Cause-Related Marketing:



Generally, the vast majority of charity fundraising can be thought of in just three distinct categories;
1) Donations, contributions, gifts, etc., typically from individuals and estates
2) Grants, mostly from private foundations and government agencies
3) Corporate sponsorships, usually non-cash assets rather than cash

For a corporate sponsor, it is never really about the deductible value of the non-cash contribution, it is more about the perceived value as an advertising or a marketing tool. This is so common that corporations consider contributions to charity as a marketing expense and not a charitable contribution, thinking of it as “cause-related marketing”.

“Cause-Related Marketing” differs from corporate giving (philanthropy), as the latter generally involves a specific donation that is tax-deductible, while “cause-related marketing” is a promotional campaign not necessarily based on a donation.
Depreciated assets used in business (not inventory items) tend to have very little value as a charitable contribution. The deductibility of non-cash contributions is limited to the book value of the donated items or what cash value is actually received by the charity when the assets are converted into cash – whichever is less.
The uncertainty of what the converted cash value will be to the charity gives rise to businesses not wanting to take charitable contribution deduction. Conversely, the certainty of simply attributing the cost of the contribution as a business marketing expense is the favorable accounting treatment.

When a business needs to liquidate a significant group of assets, (such as a hotel needing to refurbish their rooms to stay current in the marketplace), there is often a large expense associated with removing the assets.
The hotel has a choice to make, it can either contract with a for-profit liquidation business to take the room furnishings (paying the liquidation business to remove the assets), or the hotel can make a “cause-related marketing” donation to a charity. Both the book value of the assets and the expense of removing the furnishings from the property would be a “cause-related marketing” expense.

All other things being equal, a corporation would choose making a “cause-related marketing” donation to a non-profit charity over contracting with a for-profit business to remove the furnishings from the hotel rooms.

“Cause-related marketing” is a powerful marketing tool that business are increasingly leveraging. According to the Cone Millennial Cause Study in 2006, 89% of Americans (aged 13 to 25) would switch from one brand to another brand of a comparable product and price, if the latter brand was associated with "good cause".
For the corporation to realize the potential of a “cause-related marketing” donation; the donation must have a legitimate marketing value. There are a host of different ways that both the for-profit corporation and the non-profit charity can accomplish a sincere marketing effort;
The non-profit charity publically acknowledges the donation from the business. This is easily accomplished by simply making note of the donation on the charity’s web site and in print publications.

The non-profit charity allows access to the charity members. A hot link to the business web site on the charity web site.
The non-profit charity advocates that members and the public use the products or services of the business.
The corporation is allowed to use the non-profit charity’s logo on advertising and web site marketing opportunities.
The corporation tells the story of supporting the non-profit charity in corporate documents such as the annual report, other investor documents and advertising campaigns.

The corporation’s public relation department makes a news release to the various news media outlets telling the story of the “cause-related marketing” donation.
For the “cause-related marketing” campaign to be effective the corporation must choose a charity like A Creative Charity Solutions (CCS), Lift Up For Vets all part of Foundation for Educational Development, Inc. (Founded in 1975), that will resonate with customers. Veteran centric causes are extremely effective with a majority of potential customers. CCS is one of few that has the experience to complete a project that yours.
When a business (a resort hotel casino property) in a highly competitive market (Las Vegas) is required to update rooms to stay competitive, it makes sense to look to a “cause-related marketing” opportunity when it comes time to move the old out and the new in.

Contracting with a traditional for-profit liquidation business to remove the old furnishings, typically giving the fully depreciated non-cash assets to the liquidation business and paying to have the furnishing removed from the property, there is no marketing opportunity (other than making the claim that the rooms have been refurbished).

Making a “cause-related marketing” donation to a charity does give rise to the opportunity of additional marketing campaigns, (supporting veterans). It is then up to both the for-profit corporation and the non-profit charity to make the “cause-related marketing” campaign happen effectively.
The corporate culture often dictates that when depreciated non-cash assets are disposed of, they must be donated to a charity, and not just given away to a for-profit business. This is a decision that the board of directors has already made and published as part of the operations procedures.
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The partnership of a for-profit corporation and a non-profit charity presents exceptional opportunities for both entities, especially when structured with a very common “cause-related marketing” contribution of non-cash assets. Treating the transaction as a marketing expense is simple, with the up-side possibility of an effective “cause-related marketing” campaign as an additional benefit for the for-profit corporation.