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Cause Related Marketing as a Fundraising Instrument for NGOs in Albania

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Cause Related Marketing as a Fundraising Instrument for NGOs in Albania
Dr. Rejla Bozdo, Egita Alliu MSc , 2

1 Faculty of Economy, University of Tirana, Albania

2
Faculty of Economy, University of Tirana, Albania
rejlabozdo@feut.edu.al, alliu.egita@gmail.com

Abstract
Non-governmental organizations (NGO-s) have an important role in creating awareness and often paving
a path to solution for many social problems. These social problems, in many cases, become massive causes
supported by citizens and business communities, by directly impacting the wellbeing of the society we live
in. During the last year we have seen on traditional media and social media, an increased level of
awareness globally towards the climate change and the factors that create it. In many countries all over
the world there are many other social causes that have great public awareness, as the ones related with
cancer, children exploitation, women rights, human rights, etc. People are very sensitive to these social
causes, while marketing practitioners and academics have found out that an environment sensitive to social
problems needs to be considered in the business strategies and marketing strategies. From the perspective
of NGO-s, Cause Related Marketing is an instrument of fundraising and communicating the NGO-s. In this
paper, is discussed some theoretical aspects of Cause Related Marketing and practical aspects of
fundraising in some NGO-s in Albania. By using qualitative research methods we investigate on main
strategies NGO-s use in Albania to raise funds, communicate and develop Cause Related Marketing and
conclude on identifying main problems NGO-s have regarding this issue and how they can handle them in
order to improve their performance in fundraising social causes through the partnership they can create
with business organizations by Cause Related Marketing.

Keywords: cause related marketing, NGO, fundraising, CSR, CSO.

Introduction

Non-profit organizations have an important role to play in raising awareness and sometimes
resolving, important social causes that directly affect the well-being of a society. The transformation of
society also brings about the emergence of new NGOs with a mission that evolves along with the problems
that come together with change. Statistical figures show the rapid increase in their numbers. These figures
clearly demonstrate the significant increase in competition in the social market.

Another challenge is the transformation of donor characteristics as well as the need to acquire new
donor segments. In this context, NGOs need to choose the right fundraising tool. One of these tools is Cause
Related Marketing, which will be the subject of this study.

Cause Related Marketing is created as a result of an alliance between a non-profit and a profit-
oriented organization. On the business side, these collaborations are increasingly perceived as very
attractive. It is now the time for marketing instruments that synthesize economic and social principles. From
the NGO's point of view, under ideal conditions, Cause Related Marketing strengthens its brand identity
and provides the necessary financial means to grow. Worldwide practices show an increasing number of
collaborations between NGOs and profit oriented organizations. How this trend appears in the Albanian
NGO environment will be described in this paper.
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Literature Review

Organizations that have as their main goal to maximize their profit seem to be so different from the
organizations that have as their main characteristic the non-profit feature, but in practice they can relate on
a mutual interest. In order to give an answer to the question ‘‘How do profit and non-profit organizations
find a common interest?’’ we need to better understand each party in this partnership through the literature
review and explain their role, interest and meeting points.

NGOs definitions and financial background.

An NGO is the acronym for ‘‘non-governmental organization’’. According to the Cambridge

Dictionary (2019) an NGO is defined as ‘‘an organization that tries to achieve social or political aims but
it is not controlled by a government’’. Harvard Law School (2019) describes NGOs as ‘‘typically mission-
driven advocacy or service organizations in the non-profit sector.’’ World Bank (1995) defines NGOs as
‘‘private organizations that pursue activities to relieve suffering, promote the interests of the poor, protect
the environment, provide basic social services or undertake community development’’. OECD (2018), in
the document ‘‘Aid for Civil Society Organizations’’, defines NGOs as ‘‘any non-profit entity organized
on a local, national or international level to pursue shared objectives and ideals, without significant
government-controlled participation or representation. NGOs include foundations, co-operative societies,
trade unions, and ad-hoc entities set up to collect funds for a specific purpose. NGO umbrella organizations
and NGO networks are also included.’’

The definitions above are different compared to each other. Sometimes there is specified the non-
profit feature of an NGO and sometimes there is not. In one of the publications of UNDP, it was explicitly
expressed that NGO is a contested terminology, and for many has been subsumed within a broader category
of ‘‘civil society organizations’’ or ‘‘CSOs’’. This is why UNDP was using the term CSO, as defined by
2007-2008 Advisory Group on CSOs and Aid Effectiveness: ‘‘CSOs can be defined to include all non-
market and non-state organizations outside of the family in which people organize themselves to pursue
shared interests in the public domain. Examples include community-based organizations and village
associations, environmental groups, women’s rights groups, farmers’ associations, faith-based
organizations, labor unions, co-operatives, professional associations, chambers of commerce, independent
research institutes and the not-for-profit media.’’

