New Fund-Raising Scheme Fuses Profit with Philanthropy

Article excerpt

A new approach to fund-raising in the battle against AIDS in Africa has appeared in the consumer marketplace. Product RED, launched by U2 lead singer Bono, went on sale this spring. Unlike traditional fund-raising vehicles, such as philanthropic foundations, RED blurs altruism, profit motive and consumer appeal. But can it overcome the ethical and practical pitfalls of fusing commerce with charity?

The concept is simple enough: participating companies American Express, Gap, Nike's footwear brand Converse, and Giorgio Armani each market one RED product and divert a percentage of profits to the Global Fund To Fight AIDS, Tuberculosis and Malaria.

American Express launched a credit card in the United Kingdom (UK) on 1 March; 1% of spending on it will go to the Global Fund. Converse is offering a shoe in the UK and the United States on 1 April inspired by Bogolanfini, a dyed cloth produced by the Bamana people of Mali. Gap's red T-shirt made in Lesotho debuted on 1 March in the UK and Giorgio Armani's metal wrap-around sunglasses are the only RED product to go on sale worldwide this spring.

Gap will allocate 50% of RED profits to the Global Fund, Armani will give 40%. Converse has not yet announced its figure, but RED insiders hint it will also be 40%. All three clothing companies plan to expand their RED collections later this year, and extend these to other markets if sales go well.

Bono predicted that RED could generate "hundreds of millions of dollars" for the Global Fund when he launched RED in February. The partnership is timely as the Fund has seen a drop in government donations of late. Spokeswoman Rosie Vanek said it is uncertain whether the Fund will be able to award new grants this year.

"We are still looking for extra funds for the period 2006-7. The last round of pledges only covered US$ 3.7 billion of the US$ 7 billion we need to cover our grants for that period." The RED money, Vanek added, "will basically go to existing grants that are proven successes.

Until now, only a "very small proportion" of donations came from private donors, said Dr Richard Feachem, the Fund's Executive Director. Less than 1% came from corporations. New approaches are needed, he said.

"RED is not a charity or public fund-raising campaign," Feachem said at the RED launch in January, but "a business proposition that brings together partners with distinct priorities into a mutually beneficial relationship."

"Companies expand their customer base and bottom line," said Feachem, "while the Global Fund and its recipients gain not only critical financial resources but also publicity for their work. As a result, RED has the potential to be larger and more sustainable than other private sector fund-raising initiatives to date."

The chief executive of the new RED brand is Bobby Shriver, Chairman of Debt, AIDS, Trade Africa (DATA), the advocacy group he co-founded with Bono in 2002.

Shriver downplays the altruism and trumpets the profit motive that he hopes will keep RED sustainable, saying he has no illusions about his giant commercial partners: "Private sector companies, American, Italian, Japanese, have almost no interest in this. There's not even a little bit of altruism. When I go to see these companies, I don't even get through the door on altruism," he told the Bulletin.

"Sustainability was very important to us when we started out. We're trying to create a concept that will sustain itself on its own success, not on Bono's celebrity or my relentlessness. That can't be an altruistic concept. It has to have a market."

"Nobody cares about AIDS in Africa," said Shriver, recounting his two years of seeking partners in the corporate world. "They [companies] don't care about the concerns of the political world, the WHO world. All they care about is will it sell a cup of coffee or not. And if they conclude it won't, it's 'have a nice day, see you later'. …