AmazonSmile and the State of Corporate Charitable Donations

Amazon recently announced the launch of AmazonSmile.  The gist of it is that Amazon will now donate 0.5% of the purchase price of goods on Amazon to the charitable organization of your choice.  Lots of companies donate a certain amount of revenue or profits to charity, but generally the company selects which charity.  So why is Amazon doing this?

First off, Amazon is claiming that the prices of goods will not increase.   Fantastic, but let's assume that the price of goods did increase by 0.5% and Amazon simply donated the extra portion to charity.  In this case, there would be only one difference between Amazon making the donation and the customer personally donating the money outside of Amazon: in this case, Amazon would get the tax deduction and the customer would get nothing.  Basically, Amazon would have tricked customers into handing them millions of dollars in tax benefits for the reward of less freedom in being able to determine the amount of money they wish to donate to charity.  In fact, Amazon is crystal clear on their page about the tax consequences of these donations:

From the AmazonSmile Program Details:

Can I receive a tax deduction for amounts donated from my purchases on AmazonSmile? 
Donations are made by the AmazonSmile Foundation and are not tax deductible by you.

So it's good news that the price of goods will not increase.  In that case, however, where does the money come from?  I think that a lot of people assume the money comes straight from the bottom line; in other words, Amazon just donates some of their profit.  There's a problem with this interpretation though: Amazon doesn't make profit!  In the most recent quarter, Amazon lost 9 cents per share.  Also, Amazon doesn't actually sell many of the products listed on its site.  Through their affiliate model, other companies can complete transactions through Amazon.  So what is Amazon thinking?

Here is my take.  First, Amazon received a great deal of positive publicity for this, which is good for Amazon.  These days, people seem to want to only do businesses with companies that care about people.  Donating to charity is a great way to do that, especially if it makes the company less of a target to boycotts.  Presumably, this increases Amazon sales in the long term.  But what about the cost?

Notice that, for the charitable donation to be valid, the user must start their shopping at smile.amazon.com.  How many people will actually do this?  Probably very few.  Even of those who do, not all of the products are eligible for the donation.  Amazon states that only products that state “Eligible for AmazonSmile donation” will be valid.  When the benefit of this program is supposed to be effortless charitable donation, Amazon sure seems to be requiring a lot of effort on the part of customers.

So in effect, Amazon is generating a lot of positive publicity at very little cost.  This may increase overall charitable donations, and that is commendable.  However, there is little question that this move will be beneficial to Amazon's business.  But what do you think?  Am I being cynical and is Amazon making a genuine, selfless attempt to making donations to society?  Or is this a calculated move that Amazon's finance department has projected as improving long-term shareholder value?