Cause-related marketing, fundraising, and environmental nonprofit organizations

FROM T H E FIELD

Cause-Rela ted Marketing , Fundraising, and

Environmental Nonprofit Organizations

Thomus A. Hemphill This article provides policy guidance to environmental nonprofit organizations, and, secondarily, to other nonprofits, that are considering entering into a cause-related marketing (CRM) alliance. Toward that end, insights into establishing CRM committees, sponsorship development, and regulatory awareness are offered to environmental nonprofit managers. The author argues that strong consumer support for Zocal environmental concerns translates into strategic fundraising opportunities for regional, state, and local environmental organizations that have underutilized CRM in the past.

OR cause-oriented, nonprofit organizations, fundraising campaigns have traditionally focused on some formula of di- F rect-mail solicitation, fundraising events, and competitive

grantsmanship. Beginning in the 1980s, a fundraising phenome- non emerged to expand the traditional components of this revenue formula: cause-related marketing (CRM).

CRM began with the American Express Company’s first experi- ment to help fund the 1981 San Francisco Arts Festival. During a three-month period, American Express donated two cents to the festival every time customers used their American Express credit cards. The final total contributed to the festival from this “affinity group” marketing arrangement was $100,000 (“AmEx Shows the Way. . . ,” 1982). American Express went national in its 1983 campaign to assist in the restoration of the Statue of Liberty The success of this CRM campaign for both the Statue of Liberty and the American Express Company (which has copyrighted the term cause-related marketing) was impressive: Card usage increased 28 percent over the year ear- lier, the number of new cards issued rose 45 percent, and the Statue

403 NONPROFIT MANAGEMENT & LEADERSHIP, vol. 6, no. 4, Summer 1996 Q Jossey-Bass Publishers

404 HEMPHILL

Environmental nonprofit

organizations face unique

challenges that warrant special

attention

of Liberty restoration fund received $1.7 million from .American Express (Wall, 1984).

CRM as a fundraising mechanism has broad applicability to the nonprofit community. The primary focus of this article, however, is limited to offering policy guidance to public interest, environmental nonprofit organizations (and, secondarily, other nonprofits) that are considering engaging in CRM alliances with corporations. Environ- mental nonprofit organizations face unique challenges that warrant special attention. Environmental nonprofit organizations, unlike most other philanthropic nonprofit organizations, have adversarial relations with corporations due to the proregulation, public policy positions that environmental groups often embrace. Environmental nonprofit organizations also confront challenging fundraising issues, including a recent slowing in philanthropic contributions and a trend among foundations to establish and finance their own nonprofit Organizations to accomplish environmental goals.

In writing this article, I reviewed trade sources, academic jour- nals, and books on the topics of CRM, fundraising, and corporate social responsibility. I also interviewed environmental nonprofit fundraising managers, who were important sources of information and helped clarify ideas.

The article is divided into five sections. The first section is a syn- opsis of the different perspectives (including my own) on CRM the- ory. The second section reviews and analyzes CRM alliance trends among environmental nonprofit groups (environmental CRM, or ECRM). The third section evaluates recent strategic fundraising trends and issues of environmental nonprofits that may lead to greater reliance on ECRM funding strategies. The fourth section focuses on issues and recommended strategies relevant to regional, state, and local environmental (and other nonprofit) organizations that are considering CRM alliances. The fifth section is a summary and conclusion.

Perspectives on Cause-Related Marketing CRM has been the focus of extensive research over the last few years. Marketing scholars and fundraising experts have evaluated CRMs role and implications from the perspective of the nonprofit organization and the firm.

Of benefits accruing to ‘the nonprofit organization, CRM provides a growing source of funding (Frankel, 1994), increases public awareness of the cause (Garrison, 1990), expands the organization’s base of support, and generates a more positive image of the nonprofit among the public (Ross, Stutts, and Patterson, 1991). On the down- side, it is posited that CRM programs shift the motivation for giving from altruism to self-interest (Goldberg, 1989; Gurin, 1989; Cordtz, 1990) and that CRM threatens to commercialize nonprofits (Garri- son, 1990).

