Want To Open a Nonprofit Store? 10 Guidelines You–and Nordstrom’s–Should Follow

Scandal in-the-making, customer-pleaser, tax write-off, nonprofit cash cow or game-changer?  Which hyphenated phrase will best describe Nordstrom’s new concept store, which will donate all net profits to charity?

I was interviewed recently by American Public Media’s Marketplace on the Nordstrom concept store, set to open in Soho next fall, and on the growing appeal of retail philanthropy. A recent study from Cone found that 83% of consumers “want more of the products, services and retailers they use to benefit causes.” Seems Nordstrom read the report. But I hope they studied it because the concept is rife with potential, public sand traps. Little information has been released (or decided), but here’s what we do know from Nordstrom spokeswoman Pamela Lopez:  The store won’t have Nordstrom’s name on it, use its shopping bags or take Nordstrom credit cards, but will function as a wholly owned subsidiary.  The concept is based on the retailer’s “general spirit of philanthropy.” Nordstrom hasn’t yet identified how it will pick its nonprofit partners or solidified a merchandising strategy. If I were leading this initiative for Nordstrom, here are 10 guidelines I’d follow:

• Define your mission. General spirit of philanthropy is not enough. Who do you want to benefit and what ultimate result do you want to achieve–both in impacting funding recipients and Nordstrom as a company?

• Be obsessively transparent with employees and consumers. Be upfront about how you are selecting nonprofit partners, what the partnership involves (for example, are partners expected to market on your behalf?), how much money is going to which nonprofits based on what amount of sales, how the nonprofits are using the funds and how constituents are impacted.

• Invest in the causes longterm, either by continuing to support existing Nordstrom charities and partners, or committing to a new long-term investment. Long-term partnerships help define what the company stands for, enable a greater a social impact and make it easier for a company to measure this impact.

• It’s not enough to just give nonprofits money. Really, it’s not. Nordstrom would do well to treat these organizations as partners, not charity recipients. There’s much more at stake with this experiment in ultimate retail philanthropy than funds raised and a branding victory for the retailer. Treating nonprofit partners as equals entails greater cooperation, satisfaction, creativity and impact. Avoid the common pitfall of thinking that whomever holds the money calls all the shots.

• Lead with impact, not branding or splash. Go back to your mission; who are you aiming to serve and how? If all you want is a marketing campaign to attract Gen Y women, this is absolutely the wrong strategy. A quick way to turn off consumers and taint your brand is to use customers as a pawn in a high-on-glitz-low-on-impact campaign. Be transparent and proactive in your messaging, your goals and your shortcomings.

• Involve employees. Employees are your greatest brand advocate (as well as the first to smell a rat). Beyond being transparent with employees about the numbers, connect them to larger mission and develop opportunities for them to own and create parts of it.  Per Cone, 93% of employees involved in their company’s social or environmental commitments say they’re proud of their company’s values (vs. 68% of employees who don’t take part in social or environmental activities)..

• Connect customers to a cause beyond the purchase.  Sixty-one percent of consumers take the time to learn the details of a cause-related campaign before deciding to support it.  So teach consumers the root cause of the problem and viable solutions through labels, marketing material, store signage, events, interactions with nonprofit leaders and constituents of the cause and volunteer opportunities (72% of consumers want an opportunity to volunteer for a cause in addition to supporting it through a purchase).

• No markups. Donating 5% or 100% of profits to a cause doesn’t legitimate price markups. Sell the merchandise at a standard price and build the donation into the other elements of your business model. I’m not saying this is easy, but it’s important that you don’t charge consumers for the experience of giving or for supporting your corporate philanthropy.

• Don’t exploit the cause. The cause is your partner, your friend, significant of the impact you want to have. Don’t play fast and cheap with it, by which I mean no pictures of abandoned dogs and ravaged children. Find ways to communicate the urgency of their needs with dignity.

• Report on impact. Seventy-five percent of consumers want to hear more about the impact of corporate/nonprofit partnerships. How much money was raised and who did it help? How many people were served? How were they specifically affected?  The desire for feedback means you’ve successfully involved the customer in the cause. They feel personally connected to it and are interested to know how what they stood behind made a difference to someone. As a company or nonprofit, this is the best part.