In the Albanian practice the terms NGO and CSO are used interchangeably. As we go through the
Albanian law on Civil Society Organizations, we find two basic requirements for this type of organizations:
to be non-state and to be non-profit.

How do NGOs finance their activity?

Salamon and Anheier (2016) identify four sources of financing NGOs:

- Self-generated income (offering to the market goods and services that NGO is creating)
- Public funds (grants)
- Philanthropy (donations by organizations or individuals)
- Social investments (a new trend in which social investors invest in organizations that generate
social impact).
The difference between these four types of generating income is shown on the following table:
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Tab 1. Difference between types of income generation.

Self-generated Public Funds Philantropy Social Investments

Both sides benefit Grants One side transaction Social Impact

transaction

Market Application Fundraising Relationship with

investors

Clients Foundations and Promoter (supporting Investitors

the mission of NGO,
Public Administration specific projects)

Consideration of Political Programs The organization’s Social ROI

benefits and costs mision, the project goal
meets the donator’s
need to donate.

Fundraising means ‘‘to raise funds’’. Urselmann (2016) points out that, rather than a campaign for
financial resources, fundraising should provide the necessary goods and services directly. However, the
main focus of Fundraising remains financial support. To be successful, fundraising activities need to
identify the donators’ needs. According to Nowak Clarke (2003), from an NGO perspective, fundraising
tools serve as communication tools that raise awareness for the NGO brand in the general public.

According to Urselmann (2016), the fundraising instruments are: Donation, Sponsorship, Cause
Related Marketing, Making Infrastructure Available and Corporate Foundation. Cause Related Marketing,
which is the subject of this study, is a relatively new instrument. Pioneers of this form of fundraising are
American Express. In the early 1980s, American Express launched a major awareness campaign. The
company donated to the Ellis Island Foundation one dollar for each new credit card and one cent for each
transaction performed through AmEx cards. The $ 1.7 million raised was used to restore the Statue of
Liberty.

Cause Related Marketing – CRM a fundraising instrument that connects NGOs with business firms.

According to Mullen (1997), Cause-related marketing is the process of formulating and

implementing marketing activities that are characterized by contributing a specific amount to a designed
non-profit effort that, in turn, causes customers to engage in revenue providing exchanges. Carroll (1979)
describes Cause-Related Marketing as a commercial activity in which businesses join with charities or
causes to market an image, product, or service for mutual benefit. Varadarajan and Menon (1988), define
CRM ‘‘as the process of formulating and implementing marketing activities that are characterized by an
offer from the firm to contribute a specified amount to a designated cause when customers engage in
revenue-producing exchanges that satisfy organizational and individual objectives’’. This is one of the most
used definitions of CRM. Drumwright (1994) argues that through CRM the company can increase its sales
and market share, motivate its employees, improve its corporate and brand image and generate positive
publicity. Pringle and Thompson (1999) perceive CRM as a marketing tool that associates a corporation
with a cause for the benefit of both. Porter and Kramer (2002) also argue about the benefits and the
possibilities to acquire competitive advantage through corporate philanthropy, although the authors affirm
that these benefits are improved when the philanthropic investments are aligned to the core business. While
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Adkins (2000) postulates that CRM is not philanthropy, which expects nothing in return. From her point of
view it is merely good business for both non-profit and for-profit organizations. Adkins (2000) defines
CRM as a win-win-win situation (Adkins, 2000), providing a win for the charity or cause, a win for the
consumer and a win for the business. Cone et al., (2003) highlight that CRM can enhance corporate
reputation, but they also warn that CRM is not a solution for a damaged reputation. Docherty & Hibbert,
(2003) CRM generates free publicity and public awareness for both the cause and non-profit organisation.
There are also critics regarding this cause-related marketing approach of NGOs. Eikenberry & Kluver
(2004), critics of cause-related marketing, warn against the marketization of the non-profit sector.
Varadarajan and Menon (1988) alert firms to the dangers. Regardless of increased sales and good publicity,
firms can be perceived as exploiters of causes and charities, which can ultimately become bad publicity.
Berglind & Nakata, (2005) say that CRM campaigns only provide a short-term connection to a cause, and
that the benefits to the brand often far outweigh the benefits to the non-profit.

Corporate Social Responsibility (CSR) as an explanation to the question: why companies do engage in
social oriented activities?

