Products with a Purpose
In Eli Marmar’s life story, water is a recurring theme. “I was raised in the Bay Area as a competitive swimmer and spent my formative years in the ocean surfing. It rained on my wedding day. My son was born in a birthing tub.”
No surprise then that he launched his company Freewaters with one mission: provide clean drinking water, one pair of sandals at a time. That’s right, sandals. San Francisco-based shoemaker Freewaters represents a new breed of social enterprises that have philanthropic agendas built explicitly into their corporate DNA. Beyond the traditional selling points of price and presentation, companies like Freewaters are offering products that directly support a humanitarian purpose—and the concept is catching on fast. But while the entrepreneurs behind these socially conscious start-ups have tapped into consumer demands to play donor, they also raise questions about whether applying the profit motive can achieve positive and sustainable developmental ends. Advocacy as part of the business model is nothing new.
The iconic Vermont-based ice cream manufacturer Ben and Jerry’s has promoted social activism since it was founded in 1978. The company has paid a “livable wage” to its employees nearly twice the national minimum wage, sourced Fair Trade-certified ingredients for its products and utilized environmentally friendlier hydrocarbon freezers. From 1985 until the company was acquired by Unilever in 2000, Ben and Jerry’s committed 7.5 percent of the company’s pretax profits to philanthropy.
Natural beauty products company The Body Shop has similarly sought to be seen as a responsible corporate citizen through bans on animal testing and a commitment to environmentalism.
The company has supported numerous campaigns ranging from the Greenpeace-initiated “Save the Whale” in 1986 to ongoing initiatives targeting an end to child trafficking, domestic violence and the spread of HIV.
What Ben and Jerry’s and The Body Shop represent is a model perhaps best summed up as product plus politics. But for this most recent batch of social enterprises, philanthropy is the product, embodied in the “buy one, give one” model, or BoGo for short.
Founded in 2006 in Santa Monica, California, Toms, a company that sells shoes and eyewear, popularized the model through its mission statement: “With every pair purchased, Toms will give a pair of new shoes to a child in need.” Toms calls this “One for One.” According to the company’s first giving report: as of September 2010, Toms has donated one million pairs of shoes in 23 different countries.
On the heels of Toms’ success, several other companies have launched with similar BoGo statements. New York-based online glasses retailer Warby Parker has “Buy a Pair, Give a Pair.” Backpack producer Ark Collective of Los Angeles promotes “Get to Give.” Roma Boots in Dallas follows directly in the example of Toms, but donates rain boots full of education supplies to children in need, mostly in Romania, rather than walking shoes globally.
While the founders of Freewaters believe the provision of clean drinking water to be a more pressing need than a new pair of sandals, the company’s philanthropic model, like BoGo, still ostensibly targets an immediate and quantifiable impact on some place in need through each product sold. “For every pair of sandals that we sell,” Marmar explains, “we’re able to provide clean drinking water for one person, for one year.”
The drivers of these BoGo businesses largely originate from consumer demand. One April 2012 study, conducted by the public relations agency Edelman, found that 87 percent of consumers believe business should place at least equal weight on business and society, and 72 percent of consumers would recommend a brand that supports a good cause over one that doesn’t. “We’re seeing a massive shift,” said Pamela Hartigan of the Skoll Centre for Social Entrepreneurship at Oxford University’s Saïd Business School. “It used to be that the company dictated. Now the consumer is king and companies are competing for some emotional tie to that consumer.”
When he launched Freewaters, Marmar recognized that those ties were not going to be forged by the product alone. “We quickly realized that in today’s marketplace, where there’s so much product and there’s so much messaging, you really need more than an innovative product to reach people,” he explains. “Consumers need something very simple that they can connect with in an intellectual and emotional way. So, you need to educate them that they can have an impact beyond themselves; you need to help them understand that ‘if I do this, this will help people’.”
Samuel Bistrian, founder of Dallas-based Roma Boots, agrees. “There is this craving where people want to be part of something bigger. We’re seeing something in young people that we haven’t seen before. Everyone is going to want to have products that have a story behind them.”
In some instances, BoGo has amounted to copycat marketing aimed at appealing to this trend in consumer demand. One notable example is the Sketchers-launched brand Bobs, which shares more than a passing resemblance to Toms. “Buy a pair of Bobs, and Sketchers will give a pair of new shoes to a child in need” its homepage reads.
