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Can Starbucks Buy a “Saving Africa” Image for a Nickel?


I was curious about what the going rate is these days for attracting customers who want to save Africa. Five cents was a little lower than I expected.

How much money is flowing to Africa from this? Aid Watch’s exclusive investigation consisted of asking about seven Starbucks cashiers around Greenwich Village how often they processed the Starbucks Red card, with its payoff of five cents for Africa per use. All except one cashier said it was rare to see them, maybe 1 or 2 in an 8-hour day. The one exception said they saw them about 10 times a day. So we have a payoff for Africa of between 5 and 10 cents per day per Starbucks cashier, with one outlier of 50 cents a day. This sample is obviously ridiculously unscientific, but perhaps it can attain the status of an anecdote.

The only excuse for my pitiful attempt at estimating RED card revenues is that I think it is really up to Starbucks to disclose to its customers how much money is really flowing to the Global Fund for AIDS in Africa. We are in luck — Starbucks has a cool (RED) web site that actually documents in real time how many people are buying with the (RED) card (11,115!), how many Starbucks products they are buying (87,257), and how many days of AIDS medicine that translates into (10,146!).

OOPS, sorry, I misunderstood it. This is just a record of how many people have signed up online worldwide (11,115) to join the Starbucks RED campaign, how many Starbucks products they have pledged to buy, and how much that translates into in days of medicine. There is no verification that anyone actually buys the card or keeps their pledge. Even if they did, this would translate into a rather underwhelming contribution of $4,362.85 to the Global Fund. It’s not Starbucks’ fault that their customers don’t show much interest in the RED card, but Starbucks benefits even so.

Bill Gates celebrated the RED campaign as an example of what he sees as world-systemic change towards “creative capitalism,” where companies will respond to “reputational” philanthropic incentives as well as conventional profit ones. Yet if companies can obtain the RED branding, the Saving Africa reputation, for virtually nothing, just how strong is the incentive to give?

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  1. zulusafari wrote:

    Two thoughts about (RED). First, I think it’s THE most amazing ‘creative capitalism’ project for AID I have ever seen.

    The flip side, personally, I think the celebrities behind it (Bono and Oprah) and the methods of those using the raised funds are backwards and hypocritical. It would take a large blog post to explain, so I’ll just leave it at that for now.

    I wish the faith based world could be this creative and organized.

    Posted April 23, 2009 at 12:35 pm | Permalink
  2. Tord Steiro wrote:

    The economics of information…

    I guess if customers want to believe that their spending also benefit some 3rd party, the RED sing is more than enough to convince them.

    It’s far too costly to engage in some investigation of the actual outcome.

    Posted April 24, 2009 at 6:46 am | Permalink
  3. Morgan wrote:

    Surely there was enough previously existing mechanisms for donating to charity/development. You could get similar cards before where some money went to a charity (albeit without the snazzy branding) so I’m not surprised that there’s not much being raised by this one. The only USP of this one was the advertising campaign behind its launch.

    I think the real problem is the lack of interest from the population at large in donations rather than the failure of available/innovative mechanisms to allow people to do so.

    And on a digressive ranting note, I already have enough pieces of plastic in my wallet, thank you! I’d rather use a payment from my bank account if I wanted to support a cause.

    Posted April 24, 2009 at 6:58 am | Permalink
  4. Jeff Barnes wrote:

    The RED campaign was an example of great marketing and lousy foreign aid. It managed to make it cool to painlessly donate some money to poor Africans while supporting your shopping habits– which was the appeal to the companies who chose to participate in RED. The ads were also very slick and well conceived.

    On the other hand, I doubt that many contributors know what the Global Fund is, how it works, how efficient or effective it is or what has really been done with the money they have contributed. The non profit world thrives on these thoughtless contributions to their budgets. Typically unrestricted funds such as these are used to fill budget gaps and cover administrative expenses.

    Posted April 25, 2009 at 8:05 am | Permalink
  5. TMS Ruge wrote:

    The (RED) campaign would have been better and more successful had they spent millions telling me to buy $60 jeans from Africa. Instead, they spent millions on advertising and branding to tell me to buy $60 jeans and electronics imported from China.

    The (RED) campaign succeeded in boosting the Chinese economy, not Africa’s. All we got was a trickle of the goods. What else is new? It illustrated that trade works and aid is only the bastard child afterthought. Hmmm, kinda like how Africa is treated:

    Posted April 28, 2009 at 11:51 am | Permalink
  6. Ben Parker wrote:

    I wonder if I can coin a new verb?

    Blackwashing (v) – to burnish corporate reputation by visible initiatives on “saving” Africa.

    Posted May 6, 2009 at 9:16 am | Permalink
  7. What if, instead of all the corporate campaigns that push product on the backs of Africa “causes” these companies lined up behind a new trade regime that sought to build up African regional trade? How much more good would it do if Starbucks was creating new jobs in Kenya. If Africans themselves were able to donate $.05 for every Coke they bought to a cause they cared about? I’d love to see these companies flip their customer-engagement model. I used to have such high hopes for DATA until (RED) took over…

    Posted July 1, 2009 at 3:57 pm | Permalink
  8. Kim wrote:

    Thank you, Mr. Easterly.

    Ben Parker – your term is brilliant. Get it published somewhere so we can perpetuate it!!!

    zulusafari – creative capitalism ignores what even Andy Carnegie, founder of the Carnegie foundation, recognized in the 19th Century – capitalism depends on building inequalities. Do we just redistribute? Or do we try to imagine something bigger. Gates and his grossly flawed ideas is a problem, not a solution.

    Posted July 1, 2009 at 4:35 pm | Permalink
  9. Aid is aid, don’t look a gift horse in the mouth. From what I’m reading here, awareness and consumer education are the first line of the battle. Frankly, I had no idea what those (RED) shirts I saw at the mall were supporting. I don’t pay a lot of attention to popular media and advertisements, and maybe I just plain missed the initial campaign explaining the concept to consumers. If consumer change is what you’re after, additional advertising or community awareness programs are needed to educate consumers on what influence their overall, cumulative purchases have on global economy. If you don’t trust these manufacturers to do that, you’ll need to take care of it yourself!

    Posted July 22, 2009 at 1:58 am | Permalink
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    The Aid Watch blog is a project of New York University's Development Research Institute (DRI). This blog is principally written by William Easterly, author of "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics" and "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good," and Professor of Economics at NYU. It is co-written by Laura Freschi and by occasional guest bloggers. Our work is based on the idea that more aid will reach the poor the more people are watching aid.

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