Philanthropy can leave a bad taste in consumers’ mouths if brands go about it in the wrong way. It’s one of the few areas of running a business where treating it as a business strategy can be counterproductive.
In many cases, philanthropy is treated as a marketing opportunity. That’s what appears to be happening in Los Angeles, where devastating wildfires have killed at least 28 people and tens of thousands have lost their homes.
“Within three days of the fires, my email was awash with beauty, jewellery and apparel brands offering to donate a small percentage of their sales to various firefighting and recovery causes, or to sell special collections created for that purpose,” Vogue Business’s LA-based editor-at-large Christina Binkley tells me. “I doubt that they create much, if any, goodwill towards the brands. Being asked to buy a bracelet because it donates 5 per cent of the price to firefighters comes across as a tasteless marketing pitch, not an act of generosity.” However, some brands donated to LA firefighters, animal rescue efforts and the recovery work without asking their customers to first make a purchase, she points out.
In the current climate, many consumers are craving stronger ethical values from the brands they shop with. In a Vogue Business survey of almost 1,000 consumers, over a third of respondents suggested that to better appeal to customers today, luxury brands should focus on improving their sustainability and ethics. But brands must have the right intentions — to benefit the public, not to benefit the brand via marketing benefits or for tax relief. “Intention matters a lot because that dictates which non-profits [brands] choose and how consistent they are in their giving. It makes a huge difference if they’re just moving around donations without thinking carefully about social impact,” says Haram Seo, assistant professor at Texas A&M University’s Mays Business School.
The need for genuine philanthropy is only going to grow, amid geopolitical tensions and increasingly regular extreme weather events. “If there was ever a time to talk about philanthropy, it’s now,” says Hilary Jones, ethics director at Lush, who was a full-time activist and campaigner before joining the beauty company over 20 years ago. “We’ve got a climate collapse happening, war happening — and colonialism has caused all of that, so we should be talking about how the West gives back what it’s taken and somehow tries to create a fairer system around the world that isn’t so extractive.”
Separating church and state
Philanthropy often sits under an ESG (environmental, social and governance) division, public relations or within a brand’s foundation — which is a non-profit that operates as a separate legal entity and is held to the same ethical standards as a registered charity, usually fully funded by the brand. The benefit of a corporate foundation is that they can “more seriously dedicate their efforts to philanthropic activities and hire people from the non-profit sector who know how to execute philanthropy”, and that their giving won’t fluctuate depending on the company’s financial situation, Seo says.
The Swarovski Foundation is led by director Jakhya Rahman-Corey, who worked for international charities conducting field work and promoting social programmes before joining the foundation over a decade ago. “If brands are thinking about philanthropy from a business mindset, even with good intentions it can lead to bad consequences,” she says. “Sometimes when someone in communications or marketing or product is making a decision on philanthropy, it can go wrong. It’s essential there’s a separation of church and state so we can hold ourselves accountable.”
The foundation regularly updates the Swarovski brand, but Rahman-Corey says it’s important that they don’t have to pitch decisions to the brand (decisions go through trustees). Poor decision-making can lead to instances where the programmes developed are deemed unfit for the needs of the beneficiaries, and third-party charity partners may feel pressured to deliver a social programme that doesn’t fit their needs because they’re desperate for funding.
“From a business perspective, having a separate foundation allows the company to avoid the common missteps luxury brands can make in philanthropy,” says Swarovski CEO Alexis Nasard. “The Swarovski Foundation operates with specialised knowledge of the philanthropic sector and adheres to charity governance standards, so Swarovski can ensure its philanthropic efforts are independent, transparent and aligned with its mission. While the business focuses on customers, the Swarovski Foundation focuses on beneficiaries, prioritising community needs and long-term social impact over commercial objectives.”
That’s not to say there are no challenges associated with running a corporate foundation. Rahman-Corey says looking at a charity’s trustees is often the easiest way to spot any red flags such as if a trustee stands to personally benefit financially from influencing the foundation’s charitable decisions. Trustees of the Swarovski Foundation include two Swarovski founding family members and five external trustees selected for their expertise in the public and charity sectors as well as in specific causes that the foundation is dedicated to, such as nature conservation and education.
There’s always the risk that corporate foundations can lead to private benefit, Rahman-Corey adds. “That’s why governance is so important, so that when it comes to the end goal of giving back we’re asking whether it’s authentic or greenwashing? There is a nuance that needs to be understood about philanthropy, and that’s why I think decision-making needs to be separate.”
