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Fri February 10, 2012
Halos Can Turn To Horns, Corporate Donors Find
Energizer makes batteries. But in recent days, company executives have spent a considerable amount of time responding to complaints about abortion.
The reason, of course, is that Energizer got caught up in the controversy surrounding last week's decision by the Susan G. Komen for the Cure foundation to cut off its funding for Planned Parenthood.
Komen later partially reversed course, but that came too late to prevent Energizer, which had just been named part of the group's "Million Dollar Council," from receiving plenty of flak.
Energizer — like many other companies that have been big donors to Komen — found itself fending off thousands of negative emails and comments on its Facebook page.
"No company ever wants to do something which polarizes its supporters and stakeholders," says Jim Ziminski, chief marketing officer for Energizer Global. The company has donated $1.2 million to Komen since 2007.
The experience of Energizer points to the surprising danger involved in corporate philanthropy. Any business, it seems, can become tainted by association with a nonprofit organization that becomes embroiled in controversy.
"It's certainly a lesson, the fact that controversy can bubble up in any area," says Faith Stevelman, an expert on corporate governance at Seattle University.
"Branding yourself by virtue of affiliation with any organization is always precarious, because you're not in control of what happens in another organization," she says.
By Virtue Of Giving
Relatively speaking, corporations are not big givers. They generally contribute about 3 to 4 percent of the roughly $290 billion given to charity in the U.S. each year, says Kim Meredith, director of the Stanford University Center on Philanthropy and Civil Society.
Private foundations give several times more, but the vast bulk of charitable donations — more than 80 percent — are made by individuals.
There's some irony involved in a business getting burned by giving, suggests Stevelman, the Seattle law professor. Because disclosure requirements are so weak, the public generally only knows about donations when corporations decide they want to announce them.
Companies that seek a halo effect by giving to good causes, though, can find their halos tainted if the charity becomes embroiled in controversy.
That can happen with any group, through a sudden change in policy course, as with Komen, or simply mismanagement — nonprofit executives taking too generous a paycheck, say.
"The Komen situation will motivate corporations to be a bit more involved in the decisions that their partners make," says Denise Bortree, a communications professor at Penn State University, who studies nonprofits. "This will raise significant concerns for corporations as they consider future relationships."
Becoming More Conservative
Many companies are seeking out causes that are in keeping with their own functions, says Stanford's Meredith — a chocolate maker such as Nestle seeking to raise incomes among West African cocoa farmers, for instance, or an aspirin company like Bayer giving to the American Heart Association.
Part of the problem in the Komen situation, Bortree suggests, is simply that the foundation had so many corporate partners. Its well-known pink ribbons and hues can be found on blenders, bicycles, yogurt lids and many other consumer goods.
A charity that relies heavily on a single corporate funder, or a small set of them, will be more careful about taking into account the impact its actions can have on its donors, Bortree says.
As a result of the current controversy, she adds, corporations will become more conservative in their giving — not politically conservative, but simply more careful about giving only to well-established, long-trusted nonprofit groups.
"There will be more of an onus on the corporate people to look at what they're sponsoring," says Katy Snyder of JVA Consulting, a Denver-based group that advises nonprofits — and has worked with both Komen and Planned Parenthood. "They've got to do this due diligence before they enter into these partnerships."
Corporations are already pretty risk-averse when it comes time to take out their charitable checkbooks. The local symphony or the United Way is more likely to benefit than some new charitable startup, no matter how worthy its mission.
"Most corporate grants are fairly predictable, even when corporate donors talk about being innovative or entrepreneurial," says Jerome Himmelstein, a sociologist at Amherst College.
Corporations Seek Safe Harbor
Himmelstein points out that there is some irony regarding the latest flap. "It was Planned Parenthood that put controversy on the radar of corporate philanthropy back in the early 1990s," he says.
As long as it concentrated strictly on family planning, Planned Parenthood was considered a "safe" charity that everyone gave to, Himmelstein says. As the group became more vocal about abortion rights, it drew protests and its corporate supporters were threatened with boycotts.
In 1990, AT&T announced it was ending its long-standing tradition of giving Planned Parenthood $50,000 annually.
But although most corporations are allergic to political controversy, most don't want to change course once they've decided to give.
They don't want to be perceived as caving in to pressure, in part because it will call into question their judgment in having given in the first place, Himmelstein says, but also because they don't want to anger consumers on the other side of the issue.
No More Pink Batteries?
Instead, companies seek to emphasize the importance of the underlying cause that led them to give in the first place, downplaying their association with the latest twists and turns their recipients have taken.
In the case of Komen, corporate donors have sought to reiterate their support for the primary purpose of combating breast cancer. In Energizer's case, it underlined that stance after the Komen controversy by giving $50,000 on Feb. 3 to Siteman Cancer Center, located near its headquarters in the St. Louis area, to fund mammograms for low-income women.
"While it did not, nor was it meant to, erase [consumers'] concerns about the situation, we were able to demonstrate our commitment to the cause," says Ziminski, the Energizer executive.
As for cutting its ties with Komen itself, Energizer is still weighing its options.
"This issue is still top of mind for Energizer," Ziminski says. "We are working as quickly and thoughtfully as we can to address this complex situation, which will take time to resolve."