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Nonprofits at Risk in Partnerships with Corporations

Newswise - While there has been massive growth in cause-related marketing programs which have helped companies, charities and consumers, leaders of nonprofit organizations need to enter agreements with companies with their eyes wide open.

"Our results suggest that some CSR initiatives may produce consumer inferences that are wrong but desirable for the company," says Stacy Landreth Grau, associate professor of marketing in the Neeley School of Business at Texas Christian University in Fort Worth. "And these inferences can have potentially negative consequences for the nonprofit."

"Explicit Donations and Inferred Endorsements: Do Corporate Social Responsibility Initiatives Suggest a Nonprofit Organization Endorsement?," by Amanda B. Bower, a marketing professor at Washington and Lee University in Virginia, and Stacy Landreth Grau of TCU, appears in the Fall 2009 issue of the Journal of Advertising.

"An explicit seal of approval statement was not necessary for consumers to assume a seal of approval," says TCU's Grau. "The mere presence of a nonprofit logo was enough to infer endorsement."

That should be a warning sign to nonprofits, many of which have policies like the American Cancer Society's forbidding use of their logo " ... in any way that would imply endorsement of the company."

"For nonprofits, licensing arrangements appear to be a risky type of CSR initiative," says Grau. "The perception of ... the licensing agreement was not significantly different from the explicit seal of approval condition."

She cautions that a firm's participation in a licensing agreement could be one way for the company to get the "seal of approval" from a nonprofit that does not grant endorsements.

Source: NewsWise