Corporate Social Responsibility (CSR) is now a known concept in the business world. CSR refers
to ‘‘the obligation of a firm beyond that required by law or economics, to pursue long term goals that are
good for the society.’’ (Robins and De Cenzo, 2001). How each company applies its CSR depends on many
internal and external factors, such as the development of a holistic concept that involves all levels of
stakeholders such as managers, employers, suppliers, NGOs, local government, etc. From the external
perspective the success of a CSR depends on social, cultural, economic factors of the society where it
applies. According to Berniak-Wožny (2010), CSR campaigns in developing countries are distinct from
CSR in developed countries because of their expanding economies and the social and economic impact of
the financial crises. The differences are reflected on the themes CSR is involved in developing and
developed countries. In developing countries, CSR tends to be issue-specific (e.g. fair trade, supply chain,
HIV/AIDS). Again according to Berniak-Wožny (2010), CSR activities in developing countries often cover
social services that would be seen as governments´ responsibility in developed countries. Another for reason
for the differences in CSR activities in developing countries and in developed countries could be the
motivations and attitudes from the demand side. This can be explained through Maslow´s hierarchy of
needs, which tells us that if the low-level needs have not been fulfilled (as shelter, clean water etc.), people
cannot think as consumers that buy products from companies that are involved CSR activities. Kotler and
Lee (2005) use this definition on Corporate Social Responsibility (CSR): ‘‘A commitment to improve
community wellbeing through discretionary business practices and contributions of corporate resources’’.

Businesses giving to the society is an activity that originates a long time ago. According to Carrol
(2016) CSR in its modern formulation has been an important and progressing since the 1950s, but evidences
of businesses seeking to improve society, the community, or particular stakeholder groups may be tracked
hundreds of years. The main question of Howard R. Bowen in 1953, in his landmark book ‘‘Social
responsibilities of the businessman’’, that also needs to be asked today is ‘‘what responsibilities to society
may businessmen reasonably be expected to assume?’’. Carroll (1979), defines CSR as ‘‘The social
responsibility of business encompasses the economic, legal, ethical, and discretionary expectations that
society has of organizations at a given point in time.’’ This definition is known as the ‘‘Four part definitional
framework for CSR’’. In 1991, Carrol represented the four-part definition in the form of a CSR pyramid.
According to Carrol (2016), four strong drivers of CSR taking hold in the 1990 and continuing forward
have solidified its primacy, are: globalization, institutionalization, reconciliation with profitability and
academic proliferation. Primarily, via ‘business case’ reasoning, CSR has been more quickly adopted as
beneficial practice both to companies and society.
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Img. 1: Carrol´s pyramid of CSR

Source: Carrol (2016)

Research methodology and results

Research Methodology

This research is based on secondary and primary sources and it has an exploratory nature. The main
goal of this research is to identify the background in which the NGOs in Albania operate regarding the
fundraising element and more specifically if they apply or not Cause-Related Marketing activities. We used
in-depth interview with experts of NGOs, who actually work in NGOs that operate in Albania. The
interview is based in 30 questions that were further developed through the interviewing process with
experts, in meetings that lasted 45-70 minutes. The questions aimed to gather information on the following
variables: financial resources, business partnerships, marketing and CRM.

The definition of NGOs as per Albanian law is: ‘‘The term non-profit organization (NGO) means
any organization whose activity is not to produce and market goods or services that meet individual needs.’’
Referring to Law No. 8788, dated 07.05.2001 “On Non-Profit Organizations” of the Republic of Albania,
the term “non-profit activity” means any economic or non-economic activity provided that the income or
assets of the organizations, when any, are used only in order to achieve the goals set out in the organization's
statute, NGOs operate independently of state bodies. The following are classified as non-profit
organizations in Albania:

· Associations
· Foundations
· Centers
The mission of NGO creation is to carry out activities that contribute to the well-being of society.
They support and develop the spiritual and humanitarian values of the public, care for health, raise cause
and raise awareness of environmental issues, assist in natural and humanitarian disasters and disasters,
promote the advancement of science and increase the quality of education, care for and respect for the
environment, human rights, assist in strengthening democratic processes and any other development that is
in the interest of society.`` As per Albanian law, for an NGO to fulfil its mission, it needs the resources
necessary to carry out its activity. The concept of indispensable resources includes: goods; services; rights;
information; time; work. These resources are provided through quotations, where applicable, funds, grants
or donations from private or public entities, domestic or foreign (Law No. 8788, dated 07.05.2001 “On
Non-profit Organizations, Article 35).
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There is an increased number of NGOs in Albania. If in 2005 there were 794 NGOs in the Republic
of Albania according to INSTAT (Albanian Institute of Statistics), in 2019 AMSHC (Agjencia e
Mbeshtetjes se Shoqerise Civile – Agency in Support of Civil Society in Albania) reports that from the data
they have taken from the General Directorate of Tax and Tariffs, there are 2180 active NGOs. Which means
there is a greater number if we consider also the non-active NGOs registered. These figures clearly
demonstrate the significant increase in competition in the social market.

