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Assignment 1

Case study analysis: Taken for a ride

Julie Gilchrist
Unitec New Zealand
Communication Ethics
This report will endeavour to analyse the case study Leslie’s (2000) “Taken for a
ride?” to detect if it was ethical for Dan Pallotta, an events entrepreneur, to
personally maximise his profit from the AIDS Charity Event hosted by Florida in 1996.
Before an ethical issue can be analysed the facts need to be established, which are
clarified by providing a brief background on the Pallotta and his company
TeamWorks. The facts alone only tell ‘what is’ and not what ‘ought to be’ so an
appeal to values is required (Velasquez, Andre, Shanks, & Meyer, 1996, para. 4).
Concentrating on a utilitarian theory the values will be evaluated to determine
whether they were ethical. Two additional theories; deontology and the “veil of
ignorance” will be referred to, to either support or criticise the utilitarian analysis.
This report will also discuss the intentions of cause-related marketing, Pallotta, the
AIDS charity, and how the Pennsylvanian investigation established their findings.
The conclusion of this analysis will determine whether this was an ethical or as it
involves fundraising a financial issue.

Pallotta with good motives, having lost several friends to AIDS, sought a way to help
AIDS organisations. Founding his charitable event company, Pallota TeamWorks, he
created the first multi-day AIDSRide. His company raised over USD$1 million with its
first event by soliciting donors to sponsor the participants of the event, this resulted
in 73% of the funds going to the charity. The structure of this successful fundraising
enterprise paved the way for more AIDSRides around the United States of America,
and has since been adopted by numerous other charitable organisations to fight
disease and suffering (Teamworks, n.d.). However in 1996 when AIDSRide was
hosted by a Florida AIDS group, criticism was made that not enough of the money
raised reached the charity. The criticisms lead to an enquiry to examine the
deployment of funds; specifically Pallota’s personal share in the course of his cause-
related venture.

Cause related marketing (C.R.M.) sits within two contrasting ethical theories;
utilitarianism (doing good for a benefit) and deontological aspect (doing good for its
own sake) (Nielsen, et al., 2008, p. 9). John Stuart Mill’s utilitarianism is a moral
system that takes a teleological approach, claiming “the end justifies the means”. It

looks at providing the greatest good for the greatest number. This is a pragmatic
system which prevails in organisational situations. The contrasting view is Immanuel
Kant’s deontology theory; a duty based system proclaiming that the outcome is not
of value so long as the person executing the act is morally or ethically correct
(Plaisance, 2009). Kant had a clear view of what is right and what is wrong, no
background information or the possibility of future wellbeing can sway the imminent
moral act (Rachels, 1999).

Whilst utilitarianism has a feel-good factor it can not easily be applied to real world
situations as the doing of good is often a matter of an individual’s perspective. Even
deontology can struggle as there is no suggested way for creating priorities in
conflicting views (Baylin, Cunningham, & Cushing, 1994). To provide a workable
model for the real world, John Rawls’ veil of ignorance facilitates a societal
observation without prejudice. Rawls’ theory proposes we should ignore any fact
that could introduce a self-interested bias. However how the flipside to this theory
is how we can ascertain when we have enough information to come to a moral
decision that does not reflect our personal bias (Konow, 2006).

To question whether this is a humanitarian issue, the motive of CRM needs to be

defined. Rajan Varadrarjan and Aninl Menon define CRM as “a co-alignment of
marketing strategy and corporate philanthropy” (as cited in Baylin, et al., 1994). This
practice enables a charitable organisation to benefit from the business expertise
turning human suffering into a commercially saleable commodity i.e. its half business
and half humanitarian. Although this initially does not sound morally correct, if we
take a look through the eyes of an utilitarian, the ends (raising vast funds for charity)
justify the means (exploiting people’s suffering)(Nielsen, et al., 2008, p. 10).
However Kant defines the traditional donation as the proper or more ethically
correct way of managing social and global responsibility (Nielsen, et al., 2008, p. 22).
How can “right” be determined when individuals are more likely to participate in
marketed events that are able to fulfil an ethical duty, such as a fundraiser for a
charitable cause (Baylin, et al., 1994). The AIDS charity took the risk to gather more

funds through commissioning a CRM event, rather than solely relying on a person’s
sense of duty to donate out of the goodness of their heart, which is subject to each
individual’s opinion on which charity warranted the support.