MARKETING, FUNDRAISING, A N D ENVIRONMENTAL N O N P R O F I T S 405

From the firm’s perspective, opinions on the definition and role of CRM are more complex and controversial. Burlingame (1994) considers CRM a topic strongly situated in the corporate social responsibility literature. Furthermore, within his research frame- work for determining what benefits have accrued to companies practicing corporate social responsibility, he classifies CRM under the rubric of public relations.

What is corporate social responsibility? Makower and Business for Social Responsibility (1994, p. 121, after extensive review of the corporate social responsibility literature, reported that “there is no consensus on a definition of the term ‘socially responsible.”’ But they did offer a definition of corporate social responsibility, one that is more philosophical than programmatic: “[Social responsibility] stems from a deeply held vision by company leaders that business can and should play a role beyond making money. It includes an understanding that what companies do and make has a variety of direct and indirect impacts on those both inside and outside the company, from customers and employees to communities and the natural environment. Therefore, a company’s goals, missions, and policies must take into account this entire range of constituencies” (p. 13).

There are strong contrary opinions on the place of CRM in corporate social responsibility. According to Goldberg (1989, p. 21), CRM can be viewed as a device completely devoid of altruism and corporate social responsibility, as “a business-driven decision to advertise an agreement with a nonprofit in order to explicitly increase sales.” For Goldberg, CRM works against the principle of long-term enlightened self-interest on which corporate philanthropy is based and threatens to displace, not supplement, corporate philanthropy (“Is Cause-Related Marketing. . . ,” 1989). Gurin (1989, p. 33), in criticizing CRM, noted that “a philanthropic contribution should cost the donor something, not provide him with a profit.” Gurin fears that a company’s selection of causes could be based strictly on their potential for market exploitation, with little or no consideration for their social value.

For Varadarajan and Menon (1988, p. 60), CRM “is the process of formulating and implementing marketing activities that are char- acterized by an offer from the firm to contribute a specified amount to a designated cause when customers engage in revenue-producing exchanges that satisfy organizational and individual objectives.” Varadarajan and Menon observed that, in general, corporations pro- viding funding through CRM programs draw contributions from the advertising or sales promotion portions of their marketing budgets. For example, American Express spent $6 million in promotion ex penses for a CRM program.that produced a $1.7 million contribution to the Statue of Liberty renovation fund (Varadarajan and Menon, 1989).

Smith and Alcorn’s (1991) view of the CRM encompasses more comorate territorv than Varadaraian and Menon’s ( 1988) definition.

~ ~~~ ~

CRM can be viewed as a

device completely devoid of

altruism and corporate social

responsibility

406 HEMPHILL

CRM is a commercial venture that

provides socially respons ib le benefits to a charitable endeavor

According to these marketing professors, CRM offers distinct benefits for an effective marketing campaign that fulfills corporate social responsibilities, satisfies specific market-related objectives, and en- hances corporate image.

From my perspective, CRM is firmly situated in the marketing strategy realm. The evidence, as gathered by Varadarajan and Menon (1988), shows that corporate investment in CRM is overwhelmingly controlled and financed by the advertising and marketing function, and not the corporate philanthropy function, of the firm. Results of a recent study of 478 medium-size businesses supports this marketing view: Over one-fifth (20.7 percent) contributed, through goods and services, to nonprofits as part of CRM programs. The specific goals of these businesses included contact with their target markets, product promotion, prospect identification, and client entertainment opportunities (File and Prince, 1995).

What, then, is CRM? The motivation for CRM is not altruistic, nor does it reflect the philosophy of corporate philanthropy or strongly meet the criteria of socially responsible corporate behavior. CRM is a commercial venture that provides socially responsible benefits to a charitable endeavor. Therefore, before embracing CRM, nonprofit management and boards must clearly understand both its conceptual and practical dimensions.

Cause-Related Mark.eting and the Environment Corporations began active CRM alliances with nonprofit environmental organizations in the mid 1980s. This interorganizational evolution was a direct outgrowth of a political “thawing” in the traditional adversarial relations between these two interests. Coopera- tion and collaboration, rather than confrontation, have increasingly become the model for corporate-environmental group relations cov- ering technical, public policy, and CRM activities (Hemphill, 1994).

