Are Montanans Being Scammed When They ‘Round Up’?

BUTTE, MT - Your drive up to the drive-thru window. You shamefully place your order for one that could be mistaken as an order for many. Then they ask you the dreaded question: "Would you like to round up for charity?"

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It's been a hot topic recently as more and more corporations play their hand in what many call corporate philanthropy, where multibillion-dollar corporations volunteer a selected allocation of funds from their revenue—for a multitude of different reasons. The problem many face with corporate philanthropy is the problem of integrity, or the lack thereof. In short: corporations haven't proven themselves as advocates for the average citizen, being way more "for profit" than "for the people" on the tipping scales.

However, it makes sense. In our capitalistic society, a company's profit is something we regard highly as a culture, and a profitable company is something millions of Americans strive and work towards. On the other hand, many find our hyper-corporate culture to be one of the biggest indicators for the unraveling of the American system. When it looks like major players are executing their former employees who are whistleblowing on their questionable practices, how could one expect trust to enter the equation?

That's where over a hundred million consumers find themselves every day as they're asked if they want to "round up" for charity. Can we trust them? Or are we being scammed?

In a Nutshell

To really determine if the "round up" campaigns are truly a scam, a truth, or somewhere in between, we must look at the numbers and the data available. For a lot of the information presented below, we took a look at the IRS Form 990, a tax document that breaks down the allocation of funds involved with such campaigns and is required to be filled and submitted by the charity foundation.

Although we reach another obstacle, the trust of our government and their lack of corporate accountability (especially when it comes to accurate tax documentation, since only 1-2% of businesses actually get audited each year), we'll just have to assume for this article that the numbers provided on relevant tax documents are accurate.

So, let's get into the meat of it:

How Much of Your Dollar Goes to Charity?

Easily one of the biggest concerns with "round up" campaigns is how much of your donation actually goes toward charitable causes. According to an investigation into one of the biggest foundations of this type, the Ronald McDonald House Charities (RMHC), the average RMHC chapter allocates 74 cents of each dollar towards charity. That means 26 cents of each dollar donated by consumers went towards "administrative, programming, and fundraising expenses", such as salaries, marketing, and office expenses.

Looking at the data for the Missoula RMHC chapter, it appears that from 2015 to 2022, the chapter has received a total revenue of $176 million, most of which comes from your round-up change and outside donations. In that same period, they've spent a total of $142 million, with 74% of those expenses going towards their charitable programs ($105 million across 7 years).

How much are executive and management salaries? In 2022, 34.7% of expenses went to salaries and wages, with around $95,680 going to Missoula RMHC Executive Director Amy Peterson and $223,392 going to other employees.

Now, that's just McDonald's. After extensive research, many other foundations remain unclear with their exact numbers, though—with RMHC being a leader in the field as one of the most recognizable and most profitable—one can assume most others are around the same.

Corporate Philanthropy or Consumer Fundraising?

A critical question that arises from these campaigns is why multi-billion dollar corporations are asking for consumer money to fund charitable endeavors when they could afford to do so themselves. The reality is that these campaigns serve dual purposes: they allow companies to promote their brand as socially responsible while also reducing their own financial contributions to charity.

In other words, corporations can donate and truly help others—at your expense. But just like the classic philosophical dilemma of narcissistic altruism, is that really the worst thing in the world?

For example, a report from NPR highlighted that companies like Walmart and McDonald's, both of which generate billions in annual revenue, could easily fund the charities they partner with. Instead, they opt to ask consumers to contribute, effectively outsourcing their charitable obligations to the middle and lower classes.

So, although the foundation itself may not be shady themselves, their motives may certainly be, depending on who you ask.

So, would you like to round up for charity?

The rise of "round up" charity campaigns reflects a growing trend in corporate philanthropy, where companies encourage consumers to contribute to charitable causes at the point of sale. Whether you agree with it or not, it is questionable as to why seemingly, all of a sudden, every business would like you to round up. Do they know something we don't?

While these campaigns can generate significant funds for charities, they also raise important questions about transparency, the actual impact of donations, and the motivations behind corporate involvement in these initiatives. Though, ultimately, while "round up" campaigns can be a convenient way for consumers to contribute to charity, it's essential for both donors and corporations to ensure that these contributions are used effectively and ethically.