How to work with grassroots initiatives
Another risk with philanthropy being treated as a business strategy is that brands tend to compete with one another, Seo says. “That could lead to good dynamics — through pressuring each other to do better — but oftentimes it leads to a dynamic of everyone giving to the same cause,” she says. “Brands can enjoy a lot of marketing benefits [of donating to a large institution] because these are non-profits that are readily recognised and people assume they’re high quality,” says Seo. According to the Centre for Social Justice Foundation, 85 per cent of all charitable income in England and Wales goes to just 4 per cent of registered charities, and according to the UK Charity Commission, more than three-quarters of UK charities survive on just £10,000 to £100,000 annually.
Donating to grassroots organisations can differentiate a brand’s philanthropic efforts. Lush has several philanthropic schemes but is best known for its Charity Pot, a body lotion from which all proceeds (apart from tax) went to a fund that anyone can apply to. “It could be a local community trying to stop a woodland from being knocked down, for instance. Just because they’re not registered charities, doesn’t make the work they’re doing any less important,” says Jones. “We didn’t want to do what other brands do, which is pick a very big and safe charity.” The scheme, which gave up to £10,000 to small charities and other community organisations, lasted 15 years and just ended, to be replaced with a new initiative called Keystone (each Keystone product is inspired by a fragile ecosystem and proceeds will go to that specific cause).
It’s essential to do your due diligence, but to also trust people on the ground to lead the cause, says Jones. “By having a fund that’s open to anyone, we haven’t got a strategic view of how we want to change the world. It’s not a big charity dishing out to the needy, the money is going directly into the hands of people who need it and they have a say in how it’s spent,” she says, adding that Lush has been able to fund “loads of causes we didn’t know about” through this approach.
The Swarovski Foundation aims to remove some of the burden on the smaller charities it works with, particularly when it comes to research and due diligence. “It’s about being mindful of their time and resources. I’m also a trustee for a smaller charity, so I know it can be really difficult dealing with follow-ups and requests when that time could be spent on something else,” says Rahman-Corey. “By putting the onus on us, we’re doing that legwork to understand what’s happening on the ground, and we also get recommendations through our peers or other charities.”
The aim of Gucci’s Changemakers programme is to foster change in local communities. The programme includes various initiatives such as scholarships for underprivileged students, an impact fund for grassroots organisations and a creative fellow programme. Wawa Gatheru, founder of non-profit Black Girl Environmentalist and 2023 recipient of the Gucci Changemakers impact fund, says that the grant allowed her to host the first of an annual BIPOC Green Career Summit in Washington DC. “The support and mentorship from the Gucci Changemakers programme is proof that with intentional, trust-based giving, community good is inevitable,” she says.
Kiana Wenzell, co-executive director of Design Core Detroit, who received the Gucci Changemakers impact grant in 2020, says that the funding has allowed her to move from idea to conception to outcomes that strengthen her local community. “Through this partnership, I’ve seen how impactful design can be when matched with meaningful support. It’s a reminder that when global brands and local communities collaborate, the results can be transformative for individuals, organisations and entire cities,” says Wenzell.
Beyond philanthropy
In some cases, philanthropy is treated as damage control. “Companies often engage in symbolic CSR (corporate social responsibility) or crisis management when something bad happens,” says Seo. “The worst-case scenario is when firms use philanthropy as a way to deceive the public and get away with bad things they’re doing. Often when you convert the damage the company is doing into dollars, it’s way bigger than any amount they’re giving.”
Shein’s controversial $15 million cash injection into non-profit The Or Foundation in 2023, ahead of its expected IPO, raised the question of whether organisations should take money from fashion’s biggest polluters to help in the clean-up efforts. The Or Foundation was careful to position the investment as payment for services rendered and an acknowledgement from Shein that it is part of the problem, rather than a charitable donation.
Experts urge companies to look inward at their operations before considering philanthropy. Jones says there are some instances where Lush has had to do so. “A lot of our trans staff came to us because they know they’re going to be accepted here more easily than in other brands, but we didn’t have our internal policies built to protect them so they could be experiencing different things around the business,” she says. The company is working on finessing its internal policies before looking at external donations.
To create a better business world, giving back needs to be embedded into day-to-day operations. “If you’re trading in a community and making money off them, you have the responsibilities to the society you’re embedded in,” Jones continues. “It needs to be about more than philanthropy: it needs to be about business models that change the whole system.”
Comments, questions or feedback? Email us at feedback@voguebusiness.com.