The Sierra Club has been particularly ardent among environmental groups in pursuing corporate marketing opportunities. In 1986, the Sierra Club, an established 500,000-member environmental organization whose aim is ‘to protect and restore the earths natural and human environments and a pioneer in ECRM agreements, began an affinity group marketing program for credit cards issued to its members in conjunction with Chase Lincoln First Bank of Rochester, New York. In 1987, the Sierra Club reportedly gathered close to $225,000 in revenue from the program (Howe, 1987).

There has been a tremendous increase in ECRM activity since the late 1980s. As shown in ‘Table 1, some of the largest (by membership) environmental groups in the United States, including the National Audubon Society (500,000 members), National Wildlife Federation (4.5 million members), Nature Conservancy (740,000 members), and World Wildlife Fund ( 1.5 million), have followed the Sierra Club‘s lead and opted to enter into licensing agreements, that

Tab

le 1

. E

nvir

onm

enta

l Cau

se-R

elat

ed M

arke

ting

Alli

ance

s -

Orf

aniz

atio

n M

issio

n A

llian

ces

Am

eric

an F

ores

try A

ssoc

iatio

n (W

ashi

ngto

n, D

.C.)

To p

rese

rve

trees

and

fore

sts

Day

ton-

Hud

son

Dep

artm

ent S

tore

s (st

uffe

d an

imal

, chi

ldre

n’s b

ookl

et)

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terc

ard

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rnat

iona

l (re

fore

stat

ion

cont

ribu

tion)

(F

rank

el, 1

994)

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eric

an R

iver

s (W

ashi

ngto

n, D

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a st

ewar

dshi

p et

hic

Cal

isto

ga w

ater

(ra

ft tri

p pr

omot

ion)

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pro

tect

and

rest

ore

river

s and

fost

er

Pata

goni

a (s

alm

on p

oste

r, te

e sh

irt)

(Fra

nkel

, 199

4)

Cen

ter f

or M

arin

e C

onse

rvat

ion

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hing

ton,

D.C

.) ha

bita

ts w

orld

wid

e (F

rank

el, 1

994)

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tect

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ine

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ale

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ppen

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zen

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trib

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ns fo

r bea

ch a

nd ri

ver c

lean

up)

(Zba

r, 19

93a)

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ve th

e w

orld

s m

ost b

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ain

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k of

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eric

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logy

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ndin

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ural

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ders

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mpl

oyee

giv

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(F

rank

el, 1

994)

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serv

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tern

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hing

ton,

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l Aud

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iety

(W

ashi

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arch

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lic a

war

enes

s M

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l adv

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sch

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omb)

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t (re

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gram

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ity te

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ew D

ay’s

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ice

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ld p

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pro

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s)

(Fra

nkel

, 199

4)

Tabl

e 1.

(co

ntin

ued)

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aniz

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n M

issio

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llian

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iona

l Par

k Fo

unda

tion

(New

Yor

k, N

.Y.)

To

supp

ort t

he N

atio

nal P

ark

Syst

em

and

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e pu

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on

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tion

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port,

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low

ay an

d N

ew E

ra (

“Non

-Pro

fit L

icen

sing

C

ontin

ues

to G

row

Ste

adily

. . , ,” 1

994)

C

adbu

ry B

ever

ages

, Mot

t’s U

SA (

reba

te p

rogr

am)

(Zba

r, 19

93a)

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uri,

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n-to

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th P

rodu

cts,

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ycle

d Pa

per a

nd L

andm

ark

Gen

eral

(“

Non

-Pro

fit L

icen

sing

Con

tinue

s to

Gro

w S

tead

ily . .

. ,” 1

994)

N

atio

nal P

arks

and

Con

serv

atio

n T

o pr

omot

e an

d im

prov

e th

e U

.S. N

atio

nal

Ass

ocia

tion

Park

Sys

tem

(W

ashi

ngto

n, D

.C.)

Nat

iona

l Wild

life F

eder

atio

n C

onse

mad

or?

(Was

hing

ton,

D.C

.) X

ikon

and

Dan

non

(“N

on-P

rofit

Lic

ensi

ng C

ontin

ues

to G

row

St

eadi

ly. .