To validate the event on a utilitarian approach the beneficiaries for the greatest
good need to be calculated, This approach can also be supported as deontology act
were incorporated. Participants were rewarded by a sense of pride in the effort to
raise awareness of the cause and bring in donations through sponsors, who in turn
were rewarded by the knowledge that they were able to support a humanitarian
cause. AIDS victims will ultimately receive the tangible benefits of the donations
and their families benefit from experiencing the emotional support shown by the
community. The Aids charity received donations from individuals, who would not
have traditionally donated had there not been the publicity this event. Lastly Pallotta
TeamWorks duty was to utilizing their skill and expertise to maximise awareness,
participation, support and donations to help produce the greatest good. The charity
and associated individuals received benefits and deontological acts were performed.

Pallotta provides the charities with business expertise, on the marketing of their
cause. The intention to promote the company's plight and to raise money for the
non-profit organisation ("What is cause-related marketing?," 2009, para. 1). This
motive for C.R.M. business enables profiting from doing good, not profiting from a
product or service that inevitably causes harm to humanity. For example; Tobacco
companies sell an additive poisonous products, cosmetic companies maximise
profits by taking advantage of a woman’s low self esteem, promising them that they
will look more beautiful with their product and of course insurance companies
gambling on the hope on their clients welfare. Pallotta takes advantage of human
suffering to market a way to minimise human suffering.

Nielson, et al (2008) articulate the ethical paradigm of cause-related marketing:

“Campaigns deconstruct the posed juxtaposition of utilitarian business and

deontological altruism there by composing or opening up for new relational

potentials. In other words, what from one perspective might be seen as
amoral – i.e. intertwinement of hedonistic pleasure, image management and
charity work – becomes part of the solution in relation to handling the global
challenges of social responsibility marking a new paradigm of ethics (p. 11).

It would be not fair to reach a conclusion to ascertain whether the profit was ethical
solely based on this one event in ride series. The AIDSRide in question was one of
the nine events hosted in different cities around the United States of America
fundraising for the charity. The Pallotta TeamWorks’ production fee of USD$180
thousand was the same in all but one another event (Teamworks, n.d.). The
investigation to establish if Pallotta maximised his profit, was shrouded by a veil of
ignorance, looking at only the AIDSRide in Florida as the criticism was received that
region rather than series of AIDSRIDEs as a whole. The net amount available to the
charity was subject to; the actual riders, the riders sponsored donations, less the
marketing, administration expenses and production fee. Unfortunately the people
of Florida did not see it as their duty to participate in this event/cause as either a
rider or sponsor, hence the lower net amount recieved (30% of funds raised
compared to San Francisco’s 64%) for that city. If the more money was raised by this
particular event, Pallotta TeamWorks production fee would not have increased, the
charity would have received a higher payment.

This leads to the question of whether, in “maximising” his profi,t Pallotta was ethical.
Through a utilitarian approach the Pallotta’s motive was not just the improvement in
his own welfare, but the potential improvement in the welfare of every other
consumer of his product. As described by Kant, “the consequences of an action are
of no importance while it is acceptable to gain personal advantages, as long as the
general level of welfare is being upheld“ (as cited in Nielsen, et al., 2008, p. 23)

Therefore only one conclusion can be reached. It was not that Pallotta acted without
good intentions. From a Deontology perspective Pallotta intention was in the
interest of the charity, however the end did not meet the expectation of the charity.

From the utilitarian point the charity did profit, though the means may not have
been acceptable in of the charity’s hindsight. Unfortunately the charity’s investment
into this event did not maximise the return as hoped for, which turns this into a
financial issue not ethical issue. The accountability does not lie within Pallotta’s
ethical issues but with the AIDS charity expectation.


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