Smile no more. Amazon.

For years credit cards, Amazon, eBay and others have had “affinity” programs where a charity could be designated to receive money associated with normal sales activities. In the case of Amazon, Amazon Smile program, 0.5% of qualifying sales goes to your favorite charity. “You shop. Amazon Gives.” The program has been very successful growing since inception in 2013 to more than a million charities and about $400m donated over the decade.

But, Amazon is set to Smile no more. The program will end on February 20, 2023 after a decade of operations. Charities that have come to rely on this source of funding are scrambling to fill in the deficit. When the program ends, Amazon will make a one-time donation equal to 3-months of donations. That will help.

Charities that promoted the smile program are complaining. Those that made significant funding from the program are disgruntled.

The claim is that Amazon is saving money where it can in the face of layoffs. To be clear, Amazon hired about 1 million people during the pandemic, laying off a few thousand people is not a big thing. Amazon employees peaked at more than 1.6m in 2022. Because of the high turnover of new hires, Amazon has probably more than 200% annual employee turnover. That means that Amazon doesn’t really need to fire anyone (except maybe under-performers), just not hire as many people. Although, with the slowdown in the tech space (AWS cloud services), those layoffs will be real and permanent.

No, it’s probably not about Amazon saving money by discontinuing AmazonSmile. There are many, many other problems for Amazon with 1 million charities in the Smile program. Look at chapters 3 and 5 in Hall & Hinkelman’s (2022) book on Nonprofit Planning and Impactful Giving.

A charity needs to be listed by GuideStar, one of the BIG charity assessment organizations. They don’t need to be rated actually, just listed. If the charity loses its tax exempt status (from non filing with the IRS, for example), then presumably they would no longer be eligible for Smile donations. This puts Amazon in an uncomfortable position of monitoring and policing (at least a little bit) a million charities. Amazon has procedures for donations when a charity is not an acceptable/authorized organization, which sounds messy.

The good, the bad, and the ugly. From Amazon’s perspective, it seems like the biggest problem by far with the Smile program is the confusion with the Amazon Prime brand. With 1 million charities, there has got to be some really ugly charities in the mix. And all of them appear to be promoted equally from their affiliation with Amazon. Sure, everybody should carefully review the charity/charities they select for an affinity program. And they should review that charity list every year, but many people don’t.

Having money associated with Amazon affinity sales going to bad or mediocre charities, and many that are not very impactful, dilutes and distracts from the Amazon brand. It seems that giving more money to better charities would be more impactful. In Amazon’s case, they would not, and should not be associated with very small charities; no upside and lots of downside risk exposure to the brand.

eBay has a similar situation. Sellers can donate a percentage of sales to a charity. That is a cool idea. People buy more frequently from a buyer who is contributing to a charity a percentage of sales. But that program will have a similar problem of manageability and potential brand risk, just as Smile does. It will be interesting if eBay takes this opportunity to refine/improve their affinity program.

References:

Hall, E. B. & Hinkelman, R. M. (2022). Perpetual Innovation™: Strategic planning for nonprofits and the art of impactful giving: the gift of giving, the art of caring. ISBN: ‎ 979-8842614615 Retrieved from: Amazon.com/dp/B0BF8MB13X (Available on Kindle eBook as well.) ISBN: 979-8842614615 Amazon ASIN: B0B7Q1J4G6