AmEx's cheesy charity campaign.

AmEx's cheesy charity campaign.

AmEx's cheesy charity campaign.

Moneybox
Commentary about business and finance.
Dec. 31 2003 1:48 PM

Operation Just Cause

In the name of helping Lady Liberty, American Express is reaping lots of publicity.

In her new book Rambam's Ladder, journalist Julie Salamon was inspired by 9/11 to revisit the 12th-century Talmudic scholar Maimonides' ranking of forms of charity, from lowest (giving grudgingly) to highest (anonymously helping a person find a job). Were he alive today, Maimonides might have to create a new rung for American Express' campaign to help reopen the shuttered Statue of Liberty, which is laudable in principle but flawed in execution. After all, how do you rate someone who donates conspicuously to aid one of the nation's most powerful symbols, and then spends lots of money to publicize the gift—all in the hopes of making more profit?

Liberty Island—the scrap of land on which the statue stands—and adjacent Ellis Island reopened to visitors just three months after the 9/11 attacks. But it turns out Lady Liberty needs at least $5 million in security upgrades. With the National Park Service strapped for funds, the Statue of Liberty—the great symbol of Franco-American friendship, America's light unto the nations, freedom made visible—remains closed. Apparently nobody in Washington grasps the irony. And none of the philanthropists so concerned about maintaining an Open Society (hello, George Soros!) have stepped up to the plate.

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Last September, the National Park Service—which has been responsible for the statue since 1933—asked the Statue of Liberty-Ellis Island Foundation Inc. to help. The foundation was created in the early 1980s, when Ronald Reagan tapped take-charge Chrysler boss Lee Iacocca to raise funds for the statue's 1986 centennial restoration efforts.Enlisting the support of millions of Americans, the foundation raised some $87 million for Lady Liberty. Over the past 20 years, it has restored Ellis Island, built the Ellis Island Immigration Museum, and created the American Family Immigration History Center, an ambitious effort to put Ellis Island's documents online.

American Express, headquartered in Lower Manhattan since the 19th century, has long been both a benefactor to the Statue of Liberty and a beneficiary of the commerce that the area generates. In 1885, company President James C. Fargo solicited employees to donate funds to help build the Statue of Liberty, and in 1905, the company won the currency-exchange concession at Ellis Island. In the 1980s, it joined the restoration effort and in doing so made marketing history. Offering to make a 1-cent donation each time customers used the American Express card or travel checks, the company inaugurated the first national cause-related marketing campaign. It was a huge success. American Express funneled millions of dollars to the effort and saw large increases in the number of new cardholders and in card usage.

Cause-related marketing enabled the company to achieve several objectives at once. It gave people an incentive to use American Express instead of any of a half-dozen other credit cards they might carry. It gave the appearance of self-sacrifice without cutting sharply into the company's margins. (When you consider that the company reaps a $1 fee when a customer charges a $50 restaurant bill, giving a penny isn't much.) And it allowed the company to use one of the nation's most cherished symbols unabashedly in its advertising campaign.

American Express also used the campaign—and successive campaigns, like Charge Against Hunger—to build goodwill with the business owners who sacrifice about 2 percent of their sales in exchange for accepting the card. The 1990s Charge Against Hunger campaign, which assuaged the consciences of foodies by helping to fill the stomachs of the foodless, encouraged cardholders to patronize particular restaurants; its TV ads helped turn New York restaurateur Danny Meyer into a celebrity.

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As a vehicle for marketing and brand-building, cause-related marketing is highly efficient. But as philanthropy, it raises more than a few questions. Even though American Express has been a highly useful corporate citizen since 9/11—it returned to its damaged home at the World Financial Center with alacrity and sponsored a new downtown film festival—this latest cause-related marketing effort is transparently more about generating publicity than about effectively boosting the cause.

American Express has pledged to raise $3 million of the $5 million total. (Folger's, the coffee maker, is kicking in another $1 million.) American Express' corporate foundation, which quietly does lots of good work—mostly to spur global tourism—will donate $500,000. The company will also give a penny for every purchase made using a card in December 2003 and January 2004—up to $2.5 million.

By guaranteeing the sum up front, there appears to be no incentive for customers to use the card more. In any case, over the past two decades, consumers have removed some of the discretion once associated with using charge cards. Many people today automatically bill monthly telephone bills or AOL memberships to their cards, or store a single credit card with a favored online retailer. So, it's a certainty that American Express will generate the 250 million transactions needed to generate 250 million pennies in the two-month period even if the vast majority of cardholders simply stick to their habitual use.

American Express also seems to be spending an awful lot of time and money telling us about its donations. This release describes a national print, television, and online advertising campaign. The company won't say how much it's spending to promote the fact that it's giving $3 million, but it must be something close to $1 million. Already, it has featured several full-page ads in the New York Times;the one in last Sunday's "Arts & Leisure" section probably cost about $77,000. And it's a little cheesy: The company lists the amount it is giving at the bottom of the page and uses the ad to promote merchants such as Party City Corp., Sterling Optical, and Lexus of Greenwich. Given the 9/11 connection, such plugs seem misplaced.

Finally, with the advent of the Internet, consumers now have an extraordinarily easy way to support a worthy cause like reopening the Statue of Liberty. They can go to the foundation's Web site and make a donation. Whether you give $10 or $1,000, that's far more efficient than using your American Express card a few extra times and thus directing a nickel to Lady Liberty. Because the donations are tax-deductible, the actions will benefit your bottom line—not that of American Express. And if you make the donation anonymously, you'll move up a rung or two on Rambam's ladder.