The GiveWell Blog

Embedded philanthropy

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 philanthropy” (as defined by former GiveWell Board member Lucy Bernholz, via Tactical Philanthropy) is the practice of “building a philanthropic gift into another, unrelated, financial transaction.” The RED Campaign is probably the best-known example.

If you are thinking of participating as a consumer in embedded philanthropy, we urge you not to. Fundamentally, you are the one ultimately paying for the donation, as we discussed thoroughly here (if you don’t find the main post convincing, please see the comments as well).

Once you accept this claim, it appears that embedded philanthropy offers you, the consumer, no benefits, and has a couple of costs: (1) it narrows your options as a consumer (for example, you buy (RED) clothing instead of whatever clothing you want); (2) it narrows your options as a donor (i.e., the amount and recipient of your giving is determined by the company, not by you).

(2) is the more severe problem, and in some cases there may be ways around it. Telecom for Charity, the sponsor of this series, has informed me that its consumers can choose to donate to any charity of their choice (although I do not see this spelled out on its website). And with careful enough accounting, you can also make sure that your total giving for the year isn’t altered. But even in this best-case scenario, what’s the point? Why not just buy what you want and give what you want?

Much embedded philanthropy threatens to shift the choice of charity from individuals (giving for their individual reasons) to corporations (likely purely concerned with the PR aspects of the gift). All embedded philanthropy threatens to make donors feel they’ve “done their part” by signing up, instead of challenging themselves to give as much and as well as they can. No embedded philanthropy seems to offer genuine benefits to the consumer/donor. No embedded philanthropy can deliver on what I see as an implicit promise of “something for nothing” – the virtue of giving without the sacrifice.

Despite all this, embedded philanthropy may be a net force for good if it mobilizes enough giving that wouldn’t have occurred otherwise. It’s hard to turn our nose up at (RED)’s claim to have directed over $130 million to the Global Fund to fight Aids, Tuberculosis and Malaria (which we view as an unusually strong charity). (RED) has had an amazing amount of corporate and celebrity support, and I haven’t seen any other embedded philanthropy campaigns that appear to have had anywhere near the same impact.

We don’t pretend to know much about mass fundraising; we target the specific donors who seek to accomplish as much good as possible. Embedded philanthropy may be effective for the former; we feel it has little to offer the latter.


  • Christine Egger on May 28, 2009 at 4:31 pm said:

    On its own, and as a contribution to the Series, this is a really valuable post. Especially combined with the earlier linked-to post (fantastic discussion in the comments), this is a strong reality check surrounding the benefits and limitations of embedded philanthropy, and one of the most coherent assessments of the practice from a behavioral economics/sciences perspective I’ve yet to find.

  • Paul Dunn on June 28, 2009 at 11:39 pm said:

    A really interesting post. thank you.

    And that’s true for a number of reasons not the least of which is the fact that recently I’ve been describing what we do at Buy1GIVE1 (more widely known now as B1G1) as ’embedding giving into the Corporate DNA’.

    And that seems to me fundamentally a worthwhile aim when you consider that what B1G1 seeks to do is create a world full of giving with companies leading that charge. The way they do that is through the power of transaction-based giving, where small ‘chunks’ of each transaction go to create specific giving actions.

    For example, buying a cup of coffee might give a child access to water for a day; buying a plasma TV might give a cataract blind person the gift of site.

    Importantly, B1G1 is not about the short-term ‘gain’ that might come from this linking of cause to business (by the way, unlike RED, there’s no ‘special products’, the business chooses the cause and 100 % goes to their selected cause). You’ll see more on that in this blog:

    You’ll see we share what you refer to as the ‘implicit promise of something for nothing’.

    So when we use the term ’embedding the giving’ we’re referring to the opposite of what happens in companies most times where giving is ‘bolted on’ around events or company promotions. We see giving being embedded right from the conception of product design.

    And that, we believe, is a great way to create a world full of giving where the giving is happening every second, every day and in every way.

    B1G1 itself (through the B1G1 Foundation) will soon be a place where donors/sponsors can help us spread that message too (in a something for nothing way) by leveraging their giving to get more giving going. And that, we think, just has to be a great thing to aim for.

