Virtue Signaling or Taking a Stance: Corporate Philanthropy

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As the demand for racial justice in the United States has become a national rallying cry, many everyday people wish they could contribute to organizations doing the important work, even if they don’t have the disposable funds to donate.

To help those with a yen to contribute, cosmetic retail giant Sephora has announced that collectors of Sephora Beauty Insider Points can now use their stash to donate to the National Black Justice Coalition. This way, even if you don’t have actual cash on hand, you can use your earned points to support the cause of justice.

While the intentions may be positive, Sephora’s attempt to offer customers a way to feel charitable draws larger questions about how businesses deal with philanthropy, and whether donating through a corporation is truly the best way to support a worthy cause.

Donating Points

Loyal Sephora customers earn points every time they shop and they can now cash those points in to make a donation.

All contributions go to the National Black Justice Coalition, which is an intersectional activism group focusing on LGBTQ issues within the black community. The organization serves the interests both of national racial justice protesters and those celebrating Pride month.

The points translate to cash donations as follows:

  • 500 points equals a $10 donation
  • 1,000 points equals a $20 donation
  • 1,500 points equals a $30 donation

Those who wish to donate more than 1,500 points will be asked to break up their points into smaller donations.

Sephora’s Response to the BLM Protests

In a statement, a representative for Sephora wrote, “We are deeply saddened by the recent loss of George Floyd and the pain experienced by African Americans and communities of color across America. We believe unequivocally that Black Lives Matter and we are committed to using our platforms and resources to stand against racism and injustice, to amplify Black voices, and celebrate the beauty and diversity of Black lives.”

In addition to the customer points program, the company has already donated $1 million to the National Black Justice Coalition.

Authenticity or Virtue Signaling?

Over the last few years, it’s become increasingly common to see large corporations build marketing campaigns around social justice issues. This has been especially noted in regard to breast cancer awareness and LGBT Pride, but we see it almost everywhere.

Even when you’re grocery shopping, you’re often prompted to donate a dollar or two toward organizations tackling hunger. It’s such a small and common occurrence that most of us don’t think about it, but it’s a perfect example of what’s called “corporate virtue signaling.”

By including a prompt to donate, companies are hoping that customers then associate their brand with being morally upright and caring about the community. But the most efficient way for a brand to become charitable would be for the company itself to donate directly to a good cause. Instead, the current system passes that burden off to customers. The thing is, the majority of customers choose not to donate when prompted. As a result, many companies get to boost their philanthropic image without having to make any substantial contribution.

A similar phenomenon explains why customers are likely to buy a product decked with a pink ribbon or a rainbow flag. Consumers are willing to pay a higher price for these items because they think some of the proceeds will go to a cause they support, but in reality, companies often pass on as little as 10% of the revenue to the organization they claim to endorse. By flaunting their corporate virtue, companies can enhance their moral image while profiting from inflated prices that only parenthetically support charity.

Virtue in the Age of a Pandemic

As the world has faced triplet crises in the form of a health pandemic, a global recession and widespread civil unrest, it’s no surprise that corporate virtue signaling is also surging.

Only a couple weeks into the pandemic, it was impossible to find a TV ad that didn’t feature some form of “we’re all in this together” or “in times like these, it’s more important than ever….” But this kind of constructed empathy has became a cliché almost overnight. Moreover, such taglines proved meaningless when accompanied by relative inaction on the part of the companies wielding them.

But at the end of May, the tragic death of George Floyd and an immediate national backlash demanding racial justice, gave companies an excuse to flaunt their philanthropy once again.

In the last few days, we’ve seen endless posts from brands like Nike, Netflix, and Hulu tweeting in support of Black Lives Matter, but following through. By contrast, large tech companies like Facebook and Apple have actually shelled out financial contributions and offered to match donations. That’s better, but still such donations by the world’s most profitable companies amounts to pocket change compared to their vast resources.

But a true standout among reactions to the national protests has been the children’s television station Nickelodeon, which aired a powerful moment of silence that lasted the exact amount of time that George Floyd was suffocated. The 8 minute and 46 second departure from regularly-scheduled programming included text about the natural rights of all children, regardless of race. It was impactful insofar that it offered a chance for parents to explain current events to their children. And despite the backlash Nickelodeon received for introducing politics to a juvenile audience, it was a clear example of a company taking a strong stance on the issue.

What to make of Sephora

Sephora lies somewhere in between these examples. A million dollar donation is nothing to scoff at, but one must remember that Sephora’s parent company did report a revenue of $12 billion this quarter. Furthermore, customers receive 1 point for every $1 they spend, but a 500 point cash-in translates to only a $10 donation. That means the company is only donating $10 for every $500 it makes. Still, it’s a more tactile show of support than just tweeting about an issue.

At the end of the day, companies are out to create profit, not to maximize donations. If you really want to support a cause, don’t make your contribution through a company that will donate a small sliver of your money. Do some research, and give your money directly to a cause you find most worthy.

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