. ,”

1994

) H

arke

n Lt

d. (

neck

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r lin

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t, 19

94b)

Nat

ure

Con

serv

ancy

(A

rling

ton,

VA

) T

o pr

otec

t rar

e an

d en

dang

ered

spec

ies

thro

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land

con

serv

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n M

iller

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win

g C

ompa

ny (

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illio

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mm

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ure

Com

pany

(5 p

erce

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f sal

es)

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on U

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ent c

ontr

ibut

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ives

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per p

rodu

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old)

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illst

one

Cof

fee

($30

,000

com

mitm

ent)

Flee

t Ban

k (a

ffin

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t car

d, $

6 fr

om e

ach

annu

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d 2

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of a

ll ca

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xpre

ss T

rave

l Rel

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m c

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n A

mer

ican

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pres

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ner-

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bert

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(cou

pon

rede

mpt

ion

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ring

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ents

off

prod

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and

a 3

0-ce

nt d

onat

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(Z

bar,

1993

13; F

rank

el, 1

994)

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ra C

lub

(Was

hing

ton,

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. ) To

pro

tect

and

rest

ore

the

earth

‘s n

atur

al

and

hum

an e

nviro

nmen

ts

Cha

se L

inco

ln F

irst

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k (a

ffin

ity ca

rd)

(How

e, 1

987)

M

essa

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(per

sona

l ban

k ch

ecks

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icro

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(com

pute

r scr

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save

r)

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0 (g

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s)

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fman

-Pac

ific

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on B

radl

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w p

uzzl

es)

Car

olyn

Bea

n (g

reet

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card

s) (

Fran

kel,

1994

; “N

on-P

rofit

Lic

ensi

ng

Con

tinue

s to

Gro

w S

tead

ily. .

. ,” 1

994)

R

alph

Mar

lin Q

Co.

(nec

kwea

r) (H

art,

1994

b)

Ston

ehen

ge L

td. (

neck

wea

r; pr

ovid

es fu

ndin

g fo

r the

Sie

rra

Lega

l D

efen

se F

und)

(H

art,

1994

a)

Wild

erne

ss S

ocie

ty

(Was

hing

ton,

D.C

.) Sp

ecia

lizes

in is

sues

invo

lvin

g th

e pr

otec

tion

Cal

enda

rs an

d w

eara

bles

and

is w

orki

ng o

n ex

pand

ing

and

man

agem

ent o

f fed

eral

land

s, p

arks

, an

d fo

rest

s

Ded

icat

ed to

the

cons

erva

tion

of n

atur

e

into

not

ecar

ds a

nd g

ifts

(“N

on-P

rofit

Lic

ensi

ng C

ontin

ues

to G

row

Ste

adily

. . . ,” 1

994)

Sala

nt M

ensw

ear G

roup

(ne

ckw

ear)

(Har

t, 19

94a)

S.

C. J

ohns

on 6

5 So

n (d

irect

-mai

l cou

poni

ng p

rogr

am)

(Zba

r, 19

93a)

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ubbe

r Sta

mpe

de (r

ubbe

r sta

mps

) W

illits

and

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estri

(hig

h-en

d gi

fts)

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n-G

reat

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nds o

f Eur

ope

(bev

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e bot

tles)

(Zb

ar, 1

993a

; “N

on-P

rofit

Lic

ensi

ng C

ontin

ues

to G

row

Ste

adily

. . .

,” 1

994)

Wor

ld W

ildlif

e Fu

nd-U

.S.

(Was

hing

ton,

D.C

.)

410 HEMPHILL

As corporate CRM

Contributions increase us

a percentage of funding

for nonprofit organizations, more environ- mentaZ groups will be forced

to confront the contentious

issues surrounding CRM

is, to use a group’s logo or name in a marketing campaign or an affinity (credit) card arrangement. In addition, many of these environmental groups have generated significant percentages of their annual budgets from extensive use of CRM agreements, for example, the Nature Conservancy (1 1.5 percent), American Forestry Association (18 percent), and Conservation International (19.5 percent).

As corporate CRM contributions increase as a percentage of funding for nonprofit organizations (Frankel, 1994; Zbar, 1993a), or even substitute for philanthropic contributions (an emerging atti- tude among corporate management; see Shell, 19891, more environmental groups will be forced to confront the contentious issues surrounding CRM, for example, that CRM programs shift the motivation for giving from altruism to self-interest (Goldberg, 1989; Gurin, 1989; Cordtz, 1990) or that CRM may threaten to commercialize nonprofits (Garrison, 1990). The growing use of CRM by prominent U.S. environmental organizations implies that those philosophical issues that raised serious goal- and value-oriented questions for directors in the 1980s have essentially been resolved by many boards in the 1990s. This change in fundraising strategy is a result of two identifiable trends: The first is a philosophical change in how members of the business community and a growing number of environmental groups view each other in seeking cooperative solutions to mutual problems, and the second is the need for environmental groups to find new sources of funds in a more competitive fundraising climate.

