Bloomingdales is Also Your Competition

Dan Pallotta writing in Harvard Business Publishing

Why Nonprofits Should Invest More in Advertising

This weekend the main sections of the New York Times and the Daily News contained big ads for Hummer, T-Mobile, AT&T, Macy’s, Bloomingdales, and a host of electronics and furniture retailers. The home page of the Huffington Post right now is running an ad for Delta Airlines. On it’s Netflix. – Choice Hotels. – Crystal Light beverages. No ads on any of these pages for Darfur, ending AIDS, or curing breast cancer – indeed no ads for any 501 (c) 3. This is not an anomalous day. Gigantic consumer brands advertise. Gigantic causes don’t.

Total annual U.S. marketing expenditures for all purposes are estimated to be about $730 billion. A rough estimate of annual nonprofit sector marketing spending puts it at $7.6 billion. Take away nonprofit universities, museums, and other quasi-businesses, and a liberal estimate of annual health and human service nonprofit marketing spending is $1.9 billion – one dollar for charity, $384 for something else. In 2005 Save the Children (one of the larger charity advertisers) spent about $6.4 million on advertising. The Walt Disney Company – or Entertain the Children – spent about $2.4 billion – 359 times more – about the equivalent of the difference in height between the Sears Tower and a 4 year-old child. It’s a testament to the dearth of advertising in the sector that the I.R.S. Form 990 doesn’t even have a specific line item for reporting it.

John Kenneth Galbraith wrote about the tragic difference in the value society gives to private goods over public goods, i.e. we value a new car for ourselves much more than we do a new park for the community. He placed much of the blame on the gigantic engines of marketing. He wrote of the “institutions of modern advertising and salesmanship,” that, “their central function is to create desires – to bring into being wants that previously did not exist,” and that, “a broad empirical relationship exists between what is spent on production and what is spent synthesizing the desires for that production.”