This week, Amazon communicated to stakeholders that one of its social impact programs, the AmazonSmile program, which supports nonprofit organizations by donating a percentage of shoppers’ purchase value, will be closing soon.
The company justified the decision by stating that the program’s impact did not grow as expected after 10 years, and that, “with so many eligible organizations – more than 1 million globally – our ability to have an impact was often spread too thin.” The announcement comes amid layoffs at the company and a freeze on hiring.
The main question from stakeholders about the decision is: How are these types of cost-cutting measures connected? What can be done to maintain impact even during crisis moments?
I will share my perceptions with you below.
Two sides of the same coin
First of all, given the economic scenario, Amazon’s decision to close the AmazonSmile program suggests that the company is trying to redirect its efforts and resources. Unfortunately, when discussing social corporate responsibility, this often goes through business filters.
For this reason, in this situation, we have two perspectives: that of Amazon and that of the nonprofit beneficiaries.
Amazon is not cutting all of its social impact initiatives. On the contrary, in my perception companies, in general, are aware of the importance of being committed to social change and are often held accountable for this by investors and the market.
Meanwhile, for any company, and especially for large and influential companies like Amazon, the results of social impact on business needs are structural and generate some return. In my analysis of the situation, while the AmazonSmile program does have a social impact, it may not be generating meaningful change or return for Amazon.
Why do I see it this way? Here are the questions I ask myself:
- Can the AmazonSmile program increase a company’s sales just by the desire to donate to a cause? Probably not.
- Is AmazonSmile easy enough to exist with low efforts? Again, probably not. The company needs to put money and resources into the program, including making the system work, offering support to nonprofits and consumers, allocating resources, and of course, making a huge marketing effort to make the initiative well-known and useful.
- Are the results and investments achieved for the nonprofits aligned with Amazon’s impact areas? In some cases yes, but in this program, Amazon is offering general support and doesn’t work with specific business purposes and causes.
On the other hand, some nonprofit organizations defend the importance of AmazonSmile. For example, the SquirrelWood Equine Sanctuary has received around $9,400 and claims that it has made a huge difference.
The Cat’s Meow, another organization, has received around $4,000 in donations over a few years and it has covered expenses when donations fell short.
Although the reactions of nonprofit organizations supported by AmazonSmile are understandable, being partners with a large company can make a difference not only in terms of donations but also in terms of visibility and strategy for the third sector.
It’s time to recalculate the route to social impact
AmazonSmile is definitely a program that impacts and helps nonprofit organizations. It’s clear to see just by looking at the examples provided. However, at this moment, it’s clear that Amazon needs to achieve specific goals beyond just causing social impact. In this case, it’s necessary to align social impact with business objectives.
Last year, in 2022, the average donation to charities was around $230. Even for nonprofits that are impacted and grateful for the program, for a company the size of Amazon, this amount is not significant enough considering all the efforts to initiate the program. This is why the company has stated that it “will continue to pursue and invest in other areas where it can make meaningful change.”
The company will continue to fulfill its social impact commitment by investing in engineering education for vulnerable groups, donating to the community, using logistics to support natural disasters, and other initiatives.
In fact, all the actions cited by the company indicate a more structured path towards Environment, Social, and Governance (ESG) objectives that are compatible with the areas where Amazon may be having a negative impact. Sunsetting some initiatives is also a strategy to correct the route, and it’s a movement that can be seen in other companies during this critical economic moment.
According to Amazon, the company is undergoing a transition process to continue offering some support to its nonprofit partners.
“To help charities that have been a part of the AmazonSmile program with this transition, we will be providing them with a one-time donation equivalent to three months of what they earned in 2022 through the program, and they will also be able to accrue additional donations until the program officially closes in February. Once AmazonSmile closes, charities will still be able to seek support from Amazon customers by creating their own wish lists.”
The actions that the company is taking are a way to handle the decision with good practices. However, in my opinion, there are two points that can be improved:
- Promote visibility for these nonprofits at this time through communication and marketing campaigns to incentivize direct donations.
- Engage Amazon’s employees in volunteering activities with nonprofits to share knowledge and expertise about how to raise funds.
Initiatives of social impact should also empower communities and nonprofits with knowledge and tools to continue making a difference even after the partnership. At Rock Content, for example, we are implementing a digital marketing acceleration program for nonprofits that focus on education and employability for underrepresented groups in Brazil. This way, these organizations can find their own ways to scale their impact in the long term using digital presence knowledge.
For nonprofits, it’s important to use this situation to connect with other companies, including small and medium businesses, to ask for support and openly discuss social corporate responsibility.
Create proposals and partnerships that connect your cause to companies that directly impact your struggle. For example, if your nonprofit rescues animals, seek support from pet stores, pet food companies, and related industries. Turn this situation into an opportunity for networking and new opportunities!
Now more than ever, companies are interested in making a real social impact and are open to sharing this goal with nonprofit organizations. It’s time to find the perfect match, as the social impact has a place in business. It’s necessary for both sides (companies and NGOs) to find alignments, goals, and the right partnerships.
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