I got an email over the weekend from an online retailer asking me to post about its new offer of donating “5-10% of the company’s profits to charity.” A press release explains that there’s a drop-down menu at the end of the online purchase process, offering a choice of charities including MADD, Teach for America, Doctors Without Borders, and so on.
Frankly, that’s not news. Local supermarkets and such have been doing that for years. Other websites do it.
But it interests me, so I ask you: does it work? Are you going to seek out the online retailer that does it? Is this real, or is it just a ruse, as in a cynical attempt to spin?
I’m quite cynical about giving a percent of profits. I think it’s kind of a ruse. I don’t doubt that they actually do it, but “profits” and “percent of profits” is a deceptive term. I think it’s often used to quietly trick people into thinking “percent of sales price” when it’s really just a percent of that tiny bit that’s left over after all costs and expenses are paid.
The whole illusory nature of profits comes to mind again after that annoying flap in the presidential debates. I’m sure a lot of people misunderstood how big a company has to be before it produces $250,000 of profits before tax. Profits sound like money, when they’re really just the leftovers.
In my mind, after 30 years of running my own business, profits are third priority, after cash flow as first, and growth as second. Even in good years, giving even 10 percent of profits in most businesses means less than a penny per dollar of sales price.
Furthermore, I really wonder, aside from the profits gambit, how much do people take greater good into their purchase decisions? Do you?
And, if you do, are you going to seek out retailers who offer up a percent of profits, as opposed to goods made in developing nations, or not made in sweat shops? How are you going to sort through that?
And, if you do, are you still going to be doing that these days, when you’re worried about your house value, or the threat of widespread recession hitting the sales or your own business?
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About the Author: Tim Berry is president and founder of Palo Alto Software, founder of bplans.com, and co-founder of Borland International. He is also the author of books and software on business planning including Business Plan Pro and The Plan-as-You-Go Business Plan; and a Stanford MBA. His blog hub is at timberry.com.