Checkout donations: Poor transparency about where the money goes

Asking for charitable donations at the checkout counter may help retail stores bring in a lot of money for charity, but its not always easy to find answers about where that money is going, a CBC Marketplace investigation reveals.

More than 30 major retailers across Canada have occasional or ongoing campaigns that involve cashiers asking shoppers to donate money to charity.

Some consumers say its exhausting their good will.

Toronto-based blogger Samantha Kemp-Jackson says that part of the reason she dislikes the tactic is a lack of transparency about what happens to the money shes being asked to donate.

I want to know how the money is being allocated. I want to know how much of my two dollars is going to administration, how much of my two dollars is going to overhead, how much is actually going to the [stated] person or persons or organization, Kemp-Jackson told Marketplace co-host Tom Harrington.

And they dont tell you at the checkout counter. Theres no accountability, she says.

According to an online survey done by Ipsos Reid for marketing firm Public Inc., 44 per cent of respondents felt pressured to give when asked for a donation at the checkout, and most 62 per cent oppose stores asking for donations in this way. Many feel inconvenienced, embarrassed or even angry when asked.

Two-thirds of respondents say that it is not clear what, if any, contribution the retailer itself makes to the charity. Many respondents said they would be more likely to donate if they knew this information.

The survey was done from Dec. 20 to 23, 2013 and involved 1,082 Canadians. According to Ipsos Reid, the results are accurate to within +/- 3.5 percentage points, 19 times out of 20.

Marketplace investigated donations that stores collect at the checkout and found that sometimes, its hard to find out what happens to the money shoppers give.

• Watch Checkout Charity: Doing Good, Feeling Bad Friday at 8 p.m. (8:30 p.m. NT) on CBC Television and online.

Not as charitable as it seems

Indigos Love of Reading Foundation is one such charity.

The foundation, which is registered as a charity with the Canada Revenue Agency (CRA), gives about $1.5 million to Canadian schools each year in the form of grants to help libraries buy books.

But what may not be apparent to people who give money at the register: Selected schools receive grants in the form of credit, which they must spend at Indigo and other stores in the Indigo chain, which includes Chapters and Coles.

Schools in the program must pay full retail price for the books they purchase. They do not receive the materials at a discount or at cost.

Its not as charitable as it seems on the face of it, says Greg Thomson, director of research for Charity Intelligence, which analyzes the charitable sector. Its not a very efficient way for people to give books to schools.

If they were discounting the books [for schools] by 25 per cent, say, that would make it a charitable offering instead of casting a shadow on Indigo for not being as charitable as they could be, he says.

Which leads to the question: Who keeps the profit?

Lack of transparency

When Marketplace approached Indigo and the Indigo Love of Reading Foundation with this question, neither would provide a full, detailed financial breakdown of how much of the profits from sales of Indigo books to schools made their way back to the foundation.

Unlike many other charities, there are no detailed financial statements available on the foundations website. The most recent annual report is for 2010/2011, and does not include many financial details.

Between 2007 and 2014, Indigo Chief Financial Officer Laura Carr estimates that sales of books to schools through the foundation could have brought in a gross profit to Indigo of $4.4 million.

But Carr says that Indigo does not profit from its charitable arm, saying instead that those profits go back to the foundation in various ways, including office space, marketing and administrative support. Carr also notes that gross profits do not reflect Indigos costs, including retailing, selling, operation and distribution costs.

During the same period, she says that Indigo also gave $5.9 million in cash to the foundation.

The Indigo Love of Reading Foundation was formed in October 2005 by Indigo as a private foundation. According to the most recent CRA filings, the foundation has two full-time employees who are paid a total of $208,896.

• Based on a Marketplace investigation by Greg Sadler and Ghazala Malik