The ROI on a For-Profit Business to Support Charities

2 December 2015

CE boxYesterday I launched Stonemaier Games’ annual charity auction, which is on pace to raise about $4,000 for 10 different charities.

On the same day, I turned down two requests from very nice bloggers who asked me to contribute something to their charity giveaway.

Why give to some and not to others? Why should a for-profit business like Stonemaier Games give to charity at all? These questions are on my mind today, so I thought I’d talk (ramble) about it to see if I can make sense of it.

I have several guiding philosophies for running my business, like “backers come first” and “make it about them.” But hand-in-hand with those philosophies (and sometimes overarching them) is that Stonemaier Games remain profitable. If we’re not profitable, we can’t stay in business. If we don’t stay in business, I won’t have backers to put first and I won’t have other people to make things for.

So every decision I make is based on some kind of positive ROI (return on investment). The prices of our games are based on ROI. Our international partnerships and convention support methods (play and win) are based on ROI. The copies of games I send to reviewers are based on ROI–that’s why there’s a huge difference between a reviewer with 100 followers and a reviewer with 1000 followers.

That brings us to charitable giving, which is a bit of an enigma. I’ve seen no data supporting the idea that giving money or games to a charitable giveaway has an kind of positive ROI. We’re giving away a free thing to someone who might have otherwise bought it. Sure, there’s exposure and goodwill, but do those really add up to anything? The next time you decide to buy a game, do you ever make that decision based on seeing that a company

Note that I’m not saying that companies shouldn’t contribute games to charity giveaways. Though I do think it’s a little dangerous to ever give away something for free. The psychology of free doesn’t exactly encourage consumers to spend money. I think auctions are a better way to go, like the annual Jack Vasel Memorial auction. We do contribute to that one, but it’s a rare exception.

BUT–here’s the big but–I’m still driven to give to charity, personally and professionally. It feels like the right thing to do. My company exists because of the generosity of others, and I’m very fortunate. It simply feels right to give back somehow, even if there isn’t an ROI.

So here’s how I wrapped my mind around the idea of charitable giving being good for business a few years ago: Instead of thinking about ROI for Stonemaier Games, I decided to shift the ROI to a key part of the backbone of the gaming industry: bloggers, podcasters, and video reviewers.

The way our annual charity auction works is that we put 10 rare, premium items up for auction (this year it’s the Viticulture/Tuscany Collector’s Edition). We associate each of those items with a different blog, podcast, or video channel we love (with their permission).

We don’t ask those content creators to advertise the auction at all–all they have to do is each pick a charity, and we do the rest. The auction is just as much about the charities as it is to bring new audiences to these amazing content creators.

So it’s a little different type of ROI. It’s not profitable at all for Stonemaier Games–we’re auctioning games that we could sell for about $200 each, and we’re paying for worldwide shipping out of our own shipping. Sure, we get a slight tax break for charitable giving, but it’s minimal. This isn’t about our bottom line. Rather, it’s about giving back to the less fortunate and to the amazing content creators who making the gaming community so vibrant.

Also, it helps us draw a line. There are always going to be plenty of people and organizations who ask us to contribute to their cause. Going back to the idea of staying profitable, we can’t say yes to all of them. There are too many. But I can say no to those people and still sleep well at night knowing that we’re already doing something big and good.

This isn’t a lesson. I’m not telling you that what we do is right and what you do (or don’t do) is wrong. Honestly, I just wanted to sort out my thoughts on this topic and hopefully add some value to the way you think about running a business, ROI, and charitable giving. How do you feel about this?

18 Comments on “The ROI on a For-Profit Business to Support Charities

  1. This relates to the question of “What should businesses do with regards to charitable causes?” It’s a tough question, and I don’t think I have a straight answer for it.

    I’m curious, what would you do if a blogger picked an organization that isn’t a real charity (or was a cause you disagreed with?)

    1. Sheldon: I would hope that I would catch it if it weren’t a real charity. As for my personal beliefs, I leave them out of the decision. I would only require a change if I thought it would be really offensive to pretty much everyone else.

  2. Jamey,

    Personally, I think it’s brilliant and completely consistent with what many of us think, I believe, about Stonemaier Games. On a personal level, it’s the best of all worlds…I get to give a rather substantial amount to a charity which I care about and as a bonus, I’m provided a wonderful emblem of the donation. With family and friends I can share the story about how a game may have changed the lives of, in my case, a child or a veteran.

    You’re right, with regard to something as pedestrian as the “tax break” for everyone involved. It’s about something much bigger, much more important. It’s a way to touch lives in a unique way by a community of unique individuals who share a similar passion.

    Cheers,
    Joe

  3. For a moment I thought this was about the Republic of Ireland ROI . It’s good to give, it makes you feel better about yourself. You won’t trump the Facebook guy though Jamey ;-)

  4. As someone who, until very recently (I think my retirement happens today, actually, but I lost track of exactly when I sent my notice of resignation) was involved in a small charity, but primarily as a consumer, I understand entirely that as a for-profit business your primary focus has to be on your bottom line.

    However, I’m more likely to take a punt on one that I feel acts like there’s more to business than the bottom line – who treats its consumers as more than ‘walking bank accounts without brains’ to paraphrase one of the Ferengi Rules of Acquisition, but as people, which helps the wider community where possible, and the like, and I think that visible charitable donations such as your auction, and the item you donated to the JVMA, can be part of that. I doubt I could point to any specific purchase decisions I’ve made based on this, but I firmly believe that when I’m unsure about , companies that have treated myself and others well in the past are more likely for me to lean towards a buy on those products, while those that I don’t get that impression from are more likely for me to lean towards a pass, but it’s all subconscious level at that point.

    I believe it’s a small way of making your business one that people want to deal with, which I think helps in subtle ways.

    1. Stephen: Thanks for sharing your thoughts. I do like the idea that ” companies that have treated myself and others well in the past are more likely for me to lean towards a buy on those products”. For me, I think my subconscious is built to do that really well for PEOPLE, but not necessarily COMPANIES. I’m not sure why that is.

      1. I suspect companies that have a very public face – Stonemaier, for example, or looking at other board game companies, Plaid Hat or Stronghold – likely have an advantage for that, yes.

        Though I think that’s just good PR in general – present a human face to help avoid the feeling of dealing with an anonymous conglomerate.

  5. In the tech world there’s a Pledge 1% movement (1% of your product, 1% of your time and 1% of your equity). 1% of your product works well for a digital goods company, but not for a physical products company (since the manufacturing cost is non-existent). The other 1%s would work well enough though.

    http://www.pledge1percent.org/

    The goal should be to give back something meaningful without risking your company in the process, and 1% seems like good starting place to hit both.

  6. Great post (as usual)! There can be no separation between corporate culture and brand. The caring, giving, and transparent culture that you have established is one of the things that defines the Stonemaier Games brand (for me).

    Cheers,
    David

  7. Jamey,

    I had a great conversation with my daughter today regarding her economics class, which let to a discussion on charities, the government, and of course, Stonemaier Games. To that end, it led me to watch a TED Talk with her and by extension, I used your recent auction at BGG, your success as a game designer and entrepreneur, and what, I believe, drives your business. If you haven’t seen it, it’s Simon Sinek, a noted speaker on leadership…take 20 min, you won’t regret it.

    https://www.youtube.com/watch?v=u4ZoJKF_VuA

    Cheers,
    Joe

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