For entrepreneurs like Marmar and Bistrian, the real drivers behind BoGo go beyond marketing; their reasons are personal. “We wanted to address a very basic fundamental human need,” Marmar says. “We considered hunger, we considered diseases but it kept leading us back to water. Water is so fundamental to every aspect of life.” For Bistrian, who left the Romanian countryside as an impoverished émigré bound for Chicago in 1990, launching Roma Boots has been a way to give back to where he came from. “Our goal really isn’t about making money. It’s really to run a business successfully so that we can give boots to those in need.”
Good intentions aside, BoGo businesses still raise questions about whether for-profit companies should be operating in a traditionally nonprofit space. Social entrepreneurship expert Pamela Hartigan believes a little market-oriented motivation is exactly what the nonprofit sector needs. “Philanthropy should be about taking risks,” Hartigan says. “Unfortunately, most foundations are incredibly risk averse, because they have to run around looking for funds all the time. Capital is what’s going to put that gas in your engine, and companies have it.”
Dr. Jordan Kassalow founder of VisionSpring, a nonprofit dedicated to making affordable eye care products available in developing countries, is similarly enthusiastic about the advantages. “For-profit companies tend to have more resources than nonprofits. They bring the discipline that comes with managing a profit and loss statement. They tend to have good fiscal discipline, marketing channels, and a lot of other skill sets that are often needed.” Even more critical voices recognize that companies can bring benefits.
“Personally I don’t care where the aid is coming from,” explains Saundra Schimmelpfennig, a leading development professional in the post-2004 tsunami recovery efforts in Thailand who now pens the aid accountability blog Good Intentions Are Not Enough. “If [companies] are doing it well, maybe they will bring along new perspectives.”
The big concern for Schimmelpfennig is not businesses becoming more philanthropic, but rather the BoGo model itself. “The donor has far greater influence than the recipient, she argues, “there’s simply no accountability if it’s a bad aid project. A lot of BoGo companies are just handing out goods. This can have a real effect on the local economy and undermine the growth of local businesses. This is very much a short term band aid solution.” Schimmelpfennig is especially critical of Toms’ much-publicized “shoe drops.”
“They ship in goods for free that outcompete local goods. I challenge anyone to find a single country in the world where there are not shoes for sale in the marketplace,” she asserts emphatically. “There are many better and cheaper ways to get shoes on the feet of the poor.”
What matters most for Schimmelpfennig is aid that addresses the loss of dignity and the loss of control that accompanies poverty. “Often times people are poor because they don’t have jobs that pay a living a wage. It’s far more important for that family to have a job than handouts, so they can choose for themselves what they want to purchase. Choice, dignity and jobs. These are the key areas that good aid addresses.”
These are also the areas that one of the better socially conscious start-ups, online eyewear retailer Warby Parker, is working to address. While the company’s official tagline is “Buy a Pair, Give a Pair,” a more apt description of Warby Parker’s model would be “buy a pair, make a pair available for purchase through a local entrepreneur cultivated by our partner nonprofit.” Rather than handing out eyeglasses, Warby Parker provides an undisclosed percentage of each purchase to Dr. Jordan Kassalow’s organization VisionSpring, which uses the funds to produce inexpensive glasses and provide training for local “vision entrepreneurs” in developing countries. Those entrepreneurs sell the eyewear priced affordably in the local market.
Having served their millionth customer in June 2012, VisionSpring has sold as many pairs of glasses to communities in need with the help of Warby Parker and other partners as Toms has given away shoes. The difference is VisionSpring has also created 9,000 new jobs for vision entrepreneurs and generated an economic impact of $224 million, whereas Toms has left a demonstrably less sustainable impact that will wear thin when the next pair of soles are needed. Apparently, not all BoGo businesses are built alike.
Eli Marmar of Freewaters is cognizant of the potential for good—and bad—in his company’s impact. Currently, Freewaters builds the cost of drilling wells into each pair of sandals sold. That money goes to a small team in Kenya working directly for Freewaters, which is responsible for everything from identifying communities in need to the drilling of the actual wells and doing maintenance thereafter. It remains a grassroots operation and its impact is limited to however many wells the team can drill and maintain per day.
Moving forward, Marmar recognizes the need to scale the model differently. “We’d like to eventually empower local people to dig their own wells. We would shift from being the facilitator of the wells to being an educator. We would provide the training and resources as needed, but let them do the work themselves.” By cultivating local water entrepreneurs, he hopes the impact of Freewaters’ clean drinking water endeavor remains a sustainable one, because Eli Marmar wants to ensure that his company’s good intentions are turned into good aid—one pair of sandals at a time.