Impacting investing: trends, issues and capabilities
Real or Fake: Luxury Brand Corporate Philanthropy
by Catherine Walker
I love the Gucci brand. So much so that I have a rather bad fake Gucci watch to prove it. The reason I mention it is that I cannot help thinking that there is something just a little bit fake about Chime for Change.
There is something not quite right in a multi-billion pound luxury business setting up a portal through which or’nery folk like us are enabled and encouraged to give our hard-earned pennies to charity.
My charity, the Directory of Social Change1, has been researching corporate philanthropy in the UK for the last 25 years, and believe me that is no easy task. Not only are the amounts miniscule in comparison to what or’nery individuals give (2% of UK charities’ income compared to 43%), but they are also obfuscated in a morass of do-goodism verbiage, exaggeration and downright lies2.
Many companies boast about empowering their employees and customers to give to charity and then count that as part of their own giving. No! You pay your employees to make your profit, you put a profiteering margin on your products that customers buy, and then you rinse their charity pennies out of them and call it corporate philanthropy? I don’t think so! Even with all this individual giving company donations average a pathetic 0.4% of pre-tax profits. Less than £1 billion goes to charity every year from the corporate coffers, compared to over £14bn from individuals.
So Vanessa Friedman does well to point out the “concerns about profiteering do-goodism” in Gucci’s “branded movement” – a glorified crowd-funding platform. The cognitive dissonance created by luxury brands in the philanthropic arena is a hurdle which needs careful management3. As Margot Brandenburg points out in Vanessa’s article, “for the price of one luxury handbag, you can easily give food and water to a family in a challenged area for a year.” But most people considering the option would not make that swap. So allowing them to donate a percentage of the price instead allows them to assuage their guilt and still buy the luxury handbag – a win-win for the customer and the manufacturer. But not for the poor family who now, instead of getting a year’s supply of food and water only get a few weeks.
So Gucci under-wrote a big concert in Twickenham, employing 3,000 people. Incidentally, I would love to know if the artists performing (amongst which, Jennifer Lopez and Florence Welch) donated their time for the cause for free. Concert-goers were encouraged to donate the price of their ticket – 42% did so. The concert cost Gucci $5m– around £3m – or 0.4% of its profits (sound familiar?!) for a heavily-branded piece of social marketing, at which the article claims it made back most of the outlay through selling sponsorship and broadcasting rights.
‘Gold-washing’ is a new term on me, but if it is anything like my fake Gucci watch then the ‘gold’ tends to wear thin pretty soon revealing the tarnished cheap metal underneath.
So what should luxury brands do? In fact, what should all corporate do?
The three tenets of our Great Giving Campaign are a good place to start: Give; Give more; Give better4.
Stop looking for win-win deals which support your business case. Philanthropy is about giving without counting the cost (if you’ll forgive the religious nod). Give when times are hard not just when your profit-margin is healthy. Give to unpopular causes, small charities, community groups who are doing a good job and don’t make them jump through a million useless flaming bureaucratic hoops to get the money. Spend time with them, and talk to them to let them explain what they are doing. Learn their language. Allow them to define ‘success’, ‘effectiveness’ and ‘impact’ or come to an agreement together. In short, take off your suit, roll up your sleeves and get dirty. Even out the power imbalance which has charities begging at your door. Throw away the rule book and get real.
Last November I chaired the Philanthropy Impact event “Fashion and Philanthropy” at Rothschild5 which showcased a number of fashion enterprises which are working in a social context as their primary market. Social enterprises such as these demonstrate what can be done when you think about things differently, and prove that doing good can be fashionable too.
Fakes sell because they are cheap and easy, but if you can demonstrate genuine value for money, longevity and superior qualities then people will buy the genuine article.
2 See for example, The Company Giving Almanac, 2013, Directory of Social Change (http://www.dsc.org.uk/Publications/Fundraisingsources/@162468)
3 As I pointed out in this Financial Times article: http://www.ft.com./cms/s/0/51eec732-696d-11e3-aba3-00144feabdc0.html#axz...