Strategic Funding Trends and Issues In 1992, the total amount (from individuals, corporations, foundations, and bequests) of contributions to environmental and wildlife organizations reached an all-time high of $3.1 billion; for 1993, the total amount of contributions was stable at $3.2 billion, although slightly less when adjusted for inflation (Kaplan, 1993; Moore, 1994). According to Giving USA: The AnnuaZ Report on Philanthropy for the Year 1992, “ [environmental] organizations have been growing quickly in number, and issues relating to them have been widely publicized in recent years. Thus, the growth . . . can be seen as the maturing and broadening of an area of fund-raising” (Kaplan, 1993, p. 159).

As a funding source, CRM is an increasingly significant portion of corporate financial sponsorship of the nonprofit sector. According to International Events Group, a Chicago firm that tracks corporate sponsorships, corporate marketing expenditures on causes totaled $314 million in 1993, up from $254 million in 1992 (Frankel, 1994); this compares with $100 million for CRM programs in 1989 (Zbar, 1993a). The impact of ECRM was estimated by International Events Group to be nearly 20 percent of all cause-related corporate spend- ing, or almost $50 million, in 1992. For 1993, that dollar figure is estimated to have grown at a level commensurate with the growth in CRM in general, or to approximately $62 million (Frankel, 1994).

MARKETING, FUNDRAISING, A N D ENVIRONMENTAL N O N P R O F l T S 41 1

There can be little doubt that a lingering recession has slowed philanthropic donations to environmental groups. This has occurred in spite of opinion polls showing that an overwhelming majority of environmental donors planned on giving as much in donations to environmental causes in 1993 as in 1992 (Stehle, 1993). Kalman Stein, the national director of Earth Share, has identified several additional factors accounting for sluggish growth in environmental fundraising in 1993: a lack of spectacular environmental crises, such as the Exxon spill, which gamer a lot of media attention; people who have changed their own behavior to help the environment now feel less urgency about giving; and the election of President Clinton and Vice President Gore, who hurt fundraising because many people believed both men would take a more active role in solving environmental problems than that of their predecessors (Moore, 1994). Ann Monnig, vice president for membership programs at the Wilderness Society, detects that donors’ “priorities are shifting away from the environment and towards human service groups” (Mehagan, 1993, p. 25).

A recent national survey, conducted by Nye Lavalle & Associates for the Chronicle ojPhilunthropy, measured how the U.S. public rates charitable causes. The results of the survey are not encouraging for nonprofit environmental groups. In the category of charities that are “most opposed,” survey respondents chose five environmental groups to be included in the top twenty: Greenpeace (sixth), Sierra Club (twelfth), Save the Whales (fifteenth), Friends of the Earth Founda- tion (eighteenth), and the Environmental Defense Fund (twentieth). In the category of “least credible,” these same five environmental groups reappeared in the top twenty: Greenpeace (seventh), Sierra Club (fourteenth), Save the Whales (sixteenth), Environmental Defense Fund (eighteenth), and Friends of the Earth Foundation (nineteenth). In the category of “never donated to,” four environmental organizations were placed by survey respondents in the top twenty: Save the Whales (ninth), Greenpeace (tenth), National Audubon Society (sixteenth), and Sierra Club (eighteenth). In the top-twenty lists of nonprofits that are deemed by survey respondents to be “best liked,” “most credible,” and “most frequently donated to,” not one environmental organization appears (Stehle, 1994).