From a brief observation in the Albanian market, we found that many companies are involved in
CSR activities but it is not in the goal of this paper to explore the business side. They use sponsorship as
the main form of participating the social activities. Some of the big companies, such as Vodafone Albania,
have established NGOs as foundations, other companies have a consistent CSR schedule of activities, such
as AGNA Group, many banks operating in the second level and also other multinational and local
companies, etc.

We conducted seven in-depth interviews with experts from NGOs that have the following
characteristics:

Tab. 2. Characteristics of NGOs in this study.

NAME Type Year of Actual National/ Mision of NGO
OF establish status International
NGO ment (active/not-
active)

A Association 2010 Active National Empowering the role of

women in all dimensions
of social life.

B Association 2007 Active National Create awareness of the

consumer about his rights.

C Foundation 2018 Active National Empowering young

people, raising awareness
of environmental
protection.

D Center 2018 Not-active National Promotion of

contemporary Albanian
artists, regardless of their
ethnicity.

E Association 2001 Active National Cultivating the universal

values of Albanian society
with a special emphasis on
youth.

F Association 2001 Active National Supporting civil society

and strengthening cross-
sectoral cooperation in
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order to strengthen
democratic institutions and
develop the economy.

G Association 2017 Active National Rehabilitation of

individuals addicted to
gambling.

Research Results

From seven in-depth interviews, we got the following results on different variables taken into
consideration in this study.

Variable: Financial Resources

Name of NGO Self-generated income Grants (%) Donations (%)

(%)

A 20 - 30 0 70 – 80

B 0 30 70

C 0 0 100

D - - -

E 30 0 70

F 50 20 30

Experts interviewed say that in the last ten years, the process of generating grants and donations
has been greatly hampered. There is a significant increase in bureaucracy. Experts point out that even for
small services they should follow tender practices. In NGOs, which have a limited staff, this phenomenon
can lead to lower quality of services as employees are reduced in time to devote themselves to fulfilling the
mission of creating the organization. Also, public sector bodies are often not transparent in grant allocation
processes, which are distributed preferentially rather than based on the best bidder. For NGOs with over 20
years of experience, it is easier to absorb funds in the form of grants and donations. This comes as a result
of the strengthening of their brand, expertise and long-term relationships and relationships with donors.

Variable: Competition among NGOs

Experts interviewed say that in the last ten years, the number of NGOs in Albania has increased
significantly as a result of the emergence of new social challenges as well as integration processes in the
European Union. In conditions where the number of donors (demand) has remained the same on one hand
and the number of organizations (supply) has exploded on the other, there is a significant increase in
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competition. Also, the numerous precedents of abuse of donations have pushed donors to be much more
rigorous in selecting the NGO offer. Competition is also seen in the efforts of some organizations, which
according to experts change their mission "overnight" in order to receive donations or grants. It is worth
noting that the differentiation from competitors in this sector is achieved through a good marketing
program. Small organizations have difficulties in designing and implementing such a program, as they do
not have the necessary human and financial capital. The only entity that may be indifferent to competition
is the foundation, which is self-funded by the business organization that founded it.

Variable: Business partnerships

Five of the interviewed experts said that the cooperation between business and non-profit
organizations is still at an early stage. The predominant form is sponsorship. One of the reasons for the
small number of alliances NGOs and OF experts see in the mission. For example, in the case of a consumer
rights organization, it is very difficult to find a private business in the Albanian environment whose mission
matches the mission of the organization or the causes they undertake. Collaborating with businesses that
are not popular for the general public, would also reduce the credibility of their cause. Another reason is
the lack of a dedicated marketing program and budget by NGOs. Even when there are collaborations, they
are not lasting. As such alliances place both allies in a win-win situation, this is difficult to happen in the
environment of Albanian NGOs. For example, international non-profits, which have staff dedicated
specifically to designing, implementing, and controlling marketing programs during the time of such
alliances, make it much easier to establish partnerships with the business world. In relation to the region,
experts point out that the climate of business cooperation - Civil Society in Albania is more disadvantaged.
According to them this is also due to the lack of large companies, which have special budgets for CSR.
These companies serve as best practices and incentives for enhancing the partnerships of local business
organizations with Civil Society. The instability and uncertainty in fiscal policy for business organizations
in Albania, is another factor that undermines the interest of companies to make alliances with NGOs.
Experts say the first budget item that businesses cut under such uncertainty are the funds planned for CSR.

