The Walmart Donation-Matching Gimmick/Scam

The other day, I saw an advertisement/announcement on TV stating that for every dollar you contributed to certain causes, Walmart would give two dollars (you can get the details on their web page, Walmart and the Walmart Foundation Announce up to $20 Million Toward Hurricane Harvey Relief and Recovery).  I was impressed for about thirty seconds.

History

Many companies have done matching-donation campaigns, whereby if you give a dollar, they will give a dollar.  It can be effective in promoting more charity by the public in some communities.  It too can be a gimmick.  Usually, they mention a cap or maximum donation that they are willing to make.  That’s where the deceit comes in.

Donation Limits

These limits sound reasonable for making sure the donor company doesn’t get in over their heads and become committed to a donation they cannot afford, but these companies have already done their homework.  For example, if the Green Cross (names in these examples have been changed just to keep you from thinking these principles have limited applicability) Christmas campaign raised ten million dollars last year and has grown as much as 20% year to year, with many years much less, an observer would have reason to be cynical if the donation-matching company has a donation limit of much less than about 15 million dollars.  Typically, the donor company will impose a limit of one or two million dollars.  I’m sure their maximum donation will be much less than the cost their advertising company would charge for similar exposure.  But when the donation-matching company imposes such a low limit, their actual final donation will always be equal to that limit, reaching the limit will NOT be advertised, and the deception of the public will begin.  The ethical thing would have to just announce they were making a simple donation of one million dollars, but if you can’t fool suckers into coughing up more money (mistakenly thinking their donation is worth twice as much to the charity), where is the sport in that.  At least this time it is for a good cause.

Walmart Doubles Down

Walmart’s new wrinkle takes this scam to the next level.  But all it means is that the owners of Walmart will reach their company donation limit sooner, and will be able to laugh at the stupidity of even more Americans.  That’s called arrogance.

Suppose that in this year’s campaign, the Green Cross is expecting ten million Americans to each donate a dollar (I’m just making the math simple).  Under their old plan, Acme Widgets would make their generous four-million-dollar-donation by announcing they will match your donation dollar-for-dollar (for up to four million of their dollars).  The first four million Americans bring in eight million dollars for the Green Cross (including Acme’s portion), but if the remaining six million Americans donate expecting to see their money go further, they are being misled.  They will bring in just six million dollars, and the Green Cross total for that year will be $14 million – a clear victory for the Green Cross (and Acme).

Under their new plan, Acme will now make their budgeted four-million-dollar-donation by announcing they will match your donation with, say, four dollars for each of yours (for up to one million of your dollars).  Now Acme reaches their limit much faster, as the first million Americans, with matching funds, help the Green Cross bring in five million dollars, while the last nine million donors (up 50% from last year) will make a contribution that they mistakenly believe is being amplified.  They will contribute only their own nine million dollars, bringing the Green Cross the same $14 million as last year, including the same amount from Acme and the same amount from the individual donors, 90% of whom were deceived.

Disclaimers

I am not suggesting here that donating to charity is bad; quite the contrary.  I believe helping others is a good idea, an idea that is even supported in the Bible.  But there are a few things one should consider:

  1. Are you donating for the right reasons? Donations with strings attached aren’t really donations. You should not donate expecting to get anything in return (not even a reserved seat in the Hereafter). Your rewards should be internal.
  2. Similarly, don’t assume, think, or claim the recipient of your donation will place a higher value on it than you do; that’s just fraud. I’ve recently heard complaints from members of relief organizations accepting donations for victims of Hurricane Harvey about people donating expired or opened food, worn-out clothes, etc. You are not fooling anybody.
  3. On the other hand, are you giving within your means? Creating a hardship for one person to ease another – the saying for that is “Robbing Peter to pay Paul” (a Biblical reference, but not from the Bible), is not recommended. Even the airlines advise you to put the oxygen mask on yourself before tending to your children.
  4. Finally, not all charities are created equal. And not all charities are the best stewards of your money. I suggest doing your homework;
    After checking out a charity’s website, you can research potential donees at places like Charity Navigator.

What Next?

As time permits, I will be discussing some ways advertisers use math to deceive their customers.  Stay tuned.