Naturewise Apparel's crisis management in response to unintended nonprofit funding

Naturewise Apparel -- Media Policy

Background-How Crisis Occurred/Developed

The background of this particular case study involving Naturewise Apparel is a SNAFU situation to which decentralization of the corporate giving department, likely in an attempt to reduce cost and increase efficiency, failed to perform due diligence on its philanthropic alliances with non-profit organizations. Since the company IPO in 1982, the $400,000 of profit each has been donated to charity without issue. The department was centralized to which the donations were direct to the recipient.

The strategy of Naturewise Apparel however involved a change to decentralization of its corporate giving department. After the decentralization, a major calamity in society that is linked to the organization is revealed. The $400,000 donation to charity was linked to the bombing of an abortion clinic by a pro-life organization that received funds from a non-profit organization that is linked to receiving funds from Naturewise Apparel. The fear for Naturewise Apparel is in being linked to an organization that may be linked to a violent militant group.

The crisis is really linked by two disparate areas. Naturewise Apparel did not condone in any way the bombing of the clinic and further stated Naturewise did not know the money was going to that particular group nor was aware of any political or religious motivations. Therefore, one has to assume that without further information, Naturewise Apparel had donated money to CHICARE, a charitable organization which in turn donates to a large number of needy charitable organizations in the Chicago area (Sonnenfeld, 121) and therefore did not know ultimately which specific organization the funding would bankroll.

Key Issues

The key issues with this particular case study reside in the track record of Naturewise Apparel's philanthropic activity since the IPO in 1982 and the correlation of the decentralization of its corporate giving department to the acts of violence against the abortion clinic after the decentralization of the department. Additionally, the 3rd party relationship that Naturewise has ostensibly agreed to is also critical. Naturewise is not directly affiliated with any organization to which CHICARE has maintained alliances to.

The decentralization of the departmental activity essentially means that the organization has decided to fund non-profits like CHICARE rather than to directly deal with the communities-based charities directly. Therefore, the lack of control Naturewise Apparel has over the oversight of the activities of any organization that will receive funding from their philanthropy is subject to the ability the outsourced solution, in this case, CHICARE.

The resolution to this issue is best resolved by not hesitating with the press and to tackle the issue head on. The case study includes experts that rant about not speaking until the story is proven, etc. The resolution is to convey that, when pressed the acts of violence are deemed horrid by Naturewise Apparel and are in no way, shape, or form, condoned by our organization. Further, there is no affiliation between Naturewise Apparel and the organization linked to the attack. As further details of this incident are released, we feel our organization will be exonerated from any accusation of wrong doing.

Avoiding the Crisis

To avoid such a crisis is relatively difficult, especially when there is a commitment within the department to fund not only the larger charities but also the smaller charities as well. This is to say, due diligence can sometimes miss detecting the potential for these often irrational acts of violence. There may be no indication of the potential to act irrationally however the act of violence may be unleashed.

A comprehensive review process of the methodology used to assess corporate giving must also be performed. Perhaps the organization should centralize and not decentralize given the recent incident. Additionally, perhaps the organization should give to non-profits with very strong track records, such as the American Red Cross, or to directly donate to communities-based charities that are food and shelter based.

Managing and Profiting from the Crisis/Conclusion

Negative public relations can lower the market share value per share of outstanding stock which will reduce the overall value of a company. However, properly managing a PR crisis can cause what is called 'lurking variable' momentum to the stock price and bring the company valuation higher given the amount of visibility established whereas prior to the incident there was no attention given to the company. By steering the organization above the acts of a third party non-affiliate, Naturewise Apparel can point to its history of corporate giving and to its increase in value due to acts of corporate social responsibility in promoting social welfare.