  • Ian Turner on July 1, 2009 at 9:53 pm said:

    Mr. Dunn,

    You haven’t really answered the question brought up by this post: Wouldn’t the cost of the water be included in the coffee, or the medical treatment in the price of the plasma TV? If so, why should I prefer to pay more for my product rather than choosing the more heartless vendor and allocating the price savings to a carefully-selected effective and impactful charity?


    –Ian Turner

  • Jeremy on July 8, 2009 at 9:14 pm said:

    I have to preface these comments by saying that I don’t know anything about how to run a business. So I fully expect for someone to show me the error of my ways, but here are a few thoughts…

    I assume that, when I go into store X and buy its product,the money I spend, along with the money that everyone else spends, goes into a pot to help pay for everything the business needs to do, e.g. pay its employees, buy the products that it sells, expand the business, and so on.

    But if I was the owner of store X, couldn’t I pay for all of those sorts of things and yet also charge roughly the same price as similar stores, by accepting less of a profit for myself? Couldn’t I put that profit, instead, via embedded philanthropy, into aid organizations?

    True, I could actually charge less than other stores, making less of a profit for myself, so that the customers could buy my product and use the left over money to give to charity, but to this neophyte that seems more problematic for at least a couple of reasons: (1) How do I know that the customers will do that? (2) Even if individual customers would do so, they would be giving relatively small amounts, probably to many different places, which may make less of an impact upon the need out there than well-planned, large gifts, which I would be able to pull off, since I would have dedicated the profit of multiple purchases toward the one end of helping those in need.

    So, again, a business could charge less and let multiple donors have more to give, or it could charge about the same, accepting great losses in profit for itself, using those profits instead to be sure that money that *could* be spent on aid by multiple, separate donors is in fact spent on aid and that it is pooled into large, profoundly significant gifts.

    This doesn’t seem to replace the role of individual donors. If companies with “embedded philanthropy” sell goods that are either essential or so popular that most won’t go without them, then customers can support the goods of (1) and (2) above, while still also giving their usually smaller gifts to more traditional aid organizations.

    Again, I am a neophyte expecting correction and enlightenment.


  • Holden on July 10, 2009 at 10:54 am said:

    Jeremy, what about another alternative: the owner of Store X maximizes profit and personally donates as much of the profit as s/he can to charity? In the scenario you’re envisioning, would this result in just as much going to charity as the “profit-sacrificing” approaches you put forth? If not, why not?

  • Jeremy on July 10, 2009 at 3:59 pm said:

    Maximizing profit for charity is what I have in mind. If I ever started a business, I would want to live very simply and use *all* of the rest of my profit on charity. But what had seemed attractive to me about embedded philanthropy is this: if I advertise that all of the profit goes to charity, if that is a binding commitment of my company, then it might increase business, thereby increasing the amount of profit for charity that I make. As a consumer, if I was faced with a choice between store X and store Y, and if both were of comparable price and quality, but if only one of them, say X, gave all of its profits to charity, then I would choose X. In this way I might be able to give more, for it might give me an edge over the competition that I might not otherwise have. Or, at least, that is what I had thought…

  • Holden on July 13, 2009 at 4:41 pm said:

    This is an interesting point. The question is whether the corporation is giving to charity in order to increase revenue (i.e., in order to increase net profit) or whether its shareholders/personal beneficiaries would want to give anyway and are simply looking to inform consumers of this.

    In the second case, disclosing the shareholders’ preferences could result in more being given to charity, as you point out.

    However, I don’t believe this is generally what “embedded philanthropy” means or is. In fact, I think the best example of your kind of “embedded philanthropy” is Microsoft, which primarily enriches Bill Gates, who gives a relatively huge proportion of his income to humanitarian causes. Yet choosing a PC over a Mac is not generally considered to be “embedded philanthropy.”

    The dynamic you’re describing is ultimately a personal choice by shareholders, not a strategic choice by corporations, to give to charity. As such, it makes more sense for it to operate through personal philanthropy (i.e., the corporation doesn’t give but the shareholders do). “Embedded philanthropy” generally operates through corporations.

  • Carl Shulman on July 21, 2009 at 12:49 am said:

    “Microsoft, which primarily enriches Bill Gates,”
    Not true. But even so…

    “Yet choosing a PC over a Mac is not generally considered to be “embedded philanthropy.””
    I have long considered it as such.

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