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Consumer Philanthropy: This Holiday Season, You Are What You Give

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This weekend unless something big and horrible breaks, the lead story in every newspaper and on every news network will be the economy - specifically, consumer behavior in the run-up to the most wonderful time of the year. Huge crowds, traffic jams, "Black Friday," and the instant analyis of whether shoppers are buying more or less - those are the bullet points for this weekend's buying surge.

And well they should be. The U.S. economy is almost entirely driven (some would say propped up) by consumer spending and has been for a generation now. But this year, there's another big story out there - where philanthropy fits in during the buying spree. Because consumer marketers now know in full what we've suspcted for while: for the American consumer, you are what you give.

With philanthropy moguls like Bono, Branson, Clinton, Gates and Buffet on the cover of many magazines, special year-end giving sections thickening the papers, and the traditional 11th hour tax-driven charity season upon us, philanthropy is as hot as ever in the consumer consicence. And these days, you can't peruse the advertising without bumping into one good cause after another.

These are the days, without question, of consumer philanthropy.

As every marketer knows, people identify with the physical things in their lives. For better or worse, consumers believe that their house, their clothing, their car, their electronics all say something personal about who they are as people. And when that possession is aligned with someone they admire - a movie star or a clean-up hitter or the Joneses down the block - those consumers get an extra dose of affirmation. And that's how modern brands are made.

What's on television, what's on the magazine covers or the daily paper, or what's hot on YouTube or the friendly neighborhood blog can all influence that affirmation - the personal alignment with a brand that often precedes a buying decision but it always nurtures consumer loyalty.

Enter philanthropy.

The United States has largest philanthropy sector on earth; we give more as a nation than any other. Last year, according to Giving USA, Americans gave away $260 billion, and the total number almost always grows year to year. But as a ratio, growth is slow, even flat. Generally, philanthropy is around two percent of GDP, give or take a few percentage points. Contrary to common wisdon, we're not generous to a fault - but to a point.

While total giving is huge but nearly flat, the number of "giving opportunities" has exploded over the last decade. Changing Our World (where I work) projects that by 2010 there will be 1.2 million public charities in the U.S., 68 percent of which will have been formed in a mere twenty years. By that same year, there will be 150,000 private foundations of which 79 percent will have been formed in the 1990-2010 two decade period.

That's a massive increase in the structure of philanthropy and it creates a red-hot competition for a generally stagant commitment in dollars.

So philanthropies and charities are quite naturally spending more of budgets on marketing. Brand-building is growing in importance, as is long-term cultivation and donor loyalty. And increasingly, partnerships with consumer product companies can open new paths to funds. For nonprofits, cause marketing brings more than money, after all - it brings exposure.

On the other side, there are companies that genuinely have a a mission to change the world, that clearly buy into the notion of doing well while doing good. But others are driven by a purer market motivation. As their own marketers understand that the strength of the brand in some way hinges on public perception of "doing good," they're looking for ways to harness the philanthropic impulse in American society. Buy my product, and help others. It's got a ring.

The problem sometimes lies in convincing shareholders; why are we giving away some of our profits, they rightly ask. Go to them with a pure message of changing the world, and they'll slam the board room door in your face. But pich the notion of extending the brand, aligning the product with the growing world of consumer philanthropy - well, there you've got something, son. Let's tell sales about this right away. According to the IEG Sponsorship Report, American companies spent nearly $1 billion on cause related marketing campaigns in 2004.

So as you persue the crowded aisles looking for the perfect gift for Aunt Ida in Idaho, all those message about curing cancer, feeing the hungry, and bringing clean water to Africa should also tell you another story. Consumer philanthropy has arrived.