Another area of increasing concern to public interest environmental groups is the recent trend among major foundations, such as the Pew Charitable Trusts, W. Alton Jones Foundation, Rockefeller Family Fund, and John D. and Catherine T. MacArthur Foundation, to withhold grants to their organizations and establish their own environmental organizations and programs, including Environmen- tal Strategies ($750,000 annually), Earth Force ($12 million), and the Energy Foundation ($20 million). These grant makers are alarmed that the environmental movement has grown so diverse and fractured that it risks losing its effectiveness. The donors believe they must help set priorities, impose discipline, and create new programs as opportunities arise. Justifiably, many established environmental erouDs seem Darticularlv concerned that new nonmofits created bv

In the category of charities that

are “most opposed,” survey

respondents chose five

environmental groups to be

included in the top twenty

412 HEMPHILL

The use of ECRM oflers an

increasing Zy attractive

strategy for corporate

management: marketing a

product while contributing to

an envivon- . mental cause

foundations will divert resources away from the established groups, who are already financially strapped in trying to maintain existing programs (Greene, 1994).

Who are the demographic groups most likely to tie their pur- chases to environmental concerns? According to the Hartman Envi- ronmental Marketing Strategies and Research Report, the answer is middle-age women who are well educated, enjoy high incomes, and have children. The report also notes that children and teenagers are extremely environmentally conscious, yet marketers overlook them. The Hartman report concludes that, overall, consumers believe it is more important for corporations to be actively involved in local environmental causes than to donate money to far-off ones (“Advertis- ing: Environmental Marketing Pays Off,” 1993). A 1994 ConeAtoper survey on CRM in general (“Consumers Support Cause-Related Mar- keting,” 1994) found that 55 percent of U.S. respondents considered local concerns to be most important.

The continued growth iri ECRM expenditures, as recently tracked by the International Events Group (Frankel, 1994), has offered an opportunity for environmental organizations to expand corporate funding support from sources other than those dedicated to philanthropy Since CRM funding is primarily generated from marketing and advertising budgets (Varadarajan and Menon, 19881, these funding sources are less adversely affected by business cycle downturns than corporate philanthropy contributions. In turn, the use of ECRM offers an increasingly attractive strategy for corporate management: marketing a product while contributing to an environmental cause. This management thinking reflects general survey findings: seven of ten (71 percent) corporate leaders believe that corporate contributions should reflect business self-interest; in addition, one-third (33 percent) espouse a position that philanthropy should be linked to marketing (Schiller, 1988).

Is the marketplace for ECRM reaching a saturation level? Based on the national dollar figures estimated for 1992 and 1993, there is no indication of a slowdown in ECRM growth in the short term. A market saturation point will be reached in a few years, however, as corporate financial returns on these alliances begin to level off. What may now be slowing is the accelerated growth in ECRM expenditures directed toward environmental groups with national and international agendas.

Environmental Cause-Related Marketing The beneficiaries of the first phase of ECRM alliances have been environmental groups with national and international agendas, although in recent years some corporations have decentralized their CRM efforts to concentrate on local causes (including CRM pioneer Amer- ican Express). However, corporate sponsorship of regional, state, and local environmental causes has tended to be of a philanthropic nature

MARK E TIN G , F UN D R A I s IN G , A N D E N VI R o N M E N TA L No NPR o F I TS 4 1 3

and to involve direct donations or public service advertising. Exam- ples of these sponsorship programs include Bonnie Bell running a print advertisement for a wildlife refuge in Ohio, Anheuser-Busch donating $500,000 to the Rocky Mountain Elk Foundation, and Lever Brothers, in conjunction with local conservation groups, sponsoring efforts to revegetate Phoenix Mountain Preserve (Zbar, 1993a).

The Hartman and ConelRoper survey results suggest new opportunities for the hundreds of regional, state, and local environmental groups who have largely been left out of CRM alliances. Many corporations will be receptive to decentralization of their ECRM efforts to meet the local demands of their consumer stakeholders. As reviews of ECRM campaigns have shown, this second phase of ECRM has yet to be seriously explored as a source of fundraising by regional, state, and local environmental groups.

For regional, state, and local environmental groups unfamiliar with CRM alliances, there are a number of important issues and strategies to consider when pursuing this fundraising mechanism. The recommendations that follow, while directed at environmental organizations, have wider applicability to other nonprofit organizations, such as arts and human services organizations. It should be noted, however, that an important difference between environmental organizations and other nonprofits is the adversarial position on corporate practices, legislation, and regulation that environmentalists often occupy in relation to the business community, and vice versa. The issue of credibility has far greater import and consequence in a CRM alliance to environmental organizations than is the case with other nonprofits. Therefore, this issue requires far greater dili- gence for environmental organizations than other nonprofits. An environmental group’s involvement in CRM alliances could have potentially catastrophic consequences for its future political (and fundraising) viability if partnered with a corporation whose environmental policies are in fact contrary to the environmental group’s mission, goals, and values. In turn, choosing the environment as a cause has its pitfalls for the business community. “Every manufacturer is concerned about the environment, but they’re worried if they’re setting themselves up to be attacked,” says Bill Lembeck, president of Ryan Cause Marketing, a consultancy (Rigney and Steen- huysen, 1991).