Variable: Marketing and CRM

The interviewed experts pointed out as one of the main problems that made difficult partnership
with businesses the lack of a dedicated marketing program and budget by NGOs. Even when there are
collaborations, they are not lasting. Also the lack of a dedicated member of staff that focuses on marketing
and on communication is often a problem that makes very difficult the NGO approach to the long-term
partnership with companies.

Cause Related Marketing is a fundraising tool not used by any of the participating NGOs in the
study. Experts see the barriers of non-application of CRM the same as the reasons listed above on marketing
in general and also in the low level of companies that have developed a CSR strategy.

The experts interviewed in this study express great interest in using such an instrument in the future.

Another finding of this research is that there is a need to unify the terminology used in Albania
regarding NGOs. There is an interchangeable usage of the term OJQ which means NGO and OJF which
means non-profit organizations. Also the term CSO (Civil Society Organization) is used referred to the
same entities.
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Conclusions

There are different definitions for NGOs and many of the international organizations are using the
term CSO as a broader and a more appropriate term. Statistical figures show the rapid increase in the
numbers of NGOs. These figures clearly demonstrate the significant increase in competition in the social
market. In the Albanian practice the terms NGO and CSO are used interchangeably. As we go through the
Albanian law on Civil Society Organizations, we find two basic requirements for this type of organizations:
to be non-state and to be non-profit. From literature review, we identify four sources of financing NGOs:

- Self-generated income (offering to the market goods and services that NGO is creating)
- Public funds (grants)
- Philanthropy (donations by organizations or individuals)
- Social investments (a new trend in which social investors invest in organizations that generate
social impact).
The Albanian law for NGOs says that resources are provided through quotations, where applicable,
funds, grants or donations from private or public entities, domestic or foreign (Law No. 8788, dated
07.05.2001 “On Non-profit Organizations, Article 35).

According to Urselmann (2016), the fundraising instruments are: Donation, Sponsorship, Cause
Related Marketing, Making Infrastructure Available and Corporate Foundation. In the above mentioned
law the cause related marketing is not mentioned as a fundraising instrument. CRM is considered as a win-
win-win situation for NGOs that raise a cause, companies that fulfil their CRS through this partnership and
he consumers that support the cause and are sensitive to it.

Literature review points out positive aspects of CRM towards the companies as:

- increase its sales and market share, motivate its employees, improve its corporate and brand image
and generate positive publicity (Drumwright, 1994)
- acquire competitive advantage through corporate philanthropy (Porter and Kramer, 2002)
- can enhance corporate reputation (Cone et al., 2003)
Through in-depth interviews with experts working in NGOs, this study identified some problems
related to the application of CRM as a fundraising instrument. Cause Related Marketing is a fundraising
tool not used by any of the participating NGOs in the study and they also can not name any case of usage
of this tool in Albania. The reasons why this happens, are:

- low level of companies that have developed a CSR strategy

- the lack of a dedicated marketing program and budget by NGOs
- lack of a dedicated member of staff that focuses on marketing and on communication is often a
problem that makes very difficult the NGO approach to the long-term partnership with companies
- The instability and uncertainty in fiscal policy for business organizations in Albania, is another
factor that undermines the interest of companies to make alliances with NGOs. Experts say the first
budget item that businesses cut under such uncertainty are the funds planned for CSR.
- The lack of large companies, which have special budgets for CSR. These companies serve as best
practices and incentives for enhancing the partnerships of local business organizations with Civil
Society.
- Cases when the mission of NGO doesn’t fit with the philosophy of businesses. The case of a
consumer rights organization, it is very difficult to find a private business in the Albanian
environment whose mission matches the mission of the organization or the causes they undertake.
- Collaborating with businesses that are not popular for the general public, would also reduce the
credibility of their cause.
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- The number of donors (demand) has remained the same on one hand and the number of
organizations (supply) has exploded on the other, there is a significant increase in competition.
- Small NGOs cannot achieve differentiation from competitors in this sector because it would need
a good marketing plan which these small organizations have difficulties to design and implement
because they do not have the necessary human and financial capital.
Other reasons that make difficult this partnership through CRM, provided by the authors, may be:

- Many NGOs have not made their brands known and strong, so business do not show much interest
to co-brand with them.
- To enhance cross-sectoral interaction Civil Society - Business requires the completion of the legal
framework which gives significant incentives to businesses when they are part of fundraising
programs. This law should be discussed with CSOs and also with businesses in order to find the
right approach.
- Further study is needed in order to get a better picture of the situation also from the business
perspective.

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