The Global Fund to Fight AIDS, Malaria and Tuberculosis in Africa is under fire after revealing "grave misuse of funds" in four countries where it operates. The fund released its report last year, but an Associated Press story brought renewed attention to the situation last week, revealing the Global Fund is demanding the recovery of $34 million in grants out of $13 billion.
In the U.S., the development fund may be better known as the organization behind the Product Red brand. Red is backed by a house of iconic brands, including Starbucks, Apple, Nike and American Express, that have helped generate more than $160 million for the fund through licensing agreements to sell Red-branded merchandise. Its notable approach, all-star backing (Bono was a founder) and consumer appeal have made it a poster child for cause branding.
But amid the news, some supporters may wonder if it can still be trusted. The opportunity is not lost if Red and its brands consider these imperatives:
- Lead with transparency: Although Red issued a statement applauding the Global Fund for openly addressing the situation, Red's transparency to its own supporters has been somewhat less effusive. Co-founder Bobby Shriver simply stated, "No Red money whatsoever" was implicated in the corruption. Although misused funds may only be a fraction of the money the Global Fund has invested, $34 million is still staggering for the average consumer buying a $30 T-shirt or a $149 iPod. Consumers need more assurance their dollars are safe, particularly in the face of transparency questions, which can leave consumers confused about how their purchases were benefiting the cause. Now is the time for Red and its brands to be overly transparent.
Implement stricter standards: It may in fact be a "naïve, impossible standard," as Shriver states, to expect corruption is not taking place within international giving and financial institutions; however, as companies align their trusted brands with such initiatives and appeal to the compassion of their consumers to take personal action, they must also ensure proper standards are in place at the onset and results are accessible. No one entity can solve the challenges of international grant making; but, if companies are going to enlist consumers in their efforts, they need to be a part of the solution alongside NGOs, foundations and government agencies.
- Be accountable: We encourage the many brands behind Red to stay committed to this important cause, but they must also be prepared to communicate their roles in addressing this issue. For these or any companies facing donation fraud or crises within their cause efforts, we recommend:
- Review existing NGO/cause partnerships to confirm whether credible auditing is in place and whether audit results are accessible to the company and its stakeholders.
- If any doubt exists, make a formal request to partners for information and escrow further donations until such auditing and results are confirmed.
- Prepare a reactive public statement to this effect, for use in the event of media or consumer inquiries. Make sure appropriate employees -- from customer service representatives to store managers -- are armed with this statement to respond to questions in real time.
- For major ongoing product-based partnerships such as Red, post the statement on the media page of the company's website. (In the case of Red, indicate donations may be escrowed until the company is informed what measures are in place to reduce chances of future fraud.) Encourage consumers to continue supporting the cause, but assure them their money is safeguarded until it will have the social impact the company desires.
- Keep consumers informed of any changes in how their money will be directed as things progress.
Even the most successful and celebrated brands can face immense challenges with the complexities of on-the-ground activation. The situations faced by programs such as product Red should reinforce in all companies the importance of ongoing cause brand management and transparency to maintain consumer trust.
|ABOUT THE AUTHOR|
Alison DaSilva is exec VP of Cone's Knowledge Leadership and Insights Group.