Establishment of a CRM Committee To explore whether an environmental nonprofit should engage in CRM agreements for fundraising purposes, the board of directors should establish an ad hoc CRM committee. The ad hoc CRM committee’s charge is important and difficult: to compare the values and goals of the environmental group with those underpinning CRM alliances. If the organization’s mission could be perceived as compro- mised by CRM involvement, a recommendation to the board against such an involvement would be in order; if the ad hoc committee

An important difference between

environmental organizations

and other nonprofits is

the adversarial position on corporate prac tices,

Zegislation, and regdation that

environmentalists often occupy in relation to the

business community

414 HEMPHILL

If the corporate candidate has

had a CRM alliance with any

environmental organization, the CRM Committee would evaluate the resuZts of the

sponsorship campaign

believes that the organization’s values and goals are congruent with CRM alliance involvement, an initial strategy outlining broad CRM guidelines should be part of the recommendation to the full board of directors. For those environmental organizations that have a mission clause precluding all cooperative fundraising with corporations (accepting only individual donations or foundation grants), an organizational mission statement can be amended to allow CRM alliances within structured organizational guidelines.

If the board of directors accepts a pro-CRM recommendation from the ad hoc committee and votes to investigate CRM opportunities, a standing CRM committee can then evaluate potential corporate partners in terms of their environmental commitment, recommend corporate partners, and establish parameters on the type and extent of the CRM campaign to the board. To protect organizational credibility, environmental nonprofits usually have mission statements that prevent cooperative relationships with entities (corporations, businesses, and individuals) that have an environmental philosophy that is antithetical to their own. The CRM committee would establish broad guidelines to eliminate many inappropriate corporate sponsors, such as those manufacturing products or using materials and processes not conforming with the mission statement of the environmental organization. This will allow staff responsible for developing these sponsorships to concentrate their efforts on more promising corporate candidates.

If the corporate candidate has had a CRM alliance with any environmental organization, the CRM committee would evaluate the results of the sponsorship campaign. Additional relevant corporate information for the CRM committee to consider would include an environmental health and safety (EHQS) code of ethics, annual corporate reports highlighting EH&S performance, corporate strategic plans that incorporate environmental considerations (“green de- sign”), operational policies and programs that have EHQS issues built into them, environmental audit procedures, and management performance appraisal criteria that include EHQS benchmarks.

The CRM committee would also research corporate violations of local, state, and federal EHQS laws and regulations, examine EHQS corporate public policy positions and lobbying efforts for mission compatibility, and review the Council on Economic Priorities’ SCREEN program, which includes corporate profiles on the social responsibility (including the environment) of over eight hundred corporations.

According to Sarah Coniis, licensing manager for the National Audubon Society, if an environmental organization is considering CRM as an avenue for fundraising, it is good policy for the board to be involved in this decision (personal communication, February 6 , 1995). “Research and good contracts are the keys to effective licensing agreements,” says Comis. “Without them an organization has no protection.” For smaller environmental organizations, especially

M A R K E TIN G , F Ll N D RA I s I N G , AND E N VI R 0 NM E N TA L N 0 N P R 0 FITS 4 15

where there is legal and business expertise on licensing among the directors, Comis advises that the boards become actively involved with the CRM process.

Sponsorship Development Since CRM program budgets are generally drawn from the marketing and advertising function of the corporation, environmental organizations must recognize that corporate sponsors are looking for returns on their contributions. It is first and foremost a money- making (marketing) effort with altruistic goals incorporated into it (Varadarajan and Menon, 1989; Steckel and Lehman, 1993). Often, corporate marketing executives complain that nonprofits waste their time by talking about charitable programs instead of how they can help the company reach new customers (Hall, 1993).

