Know where donations go

Retailers' holiday charity efforts may have loopholes

Give $1 to St. Jude, buy a plush Grinch to help children, or consider a camera to benefit the Ronald McDonald House.

Holiday shoppers are encountering almost as many donation requests as they are discounts.

The appeals are fast becoming a yuletide tradition as merchants respond to competition as well as shoppers and employees who want to deal with socially responsible companies.

But there's quite a bit in it for businesses: good will, publicity, added sales and a tax write-off.

So before you go adding that extra dollar to your total at the checkout, consider how much of it actually makes it to the charity. In some cases, it's just pennies.

Read advertisements and signs on the shelves carefully, said Stephen Adler, CEO of Charity Brands Marketing.

Phrases such as "100 percent of the proceeds go to charity" offer retailers loopholes, he said. "Proceeds" really means "profits," which can be very small after manufacturing costs, distribution costs and overhead. In some cases, it can be as low as 10 percent of the original sale price.

And many retailers cap the amount they are willing to donate, Adler said. So, customers who purchase the product after the limit is reached never send any aid to the charity at all. Store employees should be able to say what the cap is and whether it has been reached, Adler said.

Retailers' transparency

Some retailers, such as Target, are specific in their advertising.

This season, the chain is selling a stuffed elephant to benefit St. Jude Children's Research Hospital in Memphis. It sells for $2.99 and shoppers are told that "a minimum of $1.50, which represents 100 percent of net profits" will go to St. Jude.

"We want to be clear," said Target spokesman Joshua Thomas.

St. Jude is in the third year of its Thanks and Giving campaign, where shoppers are asked to donate $1 at the register at 42 different stores.

So far this year, at Williams-Sonoma alone, 180,000 customers have stepped up to donate. All of the donations are handed over to St. Jude, said St. Jude chief operating officer David McKee. But the percentage it gets from other promotions is lower.

"Kay Jeweler sells a bear for us," he said. "They will pay for the bear, but we get 100 percent beyond the cost of the bear. ... They sell it for $10 and they give us over $6."

McKee said that despite having dozens of corporate partners, donations from St. Jude's activities with corporations accounted for only $30 million to $40 million of the $535 million it raised last year.

Charities and retailers are not required to disclose how much partnerships raise, said Daniel Borochoff, president of the American Institute of Philanthropy. But shoppers should be particularly cautious of retailers who cannot say how much of the a charity product's cost is donated.

"It might be so little that it would be embarrassing," he said. "Otherwise they'd be proud to say how much they were giving."

Style sells

Retailers have learned just how profitable charity can be. Millions spent $1 for Lance Armstrong's yellow wristbands. Ditto the pink ribbon campaign for breast cancer research.

"The pink items are amazing," said Marshal Cohen, chief analyst for research firm NPD Group. "Some of these products literally sold double what they would sell on a given day, just because they put a pink label on it."

And, truth be told, shoppers such as Zebulon resident Jennifer Woody might not be all that concerned with exactly how much of their charitable purchases makes it to the charity.

Woody bought six Dr. Seuss stuffed animals and six Dr. Seuss books at Kohl's this week for her best friend and children she knows. The items benefit Kohl's Cares for Kids, which supports children's hospitals.