Does shopping on AmazonSmile really help nonprofits?

And Jeff Bezos gets richer.

Today, Cyber Monday, you’ll probably see a number nonprofits promoting AmazonSmile, the “charitable” version of Amazon that gives half a percent of your purchase to the charity of your choice. I don’t blame charities for doing this, but in the end, the amount they receive for promoting an online retailer may not make it worth it for them, for the common good, or for you.

First of all, the nonprofit you select receives just half a percent of your total purchase. Which means your purchase of $100 results in a 50 cent donation. It’s true, that amount can add up over time, depending on how much you use AmazonSmile. But even if you spend $10,000 purchasing through Amazon Smile in a year, that’s still a donation of just $50. (Payments from AmazonSmile are made to charities on a quarterly basis.)

Does AmazonSmile make a shopper a donor? Nonprofits worry about something called the social exchange theory, which is the idea that a gift has a symbolic value. A donor who selects their organization as an AmazonSmile recipient may believe they are doing something to support that charity and will then forego an actual, substantial donation. It’s the same concept charities worry about when you “follow” their page on Facebook. It’s great, but it’s not actually helping the way a donation would.

Sure, it’s basically free money for nonprofits. Why wouldn’t they participate? But nonprofits do miss out on a lot of information that goes along with that money. They never find out who chose them as their designated charity, which means they can’t thank you, can’t invite you to their events or opportunities, and otherwise miss out on a chance to get to know you better and find out why you chose them. Most nonprofits are in the business of building relationships with a community of supporters, not just shaking the trees to look for dollars.

And the donor is missing out, too, because… well, you’re actually not the donor. The AmazonSmile Foundation, a 501(c)(3) nonprofit created to administer the program, is the donor.  When you shop via Amazon Smile you are essentially donating to AmazonSmile Foundation, which then donates that money to the charity you choose. But yet you cannot deduct your contribution to AmazonSmile Foundation on your tax returns.

In the meantime, the burden of promoting AmazonSmile falls on the nonprofits. When you sign up for AmazonSmile, there are thousands of charities you can choose from, which is great for shoppers but a challenge for nonprofits. Their challenge is to be the one that you choose, and how they do that is by promoting AmazonSmile themselves. This puts nonprofits in the strange position of promoting a retailer. But not just any retailer: a retailer whose growth and competitiveness are boosted by skirting rules other businesses have to play by or by just squelching innovation that competes.

By the way, while you “shop for good”, Amazon’s founder Jeff Bezos gets richer. Bezos, the genius businessman now worth $100 billion, has surpassed Microsoft co-founder Bill Gates as the richest man in the world, yet he still hasn’t figured out philanthropy. This past June, he famously Tweeted that he’s considering how to engage in philanthropy and was looking for suggestions. But so far, he has not made any announcements about how he’ll give. (Philanthropy isn’t hard; turning your philanthropy into a marketing opportunity – that’s hard.)

Since it was launched in 2013, Amazon reports that the AmazonSmile Foundation has given more than $62 million dollars to charities. And that’s great. If you’re already using AmazonSmile for your Cyber Monday purchasing, you should feel good about it. But make sure that shopping doesn’t replace your making an actual donation to that cause. And nonprofits need to be careful that they’re not promoting their AmazonSmile button at the expense of the “Donate Now” button. It’s not shopping that will change the world for the better; it’s giving.

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