Money Leaves Your Community, Amazon Smiles
In our small mountain town of Durango, CO, the community search, and rescue and the local outdoor gear shops share a life-saving, symbiotic relationship. The rescuers need outdoor gear to do their volunteer work, which the outdoor shops donate or provide equipment at a discounted rate. The shops also hold fundraising events and provide publicity. The folks who get rescued are often also customers of the outdoor shop, thus it’s a tight circle.
So, imagine how a locally-owned independent business might feel when it sees this on social media:
“Looking to support Search and Rescue? This is an easy way to help us fund training and equipment. Amazon will donate .5% of your purchases if you complete your purchases through AmazonSmile. Support Search and Rescue by shopping at AmazonSmile.”
I know how local outdoor shop folks feel because an owner vented to me, “I can’t believe Search and Rescue comes in and asks us for donations, equipment, and publicity, then encourages our community to shop at our worst competitor.”
The same could be said of local animal shelters and the pet supply stores that donate food and bedding, or your kids’ sports teams and the local businesses that they rely on for fundraising.
And, let’s just do the math. Amazon.com’s offer to the shopper is: You spend $20, and we’ll send 10 cents to Search and Rescue.
To be fair, nonprofit organizations may not recognize this disconnect when they sign onto Smile; plus, it’s hard to say no to a funding stream. And half a percent is better than nothing, right?
I’m not so sure. Effective charity is based on relationships, not commissions. Shopping on Amazon for products we could obtain locally can undermine our communities and those relationships. First, it undermines local businesses, making it tougher for them to keep up support for community causes and events. And, second, shoppers are forgoing the local multiplier effect, wherein money recirculates and builds local prosperity.
According to the Michigan State University Center for Community and Economic Development, local businesses’ giving is one of the four key ways that they increase local wealth. These include wages paid to local residents, profits for local owners, purchases of local goods and services for resale and use, and contributions to local nonprofits.
Research by the Institute for Local Self-Reliance demonstrates local independent businesses create 2.5 times as many jobs as Amazon for equivalent sales volumes. And, of course, they’re created largely where you shop, not just cities hosting Amazon’s warehouses and headquarters. Plus, local businesses are the anchors to many of our historic districts, providing them with character and vitality.
Amazon reported less than $13 million in disbursements through the AmazonSmile Foundation in 2015 on North American retail sales of just under $80 billion — a measly .016% of sales. While Amazon enjoys tax-exempt status for its Smile Foundation and markets the program as charity, the payments to non-profits are a pure sales commission for marketing referrals, not donations. And the value of the free marketing Amazon receives when nonprofits urge their supporters to shop there surely exceeds the commissions paid.
When it comes to actual charity, an investigation by Amazon’s hometown newspaper, the Seattle Times, called it “a virtual no-show in hometown giving,” though Amazon has responded to growing criticism by making some high-profile gifts recently (separate from Smile).
With the threats posed by Amazon’s growing dominance and chain competition, our local entrepreneurs will struggle more and more unless communities stand with them in keeping the local economy strong.
Rather than risking someone registering an organization on impulse, nonprofit leaders, board members and staff should plan a conversation about AmazonSmile and weigh the costs to the organization against potential benefits. Those organizations also should consider what message they send to the local businesses that contribute to them and the vitality of their community.
And how can we best support our local nonprofits? By giving directly to them, volunteering and by doing our best to patronize businesses that give back to our local economy and charitable organizations.
Kristi Streiffert serves on the board of the American Independent Business Alliance, a 501c3 organization helping communities build durable economies based on local entrepreneurship. Her consulting firm, Canyon Wren Companies, LLC, offers workshops on localizing community economies. She previously directed Local First in Durango.
Want to learn more about the impacts of Amazon.com?
See our “All About Amazon” archive — a curated collection of some of the best reporting and commentary covering the corporation.
by Kristi Streiffert