 6 percent of the respondents bought something online.

Regarding household income, those with less than $35,000 showed a 55 percent decrease in
charitable purchases, followed by those making $50,000 to $75,000 with a 50 percent drop. Those making more than $75,000 decreased only 18 percent.

While the sluggish economy in 2008 and the start of 2009 certainly plays a role in all purchasing, not just cause marketing, another reason for some of the cause marketing slowdown could be part of the "ribbon-ization of America," according to Carol Cone, chairman and founder of Boston-based Cone.

Awareness pieces, like magnetic car ribbons, are not effective enough to stand on their own
according to Cone, who described the trend as"passé. It's over. It's DOA."

She said, "Anybody can add a ribbon onto anything. The question is whether it will be
effective. And why are you doing it? If you are doing it just to join the bandwagon, that wagon
is long gone."

Several charitable trends have also peaked and now fallen since the 2006 survey, which could contribute to the declines, according to Paul Schervish, director of the Center on Wealth and Philanthropy at Boston College. The Lance Armstrong Foundation launched the LIVESTRONG bracelets in 2004 and by 2005 sold more than 55 million, and on the wrists of everyone from Oprah to the neighborhood deli owner.

Other charities tried to capitalize on the LIVESTRONG success without producing the same
results -- people only have so much room on their wrists. "So, some of us don't wear them and one thing is just the phenomenon of saturating, or satisfying, the market," said Schervish.
"Some retailers are moving away from selling custom items that benefit charities and are doing more in terms of soliciting contributions at checkout," said David Hessekiel, founder and
president of Cause Marketing Forum. He explained that programs where donations come directly from the consumer cuts down on specialty goods that might not sell.

Hessekiel said the economy might also affect what nonprofits potential partner companies will most likely seek out. "Because of the economic crisis, I believe many companies will shift their cause focus toward groups helping people with basic needs such as hunger, clothing, housing and medical care," he said. "I think you'll see more nonprofits positioning their work to emphasize how they are helping people get through these difficult times."

According to Karen White, director of corporate relations for Susan G. Komen For The Cure, "As the economy goes, so does our business in cause marketing in terms of the industries that are really experiencing declines right now. That translates directly in the cause marketing realm."

Instead of cutting cause marketing, nonprofits want to amp up the cause marketing game by
strengthening the quality and quantity of company partnerships. Cause marketing programs are mirroring the economy. Fashion, auto and luxury cause marketing programs seem to be down, according to White, while other programs are thriving.

Susan G. Komen hit the 10-year mark with partner Yoplait - and hit it hard. For the Save Lids to
Save Lives program, Yoplait promised to give 10 cents to the Dallas-headquartered nonprofit for every specially-branded yogurt lid sent in, up to $1.5 million. The 2008 campaign received more than 16.3 million lids, more than the anticipated goal.

"I think the key to fundraising is multiplying yourself through others. Our partnerships give us
multiple points of contact with consumers, from checking out at registers to reading banner ads donated by our online partners. This enables us to get in front of a large audience with our
message," said David McKee, interim CEO and acting COO of St. Jude's Children's Hospital
fundraising arm American Lebanese Syrian Associated Charities, Inc. (ALSAC).

St. Jude's held its fifth Thanks and Giving campaign from Thanksgiving to New Years through
corporate partners such as Target and CVS/pharmacy. The campaign included cashiers
asking customers to donate $1 when they checked out. The campaign saw roughly double-digit growth from some partners, according to McKee. St. Jude's partnership with restaurant chain Chili's had a similar formula for the Create-A-Pepper campaign, which asked customers to purchase a chili picture to color for $1.

"Because retail was facing such a bad year, I think St. Jude became a positive part of the
holiday for the more than 50 partners that participate in our annual Thanks and Giving
campaign," said McKee. "I think they worked very, very hard for us to raise money that helps St.
Jude continue to find cures and save children with cancer and other catastrophic diseases."

The Thanks and Giving campaign raised more than $120 million during the past five years for St. Jude's. Chili's has a $50 million commitment to St. Jude's across 10 years and had raised $18.7 million for the organization by 2008, including the pepper coloring and designating a day to donate 100 percent of participating restaurant sales.

Corporate partner Hickory Farms asked consumers to add $1 to purchases for Share Our Strength during the holidays and received more than $100,000 for the hunger organization. The campaign was integrated through Hickory Farms' Web site, mall kiosks and catalogues, which made the branding "seamless," according to Chuck Scofield, chief development
officer at Washington, D.C.-based Share Our Strength.

"I think asking the consumer to donate is a great way to get people involved in a difficult
economy. You give a dollar and those dollars add up pretty quickly," said Scofield.

He explained that the organization was posed to increase some cause marketing campaigns and launch several more throughout the year. Scofield said that the organization has historically worked with the culinary industry but wanted to grow "at every different angle," especially since childhood hunger is a growing issue with the economy.

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This article is from NPT Weekly, a publication of The NonProfit Times