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You Buy, You Donate; But Where Does It Go?

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The New York Times

Published: December 16, 2007

Sen. Robert Menendez, D-N.J., has announced plans to introduce federal legislation to better regulate embedded giving, the fast-growing fundraising practice that involves building a gift to charity into everyday purchases. "We need to ensure that charity is not being used solely as a sales pitch," Menendez said in a statement.

He is looking at a measure to require that retailers notify charities when their names are being used in sales promotions, to require charities' approval of embedded giving and to require retailers to disclose how much they are actually giving to charities.

Embedded giving can be traced from the early 1980s, when American Express developed an effort to raise money for the restorations of the Statue of Liberty and Ellis Island by donating one penny for every purchase charged to its credit cards, generating $1.7 million. The proliferation of such programs has caused charity experts to raise questions about accountability.

Some programs fail to disclose what part of a transaction will go to charity, others fail to name the charity that will benefit, and in most cases, consumers have no way of knowing whether their money actually went to charity and how much was raised overall.

Sometimes charities do not even know they are supposed to be receiving donations.

Roughly half the states have regulatory requirements for commercial ventures involving charities, but lawyers who represent nonprofit organizations say requirements are seldom enforced because of a lack of resources in state agencies that oversee charitable activities.

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