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What is Embedded Giving?

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  • Written By: Mary McMahon
  • Edited By: Bronwyn Harris
  • Last Modified Date: 25 September 2016
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Embedded giving is a form of charitable donation in which an act of philanthropy is built into a larger financial transaction. There are a number of ways in which embedded giving can work; proponents of the practice claims that it makes charitable donations easier for people, encouraging people to donate to a wide range of causes. However, opponents of embedded giving have pointed out that it is difficult to track, and in some cases may actually be a scam designed to make a company look good while also allowing it to quietly turn a profit from other people's good intentions.

You may have seen an example of the most common form of embedded giving; many grocery stores encourage customers to add a small sum to their bills to help local causes, ranging from food banks to battered women's funds. Other stores offer tokens to people who bring their own bags; the tokens can be dropped into containers which represent various charities, and the store claims to add up the tokens monthly, donating a set sum per token to each charity.

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In other cases, people are told that X% of a purchase goes to a charity, or that for every Y amount of a good purchased, the parent company will donate a set amount of money or product to a charitable cause. It is also not uncommon to see embedded giving built into financial transactions like phone bills; a customer will be told, for example, that if he or she wishes to round up the phone bill, the extra cash will go to charity.

On the surface, embedded giving is very appealing. Many charities support the idea that every little bit counts, and a public campaign asking for a few cents from every customer can net a substantial amount of money. Embedded giving is also relatively painless for participants; it's not a big deal to spend an extra nickel on a product for charity, for example, or to purchase a product that you were going to buy anyway with the understanding that a percentage of the purchase will go to charity.

However, embedded giving has a seamier side. In 2007, investigative journalists at the New York Times discovered that some charities were unaware that their names were being used in embedded giving campaigns. These groups questioned whether or not the collected funds would ever reach them.

If you are considering embedded giving, you may want to talk directly to the charity concerned. If the charity is in an embedded giving partnership with a business, it can give you more information, and assure you that your donation really is reaching the intended recipient. If a charity is unable to verify their participation in an embedded giving campaign, you may want to think about choosing another way to donate. For example, you could mentally round up all your bills for a month and donate the extra sum to a charity of your choice, or you could pass on an expensive item which claims to donate part of the proceeds to charity and donate the sum you would have spent directly.

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