'Checkout Charity' Works — If It's Done Right

people at grocery checkout — Do you like when cashiers ask you for charitable donations, or do you find them annoying? Either way, checkout charity is big business. Image Source/Getty Images

You've seen it at your local supermarket, department store or even on your ride share app. You're asked verbally (or digitally) if you'd like to "round up" your purchase to the nearest dollar with the difference going to a charity. It may not seem like much to hand over an extra 63 cents, so you say yes. But how much do these charities collect and is it worth it?

Checkout charity, as it's called, is not just about community service and warm fuzzies. It's a big business. Engage for Good, an organization devoted to corporate social initiatives, found that in 2020, 76 point-of-sale fundraising campaigns raised more than $605 million in the U.S. Each of these campaigns raised at least $1 million. In 2014, checkout charity raised $422.3 million.

"What companies are hoping for out of checkout charity is that there's a halo effect and that consumers are going to spend more with them because they view the company more favorably," said Joe Waters, founder of Selfish Giving, whom we spoke with in 2018. And the tactic seems to be working. Sixty percent of respondents in a 2016 survey said they felt positive about a company after being asked to donate at the register.

Marketing professor Michael Giebelhausen at Clemson University published a study in 2017 that looked at revenue at a national chain restaurant following the implementation of a checkout charity campaign.

"[Checkout charity] had a statistically significant positive impact on sales," said Giebelhausen in 2018, who credited the economic effect to something marketers call "warm glow."

Everybody wants to see themselves in a positive light, Giebelhausen explained. And when companies give consumers the chance to engage in "prosocial" behavior — like reusing their towels at a hotel to save water, or packing up groceries in an environmentally friendly reusable bag — consumers walk away feeling good about themselves.

In psychological terms, by donating to a checkout charity or reusing a dirty hotel towel, the consumer has earned "moral credit." And once you've earned a little moral credit, you have license to do something that's not as virtuous, like spending money on something frivolous or unhealthy.

"If your business is a 'vice' business," said Giebelhausen, "like fast food or candy, then it's a particularly good combination. Customers who donate feel good about you and then they have these moral credits that they can spend on your products."

Rounding up can even beat asking for a straight donation. For 19 days in 2017, some researchers from North Carolina State collaborated with a local zoo, where the zoo asked patrons of its on-site cafe if they'd like to round up their purchases to the nearest dollar for charity. The results were compared to the campaign the zoo normally ran, which asked patrons to donate an extra dollar at the cafe. The study found that 45 percent of patrons agreed to round up, compared to 18 percent who usually gave a dollar. The zoo also raised 21 percent more money during that 19-day period.

The Downside of Checkout Charity

Checkout charity campaigns are not without their pitfalls, though, said Waters of Selfish Giving. He mentioned a local Boston grocery chain that hit him up for a different charity every time he came to the register. The store employees didn't engage customers or bother to explain what the charity was all about. An option just popped up on the credit card pinpad and Waters felt pressured to donate.

"Those are the programs that people complain about," Waters said.

Indeed, a new October 2022 study found that checkout charity can increase a shopper's anxiety, with 40 percent of respondents using words like "pressured," "annoyed" and "concerned about being judged" to express how they felt about being asked. Only 20 percent used positive words to express their feelings. The researchers found the "anxiety can be relieved when customers agree to donate, but only when the solicitation comes from a cashier, as opposed to an automated request made by a computer or self-service checkout machine."

The checkout charity campaigns that work, explained Waters, are thoughtfully executed and integrated with the company's mission and client base. Waters' specialty is "cause marketing," helping for-profit companies partner with nonprofits to advance a charitable cause while making the company look good. He's run checkout charity campaigns for local Boston businesses as well as national chains like Staples and Valvoline Oil Change.

For Waters, a good example of an effective checkout charity drive is the Month of Giving at the sandwich chain Jersey Mike's. Each franchise location partners with a local charity and solicits donations during the month of March and only during the month of March. The campaign is capped by the Day of Giving, when the proceeds from all sales made on March 28 are given to the chosen charity.

Now That's the Truth

A 2021 viral TikTok video claimed that stores can write off these checkout donations from customers on their own end-of-year taxes but this is simply untrue, according to the Associated Press. These donations don't count as company income, so they can't be written off. When a store donates from its own business income, the company can write off that charitable donation. Customers who donate to these "checkout charities" can also write off contributions on their taxes, but most people don't as the amounts are so small.