This blog post is part of the Embedded Philanthropy Blog Series, sponsored by Telecom for Charity. The blog series was launched in May 2009 to highlight expert thinking and encourage discussions on the state of embedded philanthropy in today’s economy.
“Embedded Giving” is a phrase coined by Lucy Bernholz in 2007. The phrase quickly caught on and was used by the New York Times, Washington Post and other major media outlets. Lucy was interviewed on ABC News and NPR.
Embedded giving is the (apparently) increasingly common practice of building a philanthropic gift into another, unrelated, financial transaction. For example, rounding up your phone bill to make a gift to charity. Or using your own grocery bag and donating the nickel that the store gives you to a local homeless shelter. Or using a specific search engine because it donates a small portion of its advertising revenue to charity.
Embedded giving proved to be a real trend and Lucy once again picked up on something far before anyone else.
The sponsor of this blog series, Telecom for Charity, has a business model based on embedded giving. From their website, “The Telecom for Charity Initiative puts forth five percent of your monthly telecom spend towards whatever cause you wish to support.”
But to tell you the truth, I just don’t think embedded giving is particularly important.
Let’s look at the example of a credit card company that donates 1% of your purchases to the charity of your choice. I’m not sure this is materially different from a card that rebates you 1% of your purchases back to you as a cash payment. From the standpoint of the credit card company it certainly doesn’t make a difference. For the credit card user, the cash means they can do what they want with the rebate (including give it to charity). So why would a consumer chose a card that donated to charity? My guess is that the major driver is that the charity linked card helps the consumer project (to themselves and others) their ideal self image.
That’s not a bad thing. Striving to be the person you want to be is a healthy human motivation.But at the end of the day, I think that embedded giving is basically just moving money around between artificially created “buckets”.
However, it may be that embedded giving actually is tapping into the non-rational, behavioral characteristics of how humans make choices. For instance, pioneering design firm IDEO worked with Bank of America to create their Keep the Change product that rounds up debit card purchases to the nearest dollar and shifts the excess charge to the customers savings account. IDEO designed this product to help people save.
Books like Nudge and Predictable Irrational, have recently highlighted the degree to which humans have certain behaviors, which if understood, can be harnessed to help people make better decisions. Maybe embedded giving will prove to increase the amount Americans donate to charity each year by presenting consumers with an option that makes them behaviorally more likely to donate. But for now, I have to say that I see embedded giving as an indicator that Americans have an increasing interest in philanthropy rather than as a driving force of that interest.