How Much Money Actually Goes To Charitys

AmazonSmile brings to mind the observation of late great media critic A.J. Liebling about The New York Times' fundraising campaigns on behalf of its Neediest Cases. "Readers are invited to send in money," Liebling wrote, "while the newspaper generously agrees to accept the thanks of the beneficiaries."

AmazonSmile is bit like that. The website, created by Amazon.com in 2013, offers

the same products, prices, and shopping features as Amazon.com. The difference is that when you shop on AmazonSmile, the AmazonSmile Foundation will donate 0.5% of the purchase price of eligible products to the charitable organization of your choice.

Nice, right? Well, yes, but not nearly as a nice as it could be.

Two questions need to be asked about AmazonSmile.

First, what has it done to increase the quantity of charitable giving?

Second, what has it done to increase the quality of charitable giving?

The answer to both: Not much.

Let's begin with the numbers, starting with that 0.5 percent figure. If you spend $20 at Amazon.com, that's 10 cents. Spend $2,000 and $10 goes to charity–provided, that is, that you remember to bookmark or navigate over to https://smile.amazon.com before making a purchase.Predictably, most shoppers don't. It's hardly worth the bother to surf over to a new URL to give away a dime.

The results reflect that friction: In 2015, the AmazonSmile Foundation, which administers the program, donated $12,867,013 to charity, according to the foundation's latest Form 990-PF filed with the IRS. That's less than 0.5 percent of Amazon.com's retail sales.

How much less? In 2015, Amazon generated about $99.1 billion in U.S. and international retail sales, its annual report says. (See p. 68). If my math is correct, that means that the $12,867,013 in charitable giving amounts to 0.00012 percent of sales. That's $1.20 in donations for every $10,000 of sales.

Now, you could argue that this is the fault of shoppers (and, admittedly, I'm one of them) who are less than rigorous about finding their way to the AmazonSmile portal every time they make a purchase. Instead, I want to make the case that the low numbers are the product of a deliberate effort by Amazon.com to depress, rather than increase, giving.

After all, it would be a trivial matter for Amazon.com's software designers to allow shoppers to make a one-time request to have 0.5 percent of their purchases go to charity, and make that the default option every time a customer visits the Amazon.com site.

As one perceptive Amazon shopper wrote on the company website back in 2014:

This is a wonderful program with a big BUT! Here's the 'BUT': Why do shoppers have to go to the smile link in order for donations to kick in? Why can't the contributions simply be linked to the shopper's account? I want to support a nonprofit, but i frequently forget to go to smile. Is Amazon trying to get organizations to encourage their members to use Amazon, but secretly hoping they will forget to go to the smile link so Amazon doesn't really have to make a donation? A truly noble approach would be to make it automatically link to the shopper's account.

Exactly.

Further evidence of Amazon.com's intentions come from the the fact that there are no cell phone or tablet apps for AmazonSmile. Users have asked for AmazonSmile apps, which is no surprise, given the growing share of e-commerce purchases made by phone. One survey found that about 40 percent of all e-commerce was conducted on phones or tablets last Thanksgiving, ReCode reported. It's not impossible to buy from AmazonSmile over the phone, by using the phone's browser to reach the website, but it's clunky so few people bother.

It's sure looks as if Amazon.com wants to make it hard, not easy, to use AmazonSmile.

To put the $12.9 million donated by the AmazonSmile Foundation in a broader context: The Walmart Foundation made $166 million in donations in 2015. Microsoft, its Seattle neighbor, donated about $500 million last year. Amazon makes other donations as well, but they don't add up to much and the company won't release numbers, GeekWire reports.

Laziness, stupidity, indifference or caution?

What about AmazonSmile's influence over the quality of giving? By that, I mean the potential for AmazonSmile to recommend charities that do the most good, or at least those that are more transparent than their peers about their performance. As it happens, there's an easy and useful metric to identify such charities–the Platinum designation awarded by GuideStar, which I blogged about last year. Alternatively, AmazonSmile could boldly turn to trusted evaluators such as The Life You Can Save, a nonprofit that recommends charities, based on evidence, that help the world's poorest people. The Center for High Impact Philanthropy at the University of Pennsylvania also does a fine job of identifying effective nonprofits.

This wouldn't limit consumer choice. AmazonSmile permits shoppers to choose from nearly 1 million charities, it says, and it could continue to do so. But, since its early days, AmazonSmile also has nudged shoppers to give to what it calls Spotlight Charities. The company says:

We do this to make it easier for customers to choose an organization to support from the almost one million available, but we do not endorse any particular organization or the causes they support.

The five current Spotlight Charities are the ASPCA, charity: water, Doctors without Borders, The Nature Conservancy and the American Red Cross. A less interesting list is hard to imagine. These choices can be explained only by some blend of laziness, stupidity, indifference or an abundance of caution.Since the people who work at Amazon.com are neither lazy or stupid, we can chalk this up to indifference or caution.

Of AmazonSmile's five spotlight charities, only one, the American Red Cross, has a Platinum Rating from Guidestar. If you believe Pro Publica (here) or Senator Charles Grassley (here), the Red Cross is a disaster charity in every sense. Giving to The Nature Conservancy, for all of its good work, is like giving to Harvard: It had nearly $6 billion in net assets and brought in $786 million in revenue last year. The ASPCA has never been ranked among the most effective advocates for animals by Animal Charity Evaluators. As for charity: water, it is at core a fundraising platform, and a very good one, but most of the work it funds is carried out by partners, some better than others.

These recommendations have enormous impact. In 2014, which is the latest year for which grantee data is available, Spotlight Charities outpaced the rest by huge margins. AmazonSmile gave $602,495 to St. Jude's Children's Research Hospital–more than 10 percent of all the money that passed through the foundation that year. It also gave $436,338 to the Wounded Warrior Project (!), $265,557 to the American Red Cross and $167,316 to The Nature Conservancy. All were Spotlight Charities. The vast majority of charities brought in less than $100 apiece. (I pulled these numbers from AmazonSmile's 575-page Form 990, and might have overlooked a big recipient or two. The document isn't searchable.)

Finally, consider the possibility that AmazonSmile could ultimately lead to less, not more, charitable giving. If it leaves shoppers feeling that they have done their part, they may be less likely to respond to a direct appeal from a nonprofit, as Brady Josephson, a fundraising consultant, wrote on Huffington Post back in 2013.

What, then, is AmazonSmile? It's marketing, dressed up as altruism.Hundreds, perhaps thousands, of charities put the AmazonSmile logo on their websites (here, here, here and countless other places). They're promoting Amazon.com. It's revealing that the president of the AmazonSmile Foundation, according to its latest Form 990, is Steven Shure, who is vice president of worldwide marketing at Amazon.com. Shure doesn't mention the AmazonSmile Foundation on his LinkedIn profile. His only visible nonprofit experience is as a board member of US Rowing.

In the end, though, to understand the purpose of AmazonSmile, all we need to do is the math. Imagine that you spend $1,000 this year on AmazonSmile. Amazon gets $995. Your favorite charity gets $5. Someone's doing well, and it isn't the charity.

No wonder Jeff Bezos is smiling.

A note on sourcing: I tried every which way to get Amazon.com's response to all this. I emailed two people in the company's communications department, asked a DC-based Amazon exec to refer my request to its PR department and left a message on the AmazonSmile website. I'm aware that the company can't respond to all media requests. If I do hear from Amazon.com, I will post a response below.