Products Turn Red To Augment AIDS Fund

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April 13, 2006

When United Nations Secretary General Kofi Annan called in 2001 for a new global fund to fight the AIDS pandemic, he described it as a public-private partnership with both governments and corporations pitching in.

It hasn't worked out that way. Since 2001, the Global Fund to Fight AIDS, Tuberculosis and Malaria, an independent Swiss-based, nonprofit foundation that is supporting disease prevention and treatment programs in 131 countries, has raised more than $4.8 billion from governments, including $1.5 billion from the U.S. Other money has come from nonprofit sources, including $150 million from the Bill and Melinda Gates Foundation. But less than $2 million has come from corporations, and none of that has come from American companies, according to the fund's financial records. By contrast, companies in the U.S. gave $425 million in cash to Southeast Asia tsunami relief, according to the Business Civic Leadership Center in Washington.


This isn't to say that U.S. companies ignore AIDS. Some have given to AIDS relief efforts outside the global fund -- more than $69 million in 2003, the latest year tracked by Funders Concerned About AIDS.

At the global AIDS fund, Executive Director Richard Feachem says the fund "is not an easy sell" to companies' philanthropic programs because it looks for large sums of money over a long period of time -- unlike emergency-relief efforts. The fund also doesn't allow private donors to direct how the money is spent, which doesn't jibe with a lot of corporate-giving programs, fund officials say. The fund's generally low profile is another problem.

Help may be at hand in the form of Project Red, an effort conceived by U2 rock star Bono and the Kennedy clan's Bobby Shriver, who have worked together on African poverty issues. Announced in January, the project is centered on enlisting companies to create special "red" products, a portion of whose profits -- about 40% to 50% -- is given to the global AIDS fund for its work in Africa. "We're trying to make it really easy for people to help," Bono says, referring to consumers.

The first Project Red products were introduced in Britain last month. So far, four companies have signed on, led by American Express Co., which is offering a red-colored credit card that says on the back, "This card is designed to help eliminate AIDS in Africa." At least 1% of the cardholder's spending goes to the fund. The other participants are Gap Inc., which launched a line of T-shirts; Nike Inc., which is selling a special Converse sneaker; and Giorgio Armani SpA, which is marketing sunglasses popularized by Bono. Actress Scarlett Johansson contributed a photo shoot to publicize the initiative.

Bono says the project sprang from a conversation he had with Robert Rubin about the general lack of AIDS awareness in which the former U.S. treasury secretary said, "You need to market this like Nike." Bono says, "It sowed the seeds in my mind about how to go about this."

The project was launched in Britain with the knowledge that consumers there have a history of buying "ethical" products like Fair Trade coffee, which promises to pay peasant growers more than the market rate. Only Armani, which says it plans to sell a whole line of red products, has expanded the project to the U.S. and other countries, although a Gap spokesman says an expanded line of red products will be available in North America this fall.

Officials at American Express, Gap and Armani say it is too soon to judge the project's success, but by some indications, there is a long way to go, at least in the U.K.

Stephan Shakespeare, chief executive of YouGov, a British market-research company, says, "When we look at the impact of Project Red on these so-called superbrands ... the scores are as flat as a pancake and the British public hasn't reacted in the manner that these companies, at least in private, would have hoped for." He suggests a recent spate of other ethical-issue affinity products in the U.K. may have resulted in "consumer apathy towards Project Red, which even Bono can't overcome."

Although publicity for the fund was widespread at its launch, Dr. Feachem says it has since waned. "Most people have never heard of us," he says. Joelle Tanguy, managing director of the Global Business Coalition on HIV/AIDS in New York, says AIDS "will never have the power of the images of the tsunami."

Stephen Lewis, Mr. Annan's special U.N. envoy for AIDS in Africa, says, "The companies are going to benefit a hell of a lot more from Bono's name than the global fund is going to benefit from the companies." Replies Bono, "We don't know that yet. If we fail, that's true."

Mr. Lewis suggests that companies give 0.7% of their after-tax profits to the fund. But Ms. Tanguy of the HIV/AIDS business coalition says, "It's not going to happen," in part because shareholders likely wouldn't agree.

Meanwhile, Bono, Mr. Shriver and fund officials remain optimistic about their approach. Mr. Shriver says it will take 18 months to judge the effectiveness of Project Red, and he notes that the four companies signed five-year contracts. He says it took nearly two years to enlist participants; some companies suggested sponsoring a musical recording involving Bono.

Apple Computer Inc. and Time Warner Inc.'s AOL unit declined to participate, at least at first, according to people familiar with the situation. Spokespeople at Apple and AOL declined to discuss the matter. Project Red officials are hoping soon to announce a major cellular-phone service deal.

Mr. Shriver says all of the companies they approached were "a bit stunned" when they first heard the pitch: "We want you to make money." Although he suspects some companies worried about being accused of AIDS "profiteering," he says he believes it's the best solution to get companies to contribute over the long term. "No private-sector company whose job is to make profits is going to on a sustainable basis give away money," he says.

The fund's Dr. Feachem, who eventually wants to raise about $300 million annually from the private sector, makes no financial projections about Project Red, but says, "The potential ... is very large." And Bono is hopeful the companies' marketing skills will generate more awareness about "the AIDS emergency" in Africa, which is the continent's leading cause of death. "These people are great about getting people's attention," he says.



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