Are in-store donations a good idea?

It happens at stores everywhere. A cashier asks you to donate a dollar or two to charity at the store checkout. For some, the decision whether to donate can be tough if you don’t know where your dollar is really going. On the bright side, 100% of the money you donate goes directly to the charity, according to two major retailers that run programs in stores. On the other hand, it’s difficult to know just how efficient that charity is.

As our annual Charity 100 ranking reveals, the largest charities in Canada spend on average roughly 73% of every dollar collected on programs, the rest pays for charity staffing and other overhead costs. Only a select few manage to spend upwards of 85% on programs.

Then there’s the issue of piecemeal donations—a loonie here, a toonie there—that don’t give donors the same sense of reward as a more thoughtful giving plan (or tax deductible receipt for that matter). And while the charities themselves are grateful for the every dollar collected, experts say that in-store donations aren’t as effective long term.

In-store donations are challenging because there’s no way to follow up with people, says Michael Nilsen, vice president of public affairs for the Association of Fundraising Professionals.

These campaigns don’t allow charities to make follow-up requests, an important aspect for ongoing fundraising efforts. Charities get the money but no information about the donors.

Nilsen isn’t opposed to cash register campaigns but advises shoppers to exercise caution and make sure the charities have good track records.

The Tree of Life campaign, Shoppers Drug Mart’s largest charitable in-store fundraising initiative, raised $2.9 million last year. Customers can buy paper icons in the shapes of leaves or butterflies to hang in the store. The money goes back to a wide range of local women’s health charities.

“Making the campaign region specific helps put the dollars towards the needs of each and every community,” says Tammy Smitham, a spokesperson for Shoppers Drug Mart.

The four-week Tree of Life campaign runs every fall. Amethyst Women’s Addiction Centre in Ottawa has 13 stores supporting it. In Toronto, North York General Hospital Foundation’s Phillips House, which provides mental health programming for women, along with the Breast Health Unit at the Fraser Valley Health Care Foundation in Abbotsford, B.C., are three of the more than 480 charities supported across Canada, further highlighting the need for due diligence when it comes to these hyper local campaigns.

What makes checkout fundraisers so successful is this idea of “guilt giving” when your wallet is already open, says Paloma Raggo, a professor of philanthropy and non-profit leadership at Carleton University in Ottawa.

She says the problem, however, lies in this snap decision process. Funding needs are now, and feeding a system based on short-term thinking makes the cash register format easy. In order for a charity to survive long-term, there needs to be deeper engagement between customers and the cause.

According to Statistics Canada’s most recent report on charitable giving, Canadians donated a total of $10.6 billion to charitable or non-profit organizations. What stands out is the increase in the percentage of Canadians who believed that their money would not be used efficiently. While there is a lot of competition for the charitable dollar, charities are looking for inventive and inexpensive ways to raise money and the checkout method is proving to be unquestionably successful.

The Give a Little, Help a Lot campaign run by Loblaws banner stores across Canada every June is a one-week, in-store fundraising initiative that has raised more that $5 million to date. Like Shoppers Drug Mart, banner stores in each location pick the organizations they support. The money Loblaws raises goes towards nutrition programs, regional children’s hospitals, and sport and recreation programs. Some of the most generous donations hail from grocery shoppers in Halifax who have given almost $150,000 to the IWK Health Centre Foundation.

“We’ve found that a toonie isn’t too onerous on a customer’s grocery bill,” says Peggy Hornell, senior director of community investment for Loblaw Companies Limited.

One hundred per cent of the donations collected at all Loblaws locations go directly to the regional organizations they support.

Echoing Shoppers Drug Mart’s sentiments, “donating at the cash register is the easiest way to spread awareness in a specific community,” says Hornell, adding that there are no incentives for cashiers to raise more money.

At both Shoppers and Loblaws, cashiers are trained to simply ask customers if they want to donate. Both stores cover the costs of their campaigns with a separate budget allocated to administrative fees and fundraising materials.

“This method of giving is still very important,” says Nilsen. While it might not be a perfect system, he acknowledges how convenient it is to donate when you’re already running errands.

“As long as the money is going directly to the cause, then at least you know you’ve helped make a difference.”

Ensure your donation dollars stretch as far as possible with the help of the Charity 100.