None of these "affinity" products is particularly "different" and charities say they have been designed to compete in terms of features and/or price with comparable mainstream financial products, while carrying the added cachet of raising money, at no cost to the holder, for the charity concerned.
Amnesty International is among a new wave of charities in the affinity finance market. Its move followed a looming funding shortage at the end of 1995 and research among its members showing there was support for more than just its existing Co-op credit card. David Coe, director of fundraising, says: "We found that members would be interested in practical financial products such as PEPs or insurance, suggesting a new and potentially durable source of income for us if we could offer something robust and competitive." Last year Amnesty launched an ethical PEP, basically a Friends Provident investment product sold in partnership with the Co-operative Bank, which proved popular. Then in April the charity teamed up with London & Edinburgh, the insurer, to offer household and car insurance policies where for every policy sold (or renewed in future) the insurer gives Amnesty pounds 10.
While careful not to claim Amnesty's home insurance product will beat everything else on the market, the offer comes with the guarantee to undercut the amount being paid by anyone holding an existing policy with a bank or building society. To back that it offers to donate a further pounds 5 to Amnesty for anyone who can send them a copy of a bank or building society insurance renewal invitation cheaper than its own quote.
Age Concern and Help the Aged have been into financial product fundraising for longer, and both now run lucrative trading arms selling the over-50s a broad range of insurances (buildings, home contents, car, pet, travel) as well as long-term care or "independence planning" policies. Unlike Amnesty, Age Concern claims it did not set out down this path primarily to generate income for the charity. Dave Botsford, the managing director of Age Concern Enterprises, says the offers were launched to meet a social need in its supporter base for low-cost, low-value home insurance policies at a time when older people often faced excessive premiums. Help the Aged also denies its decision to compete for the same business was anything less than socially oriented. To serve a much wealthier supporter base it has done much to pioneer fairer priced new-for-old home insurance and travel insurance for senior citizens.
Elsewhere, the British Diabetic Association launched its own travel insurance aimed at resolving the problems diabetics faced in getting insurance.
The rewards of these financial tie-ups can be chunky for charities. For example, over the past decade the National Trust has generated more than pounds 2m off the back of what it terms "a licence arrangement" with Frizzell offering NT members car, financial planning for long-term care and home insurance products, some of which have been rated best-buys in Which? magazine. So why, one has to wonder, isn't every charity out there flogging us life insurance and the like? It could well be that relatively few charities actually retain staff with the right kind of marketing expertise. But, according to Mr Coe that is expected to change quickly if only because, as fundraising activities go, "few can better one where the sponsor takes all the investment risk developing the scheme and carries all the administration overheads while the charity just collects a steady income over a number of years".
However, Simon Collings, head of appeals at Oxfam, is less certain everyone will rush to follow suit because for many charities there are ethical considerations involved. "Anything we promote has to fit with our values so we are careful about any kind of joint venture."
Such issues may be of less concern to other charities. The Royal Society for the Protection of Birds (RSPB) is inviting tenders from six insurers for the contract to launch "a range of high-standard good-value RSPB financial products" that will not only cover general insurance and long-term care but will also extend to life assurance and PEPS, all of which will be targeted later this year at the RSPB's 967,000 members and the 1.9m people who read the RSPB magazine.
Cause-linked marketing of financial products is here to stay, choice is set to improve and there is every reason to expect the products to become increasingly competitive as more insurers and investment managers realise it could pay them a hidden dividend to give some of their profit margin to charity in return for new and loyal customers.
Amnesty (home and car insurance) 01903 69411; Help the Aged (buildings, contents, travel, pet or motor insurance) 0800 413180; Age Concern (home) 0345 697610, (motor) 0345 125816, travel (01883 834887), or contact any local branch; National Trust/Frizzell (home cover) 0800 272525, (motor policies) 0800 581817; British Diabetic Association Homequote 01903 264464, Motorquote 01903 262900, Travel insurance 0171 512 0890.Reuse content