An Economic Analysis of Cause-Related Products

Cause-related products have become increasingly common in the marketplace. They have the potential to raise substantial funds for not-for-profit organizations and to increase the bottom line for companies. They allow consumers to support a non-for-profit action at very low cost. This paper characterizes cause-related products and purchase-triggered donations and identifies the motives of the different partners involved in the process. It also stresses the role of tax laws in shaping firms' strategies as well as several possible undesirable and counter-productive effects caused by these partnerships. Two case studies are presented to support the analysis.