The foundation of any successful CRM alliance is good self- awareness and a shared vision. Key CRM success factors include the following: (1) an appropriate, logical match between cause and product, (2) good working relationships with an emphasis on communication and contractual agreements, and (3) a match of geographical focus and program duration to the program’s goals, the product’s market, and the nonprofit’s constituency (Sheridan Associates and Zimmerman Associates, 1988).

According to Bill Lembeck, president of Ryan Cause Marketing, environmental causes are difficult to shape into a marketing program (Rigney and Steenhuysen, 1991). Therefore, before embarking on a serious CRM sponsorship development campaign, regional, state, and local environmental groups should evaluate the sales benefits that the organization’s name and logo will have for a manufacturer or service-oriented corporation and perform extensive market research to identify potential corporate sponsors.

Awareness of Regulations Regional, state, and local environmental organizations are advised to be aware of the CRM sponsorship guidelines adopted by the Coun- cil of Better Business Bureaus (CBBB) Philanthropic Advisory Ser- vice. Nonprofits that do not comply with the guidelines may be in jeopardy of failing the CBBBs standards for organizations that raise money from the public (Hall, 1993).

Because of concern over possible abuses of CRM arrangements, there are presently fourteen states (Colorado, Connecticut, Florida, Georgia, Hawaii, Maine, Massachusetts, New Hampshire, New York, North Carolina, Ohio, Oregon, Pennsylvania, and Wisconsin) that regulate commercial coventurers (or corporate sponsors). Many of these states require contracts to be filed, and most states have con- tract provision requirements and advertising disclosure (Bush, 1994).

According to the Internal Revenue Service, if nonprofits go too far in promoting the commercial products of sponsors, they may end up owing unrelated-business income tax on their sponsoring earnings.

416 HEMPHILL

The widespread use of CRM as a fundraising tooZ by major environmental groups is the

result of a broader

philosophical change in how the business

community and a growing number of environmentaZ nonprofts view

each other

The Internal Revenue Service is now considering rules that would make most sponsorship income exempt from taxation (Hall, 1993).

Summary and Conclusion The growth in CRM over the last five years reflects an increasing desire by the business community to “give something to get something” in an intensely competitive business environment. While the controversy concerning the place of CRM in nonprofit fundraising continues, it appears that a growing number of nonprofits are engaging in these “public purpose” marketing alliances and therefore accepting the commercial nature of this form of endeavor.

As explained in this article, CRM is not corporate philanthropy, nor can it be considered clearly socially responsible corporate behavior. CRM is essentially a tool of marketing strategy, a commercial venture of private enterprise. The results of a successful CRM campaign can, however, provide socially responsible benefits to a nonprofit’s cause. The acceptance of CRM by a nonprofit organization should be based on a clear understanding of what it is (a marketing arrangement), what it is not (corporate philanthropy), and what it provides the organization (funds to benefit a cause). Through carefully man- aged, case-by-case review of corporate partners by environmental nonprofit directors and management, CRM agreements are developed that strictly define the organizational parameters of alliances.

The widespread use of CKM as a fundraising tool by major environmental groups is the result of a broader philosophical change in how the business community and a growing number of environmental nonprofits view each other. Obviously, a strong impetus is the need for environmental groups to find new sources of funds in a more competitive fundraising climate.

The greatest opportunities for ECRM agreements in the imme- diate future lie with regional, state, and local environmental groups. The Hartman and CondRoper survey results (“Advertising: En- vironmental Marketing Pays Off,” 1993; “Consumers Support Cause- Related Marketing,” 1994) reveal widespread support for local environmental causes. National environmental organizations, facing an emerging threat to their virtual monopoly of ECRM funding, will need to segment their CRM campaigns to emphasize the local orien- tations of their efforts. However, corporations will be more receptive to segmenting and decentralizing their CRM campaigns when approached by regional, state, and local environmental groups who have carefully researched their prospective sponsors and can offer a shared marketing vision.

THOMAS A. HEMPHZU is afiscal tfjcer with the NewJersey Historic Trwt, New Jersey Department of Environmental Protection, in Trenton.

MARKETING, FUNDRAISING, AND ENVIRONMENTAL NONPROFITS 41 7

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Documents

Cause-related marketing, fundraising, and environmental nonprofit organizations