The digital age has been reshaping the way Target Corp. makes money. Now it’s affecting how Target gives it away.
Target is once again donating $5 million to schools nationwide this year as part of its annual “Give With Target” campaign. But this time, Target will distribute the money to schools that receive the most votes from shoppers on the company’s Facebook page.
Last year, Target relied on Facebook voters to decide who would get half of its Give With Target donation to schools, with company executives allocating the other half.
With the full-on social media approach to Give With Target, the company is essentially aligning its philanthropy with a broader effort to transform itself from a chain of stores into a nimble, technology-driven retailer.
‘Target recognizes technology and social media are an integral part of our guests’ lives,” said Laysha Ward, the company’s president of community relations. “We want to use Facebook to connect with our guests on a daily basis. They have told us over and over again that education is their top social concern and they really want to be involved.”
Target’s approach is rare and could pose problems, according to those who follow corporate philanthropy. And companies are typically unwilling to cede control of their philanthropy or any corporate decision to outsiders, of course.
But in this case, Target is betting that its customers will prove to be fairer judges of need than its executives. The risk is that popularity, not need, will determine which schools receive a donation from the firm.
“Schools’ chances of winning the money will only be as good as the strength of the community [to mobilize and vote], not necessarily which schools are the most worthy,” said Kat Rosqueta, founding executive director of the Center for High Impact Philanthropy at the University of Pennsylvania.
She said that socioeconomic factors could play a role. For example, a suburban school with a history of strong parental support may prove more likely to win votes and receive funds than an urban school or one in a small town.
Eric Hausman, a company spokesman, said Target is confident that a wide selection of schools will be chosen.
“We know that many schools struggle with resources and inadequate access to supplies,” Hausman said. “There will be plenty of funds to go around. Based on our results from last year, we are confident that guests will designate funds to schools that need them.”
Target limits the amount each school can receive to $10,000, meaning that at least 500 schools across the country will receive a gift. Target places no limit on what a school can do with the funds.
In the past, corporations approached philanthropy without any real thought or rigor, analysts say. Companies donated to charities but did not bother to measure the effects of their investments or determine how the philanthropy connected with broader corporate strategy.
Today, companies like Target fully integrate giving with other parts of their business, including marketing, public relations and operations. For example, Ward sits on the company’s senior management team, along with CEO Gregg Steinhafel and executive vice president and chief marketing officer Jeff Jones.
But more important, companies want their philanthropy to generate a return. In Target’s case, donating money to schools earns goodwill with young mothers with families, a key customer group, who will inevitably think of Target for their back-to-school shopping needs. In addition, Ward said, the money to schools will help better prepare students for the future workforce, something that can only benefit firms, like Target, that employ large numbers of people.
“Target takes education very seriously,” said Amy Koo, a senior analyst with the Kantar Retail consulting firm in Boston. “It aligns very, very well with what they stand for.”
Target has pledged to give $1 billion to education by 2015. The company has already doled out $354 million to K-12 schools since 1997. Target’s Take Charge of Education program allows customers to donate 1 percent of REDcard purchases to a school of their choice.
The Give With Target campaign, however, allows the company to use its growing arsenal of digital tools to engage shoppers.
In recent years, Target has formed an especially close relationship with Facebook.
So far, Target has signed up over 1 million consumers to Cartwheel, a digital coupon program in which Facebook users can earn discounts on certain products at Target stores.
Expion, a software firm, released a report Tuesday that ranked Target seventh out of the country’s top 50 retailers in terms of customer “engagement” on Facebook.