A deal between a children's aid project in Berlin and a maker of food supplements illustrates the increasing lengths nonprofits must go to stay afloat in times of government belt-tightening.
Berlin's Neukölln district has the highest welfare rates
Berlin-based children's project the Arch ( Arche) is cooperating with a vitamin manufacturer, and will receive a percentage of the profits on every packet of a certain food supplement they sell. The move is an example of the increasing trend toward "social sponsoring," where non-profit and for-profit activities mix with the intention of benefiting both parties.
The head of the Arch, Kai-Uwe Lindloff, said the group decided to work together with Limburg-based Orthosan, maker of the food supplement Visan, as a means of staying afloat.
Seeking financing paths
To date, the project has covered 95 percent of its 500,000 euros ($600,000) in annual costs through donations. But "social sponsoring through firms could open up a new path to financing," Lindloff told the edp news service in late February in Berlin.
The Arch was founded 10 years ago in a downtrodden Berlin neighborhood by well-known German pastor and children's activist Bernd Siggelkow. It offers care to some 250 underprivileged children each day, giving them a warm meal and a place to go to play games, get help with homework, or receive counseling.
Increase in poverty
Last year, the Arch was awarded a human rights prize. It has two centers in Berlin, and opened a branch in a rough neighborhood in Hamburg earlier this year, with a branch planned for Munich.
Child poverty exists in Germany -- and it is growing
In the past years, poverty in Germany has been on the rise. A report on poverty from 2005 showed 13.1 percent of Germans were at risk of poverty, or earned less than 60 percent of the median German income. According to the Organization for Economic Cooperation and Development, some 1.5 million children under age 18 live below the poverty line in Germany.
Nonprofit vs. for-profit
"We get children from families who often don't have enough money to do the things they would like to do for their children," said the Arch's Lindloff.
But as necessary as their work is, some are nonetheless questioning the wisdom of joining forces with a for-profit vitamin maker.
Germany's Consumer Protection Agency is aware of the agreement between the Arch and the food-supplement Visan.
"We have noticed an increase in such questionable cooperations," said Angelika Michel-Drees, nutrition division head at the Consumer Protection Agency, who sees the Visan-Arch deal as dubious. "We always prick up our ears when we hear something that implies that you can't be healthy without food supplements," she said.
Is real food sufficient to provide vitamins?
In this case, the children's project is being used as a marketing tool for Visan, Michel-Drees said. "Profitable interests are hiding behind the cloak of doing good."
Indeed, a closer look at the details of the deal shows the potential conflicts of such a connection. At 30 euros per package, Visan is much more expensive than over the counter vitamins, which retail for about a quarter of that price.
In fact, Visan is sold mainly on doctors' recommendations. The firm Orthosan is planning a marketing blitz for Visan at doctors' offices to increase sales, and at the same time the supplement will be tied to the Arch -- and the project's good deeds -- by carrying the Arch logo. A portion of the price of each packet sold will then go on to the Arch.
Despite the tie-in, Arch founder Siggelkow told the dpa news agency he doesn't feel his organization is being used: "We aren't selling anything, and our kids aren't walking around with Visan logos on their t-shirts." And besides, he argued, vitamins aren't anything bad for you, like cigarettes or alcohol.