Checkout Charity: Where Does your $1 Donation Go When it is Made at the Cash Register?

We’ve all been there; you’re just about to insert your credit card to pay for your groceries or your kids’ clothes when they cashier says “Hi! Would you like to round up today for heart health?” or “Would you like to donate just $1 for hurricane relief?”

Some people report feeling good about themselves making even a small donation and are happy to be solicited for donations at the register. Others find it annoying. Still others report that it makes them feel uncomfortable or guilty if they don’t donate every time they’re asked to contribute.

Regardless of how it makes us feel, the data shows that charities have been enormously successful at fundraising via the checkout line. According to a watchdog group, 2016 saw over $440 million dollar raised by customers when asked to donate while shopping. This donation process now even has a nickname: “checkout charity.”

But, where does your money go and how does it get there? Do for-profit companies match customer donations? If not, do they still take all the credit for the donation? Are there overhead costs for the charity fundraising through a company or does 100% of the donation go to the charity? Is your donation tax deductible? We have most of the answers.

Stats

• The majority of customers (71%) donate at the register when asked to do so by a cashier
• Approximately 55% of people like being asked for donations
• Checkout charity makes people (60%) feel good about themselves
• In 2016, $441 million was raised in the U.S. through checkout charity donations
• E-bay, Walmart, Sam’s Club and Petco donated $150 million in total in 2018 through customer giving. E-bay’s customers donated the most ($56 million).
• From 2014-2016, checkout charity donations increased 4.5%

Source:

The Money Flow
There’s very little regulation when it comes to checkout charity, but research shows that most companies donate 100% of the customer’s donation to the store’s chosen charity. The majority of companies don’t charge an overhead/administrative fee to the charity, but most companies also don’t match customer donations with corporate donations. Walmart is an exception, particularly during times of crisis relief.

One concern of charity watchdog groups is that customers are not informed of the charity’s rating when they are asked to make a donation. Of course, you can research it on your own using a site like Charity Navigator but no one will take the time to do this at the register. Furthermore, it’s unclear how long it takes for funds to get to the charity and be put to use.

What’s in it for Charities?
Charities love the checkout charity set up for a number of reasons. Corporations use the term “cause marketing,” to describe how to “sell” customers on opening their wallets. Fundraising and giving have been studied extensively; researchers have reported that if a cashier asks a customer to make a donation to a food bank, a customer will be less likely to give than if the cashier shows a picture of a sad, hungry looking child and asks for a donation to a charity that helps children not go to bed hungry each night.

Of course, charities have to sell themselves to corporations before corporations sell the charity to their customers using the same kind of cause marketing.

Donations at the checkout line mean someone else is doing the work for these charities. The cashier doesn’t get paid by the charity to ask for donations; it simply becomes part of their job according to the corporate handbook. There is little to no overhead for the collection and tax-deduction receipts are not necessary. Charities can study who gives what and tailor their in-house fundraising programs to the types of shoppers that give.

What’s in it for Corporations?
First, the company often donates to the charity under their name, even if the entire donation comes from customers, and they often go to great lengths to inform the public of their :good will”. One example of this is eBay’s press release back in 2013 during Typhoon Haiyan entitled “eBay Generates More Than $10M for Typhoon Haiyan Relief.” Using the word “generated” allowed eBay to be ambiguous about its donation source.

There is a positive impact on sales when for-profit companies promote the good will in which they participate. Hotels have become experts at this with the “win-win” of bath towel reuse. All hotel chains now have notices in the bathroom asking customers if they would consider helping the environment by reusing their towels. They play on the conscience of consumers to reuse their towels in order to reduce water and energy usage; hotels save millions of dollars a year in energy costs, detergent and wear and tear and they get consumer “good will” points for “being green.”

Grocery stores are following suit by requiring shoppers to provide their own reusable bags else pay a fee. Has Stop and Shop just found another way to increase their profits or are they environmental superheroes? The answer is probably a bit of both. By requiring customers to now pay for disposable grocery bags, they save money on bags, plus they charge ten cents per bag if the customer did not bring his/her own. As a for-profit, the driving factor is probably financial, but environmentally conscious consumers can also applaud the effort.
Rite-Aid’s multi-million-dollar charity fundraising program seems like it may have backfired on them. There is currently a class-action lawsuit pending against Rite-Aid with the defendants claiming that they were enrolled in Kidcents, Rite-Aid’s customer-based donation program, without their permission and/or in a misleading way. In Rite-Aid’s case, shoppers using their “wellness card,” a card they signed up for to save money on purchases, are asked on a pin pad if they’d like to round up for Kidcents. Once a customer says yes, they are opted into the program each and every time they use their wellness card, or the phone number associated with the card at checkout. Customer complaints are numerous online; many wellness card users claim they had no idea they were donating every time they shopped at Rite-Aid and felt duped. Rite-Aid claims that customers can opt-out any time but must actually opt-out. The defendants claim that opting out is much more of a process than opting in.

Approximately 60% of people feel positive about the retailer that asked them for a donation when they donate. This bodes well for the retailer.

What’s in it for me?
It’s quick, easy and convenient to make small donations at the register. Checkout charity raises awareness for causes that might otherwise go under the radar. Didn’t know there was an earthquake in Haiti? Well, your Shoprite cashier may alert you to it and give you an easy way to help out those affected by the disaster. People who participate in checkout charity donations report feeling good about being a small part of making the world a better place and they also feel good about the retailer.

Is it Tax Deductible?
Believe it or not, even your $1 donation at CVS can be taken as a tax deduction as long as you save the receipt and it shows the amount of the donation. You also need to list the recipient charity on the receipt. Most companies do not take the write-off themselves for the donations.

An online search led to lots of opinions of checkout charity. There seems to be “fatigue” among some people, as in people are happy to donate here and there but are getting sick of being asked every single time they check out. However, most people like being asked, do donate, and are happy to donate at least monthly. Some mentioned Jersey Mike’s and their method of charitable giving as a corporation. During the month of March, and the month of March only, customers are invited to make donations when they make a purchase. On March 25th, the “day of giving,” Jersey Mike’s partners up with 200 local charities and donates 100% of proceeds to these organizations on this day. This year they hope to raise more than $8 million.

The bottom line is that checkout charity isn’t a hoax. Your donation usually gets where it needs to go, even in the case of coin collection cans at McDonald’s, and corporations are both helping make the world a better place and benefitting from their routing of your money to do-good organizations.