Yesterday I received an email about AmazonSmile. Have you heard of this?
Well, since the autumn of 2013, customers who purchase items on AmazonSmile will be able to direct a donation from Amazon to a charity of their choice that is 0.5% of the purchase price.
I was surprised that: (1) I had never been emailed or presented about this before while shopping on Amazon and (2) why have I not heard from charities that I support about this?
Why this program is great?
First, there is no cap on the donation amount, as USA Today pointed out, that even high-end art is eligible and theoretically Amazon would make a $25,000 contribution for a $5 million piece of art work.
Next, we, the customers, have the opportunity to help our charities. Typically, businesses will have a limited selection of charities to choose from, if at all, when running a campaign like this. Through the AmazonSmile Foundation, they will make the donation to your personally selected nonprofit (which they state there are over 1 million participating). This clearly adds more value to the customers purchase and may push some consumers to buy from Amazon, thus giving Amazon a stronger hold on their strategic position against its competitors.
If we compare AmazonSmile to Walmart, Walmart has its local giving program and donated $316.3 million in 2013. It awards grants to several different nonprofits in communities, but only if they are one of the "pillars" Walmart is focusing on (see side table "Walmart Foundation Facts).
We were not able to find out how much Amazon donated in 2013 or 2014. Making an estimation is difficult as not every purchase happens on AmazonSmile, not all products are available on AmazonSmile, and international customers cannot pick their local charities. However, in 2013 Amazon totaled $74.45 billion in revenues and if we pretend the same revenues for the 12-month period from when the program began and all purchases were made through AmazonSmile, that would be a donation of $372 million (a very high estimate).
Since its earliest beginnings, the program has had several critics. One of the main arguments is that the percentage given to charities is so low that Amazon is the true one benefitting from a program like this. In order to get a $25 donation to a charity, one would have to buy $5,000 in products. It was reported in an article in 2013 that the average Amazon account spends about $313 annually. This means that if all their purchases were made on AmazonSmile, each account would donate $1.57 annually to their charity.
Another argument is that the charities that are biggest will be the only ones to benefit from this as they are the ones with enough followers to purchase enough to make a meaningful contribution.
Final Thoughts and Opinions
First, the steps for a charity to sign-up seem rather simple, so I don't believe this is a waste of a nonprofits time, even if the reward is small. The money will help and you only have to set it up once. I do agree that it will be harder for smaller charities (and really almost all charities) to see significantly impacting funds from this program. Thus, nonprofits should spend more time on targeted grants, corporations, and individuals that can donate dollars directly.
The big debate really comes down to a debate of what makes a bigger difference. Would you prefer a business give (1) a small number of higher value grants distributed to a smaller number of charities OR (2) a million number of very low grants distributed to a million number of charities? Perhaps you believe it is Option 1, but it may be harder and less efficient for Amazon to do that. Amazon is not able to do what Walmart and other stores with physical locations can do with the same efficiency. Those physical locations have employees present and involved in each community where they can hear the needs and donate time, product, and money. Amazon has taken advantage of an opening in corporate giving amongst its competitors by focusing on its customer's needs through giving additional value to their purchases to make a direct difference to the causes they know. Amazon is utilizing its resources (online store and processes) to its advantage.
The goal of the AmazonSmile program is not aimed at making a huge difference for charities, it is about connecting Amazon customers to connect and help their favorite organizations. Perhaps those that are actually using AmazonSmile also contribute to their chosen cause in other ways and the AmazonSmile purchase is just a small percentage of the individual's overall contribution. "Do what you can, with what you have, where you are." - Teddy Roosevelt
Brian Phipps is the Founder and a Strategist at Confluence in Denver, Colorado that consults small and mid-size businesses to increase their positive impacts and community connections in their corporate giving and social responsibility practices. To find out more go to www.ConfluenceLLC.com.