For a good cause, or for a good image?
I went to the local grocery store the other day and as has become the norm, there was a table set up in front of the entrance with product laid out, and posters advertising some cause or another. The women wearing pink blazers standing behind the table clearly weren't selling girl scout cookies, so I ventured closer to see what they were about.
The cause was "Operation Smile" which I had heard of, and knew to be an organization focused on raising money to help surgically repair facial deformities in children such as cleft lips and palettes. It's a worthwhile cause but I chose not to donate that day.
The actual product that they were selling to raise funds for the charity was Victoria Jackson cosmetics, which they explained through a "generous program and partnership with Victoria Jackson herself", they were able to purchase at a significantly discounted rate. And 5% of the total proceeds of their sales would then go towards Operations Smile.
I'm not a big makeup wearer, but I can always go for a good lipstick and some mascara so it wasn't entirely outside the realm of possibility that I would purchase cosmetics for a good cause. However I questioned the 5% and was told that that most of the money went towards buying the product (which was significantly discounted for them which they took pains to point out; whether or not it was also going to be significantly discounted for me they never bothered to offer) and administrative costs, but that 5% is a good amount to donate towards this charity.
Without even having to know the retail or discounted price of the cosmetics they were peddling I did know this. Why would I be interested in purchasing cosmetics for a good cause when only 5% of the proceeds went towards the cause. When instead I could donate directly to the charity where a significantly greater percentage of my money would go directly towards the cause.
But just because I was curious I decided to do some research. And here's what I found out about Victoria Jackson and her cosmetics, as well as about Operation Smile.
Operation Smile - in my opinion a worthy mission statement, to help children with deformities lead normal lives and promote sustainable healthcare systems for children and their families. Here are their financials for fiscal year ending June 30th 2007
- revenue: $52.6M
- operating expenses: $46.7M
- Net proceeds (by my calculation and I should caveat that I am not an accountant nor do I hold a degree in any sort of business administration but it seems this should basically be revenue - operating expenses): $5.9M
I have no idea how that compares to other charities in terms of operating expenses as a % of revenue. Like I said - not a financial analyst; not an expert in non-profits; not an accountant; not an MBA. So I can't really pass judgement on the efficiency of the operation or net proceeds.
I also looked up Victoria Jackson's cosmetic line and here are a couple of sample prices:
lipstick: retail - $22; wholesale - $15; current sale price - $11
foundation: retail - $28; wholesale - $17
blush: retail - $23; wholesale - $14; current sale price - $12
so retail price in general appears to be a markup of 45% - 65% from wholesale. I don't know what the discounted price the pink blazer ladies paid for their inventory. Maybe it was less than wholesale. I also didn't actually note what price they were selling the cosmetics for. Maybe that also was less than wholesale. I would venture to guess though, that even with the discounted price (which I will presume since it is for a charitable cause would be passed on to the consumer in some fashion) and after the 5% donation to the charity, that Victoria Jackson was still making some sort of profit. There's nothing wrong with that; Victoria Jackson Cosmetics itself is a business, not non-profit. This is just an observation.
I did peruse the Operation Smile "shop to benefit" page. For cosmetics and fragrance purchases, 2% - 5% proceeds donated seems standard. There is a pretty pendant you can purchase for anywhere between $200 - $5,000 and 30% of its proceeds goes towards the charity. And the DVD, a $20 purchase, donates $6 of each purchase to the cause - also 30%.
Anyway, at the end of it all I didn't arrive at any different conclusion than I started with which was
- if you wouldn't normally use it or buy it; save your money and donate it directly to the charity
- if you would normally use it or buy it, find out how much of your purchase would actually go towards the cause before making the purchase
which are the rules I've always applied to charities anyway.
I do wish I knew the discounted price the organization paid for the cosmetics in the first place as well as taken note of the price they were selling because that would have made the math a little more interesting.
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