If there is one word in loyalty marketing that causes concern, it’s “breakage”. Simply defined, breakage is the portion of earned rewards that are never redeemed. Marketers are concerned because it means customers are not engaging with the program. They understand that redemption pays out in the long term. The finance team has a love/hate relationship with breakage. On one hand, the discount is never realized. On the other hand, it keeps liability on the books.
For years, loyalty programs have lived with this quiet inefficiency.
However, smart brands have been rethinking the concept of breakage and how to alleviate everyone’s concerns. Instead of treating unused points as liability relief, they’re turning them into a new kind of currency: one that customers can direct toward causes they care about. We call this “cause conversion”.
This is the essence of transactional giving—a model where customers, not brands, decide where value flows.
From Points to Purpose
At its simplest, cause conversion allows customers to turn excess loyalty currency into charitable impact—often with just a click. But the shift is deeper than functionality; it’s about control.
Programs across industries are already making this tangible:
- Beauty retailer Sephora enables members to convert points into donations (e.g., 500 points = $10), embedding giving directly into the rewards catalog
- American Express connects Membership Rewards to fundraising platforms like JustGiving, letting customers direct support to causes of their choice
- Hotel and airline programs allow points or miles to fund everything from disaster relief to conservation initiatives
Delta Airlines allows its SkyMiles Members to donate points to SkyWish. This goes directly to non-profits like American Red Cross and UNICEF, allowing travel for volunteers and disaster response through a simple online donation flow. This program is strong because it’s simple, clear and easy to see how the points donation has a positive effect.
Throughout the year, charity options change. In November 2025, in honor of Veterans Across America, SkyWish focused on matching SkyMiles donated to two Veteran charities, Fisher House Foundation and Luke’s Wings. This allows SkyMiles members the choice of donating to charities about which they feel strongly.
This model resonates now more than ever. Three drivers make it important for both the company and rewards program members.
1. Value alignment is a loyalty driver
A growing majority of consumers prefer brands that reflect their values, making cause-based rewards a differentiator rather than a “nice to have.” Customers shop with you because they like your products and stay with you if they feel your values align with theirs.
2. Frictionless generosity wins
Donating points removes the biggest barrier to giving: parting with cash. Customers can contribute without changing spending behavior, transforming passive accumulation into active impact.
3. Idle currency becomes engagement fuel
Donations count as account activity, keeping programs “alive” and preventing expiration, activating at-risk members. It’s a way to engage with the customer through a non-transactional way (at least from their perspective).
Morrisons, a UK Grocer, has recently partnered with Marie Curie, an end-of-life charity organization. Morrisons More members are able to rack up points while grocery shopping and donate points (1000 points = £1) either through one-time transactions or regular donations of all points. Members can toggle this feature off and on, so customers can easily keep their points again if needed.1
The Bigger Opportunity
From a business standpoint, charitable giving reframes loyalty from a discount engine into a value exchange.
It transforms:
- Breakage → participation
- Points → purpose
- Transactions → relationships
Cause conversion also removes liability, and can be done at a discounted rate compared to regular redemption. And, perhaps most importantly, it gives customers a new reason to engage—not just for what they get, but for what they can give.
Len Llaguno, Founder and Managing Partner at KYROS, an actuarial firm that works exclusively with loyalty programs, notes, “There is a common misconception, particularly in finance, that breakage is a good thing. The view is that breakage is good because it means lower redemption costs. But no good business decision has ever been made by just looking at costs. You have to look at the cost/benefit trade off. We see time and time again that redemption is a powerful moment in the customer journey that increases customer lifetime value above and beyond the cost of the redemption. The cost/benefit trade-off is positive. We firmly believe that redemption is a good thing and breakage is a bad thing.”
In a landscape where loyalty is increasingly emotional, this shift may be the most valuable redemption of all.
