Moneybox

Companies Are Donating Things That Nobody Wants to Buy Right Now

A JetBlue plane parked at an airport.
JetBlue announced that it would be donating 100,000 pairs of round-trip flights to medical workers. Daniel Slim/AFP via Getty Images

Over the past two months, major corporations have eagerly touted their efforts to help the United States weather the coronavirus outbreak. In press releases, Amazon has highlighted its donations of thousands of laptops to schools and tens of millions of dollars to COVID-19 research and response. Visa, Sony, Wells Fargo, and others have publicized their coronavirus pledges. President Donald Trump even showcased a menagerie of prominent CEOs from the likes of Target and Walmart—and ill-advisedly shook a hand or two—when he announced a national emergency in the Rose Garden in March. They announced efforts like opening up more testing locations in their parking lots.

Nothing to fault here—but it’s hard not to notice that some of the acts of corporate beneficence involve donations of products and services that companies can’t sell right now due to the ongoing economic shutdown. If no one’s buying, why not give it away?

For instance, JetBlue announced on Wednesday that it would donate 100,000 pairs of round-trip flights to health care workers, starting with 10,000 recipients in New York, to thank them for their service in treating coronavirus patients. The company saw a nearly 97 percent drop in the number of passengers on domestic flights in late April. On Tuesday, the Department of Transportation approved the company’s request to suspend service at 16 airports, including in Chicago and Dallas, because of low demand. Though the vouchers are good until July 2021, no one is clamoring to buy those tickets for now.

Serta announced on March 25 that it was donating 10,000 mattresses to hospitals in New York City that are suffering from a shortage of beds for patients. The company launched a new “Stay Home, Send Beds” initiative on Sunday, which allows people to purchase beds and distribute them to hospitals in whichever city they choose. For every 25 beds that people purchase, Serta will donate an additional mattress. Mattress retailers predict that their sales will go down by around 50 percent in the second quarter, according to the financial services company Piper Sandler. Serta itself has had to close down two plants in Georgia.

In March, Google committed to shelling out $250 million in ad grants to the World Health Organization and more than 100 other government agencies involved in disseminating coronavirus information, as well as an additional $340 million in ad credits to small and medium-size businesses. The online ad market was hit hard in March as businesses looking to cut costs were reluctant to spend on promoting services and products that people likely weren’t interested in buying in the first place. That means there’s a lot of inventory—ad spots on Google search pages and around the web—to give away. The market did show signs of stabilizing in April, but the Interactive Advertising Bureau nevertheless predicts that digital ad spending will be down 33 percent in the second quarter, amounting to a roughly $40 billion drop in sales compared with last year. Facebook similarly pledged to give out $100 million in ad credits and cash grants.

Meanwhile, Hilton, Marriott, and other hotel chains are offering millions of dollars in free hotel stays, giving empty rooms to health care workers around the country. New York City is also planning to use thousands of hotel rooms to house patients. More than 75 percent of the nation’s hotel rooms are currently empty, so these chains have plenty of capacity to contribute.

The fact that consumers weren’t likely to purchase whatever these companies are donating in the first place doesn’t diminish the value of the contributions, even if it’s also a PR win for these brands. It’s similar to how struggling businesses like farms are currently sending unsold produce to food banks lest it go to waste, although a farm is at a much higher risk of going under right now than JetBlue. Either way, though, both that onion and that flight ticket have an expiration date.

For more on the impact of the coronavirus, listen to What Next.