• Measuring Up: 2012 Social Finance Forum in Toronto

    By Rebecca Byers, Community Manager of SocialBusiness.org

    In November I attended the 2012 Social Finance Forum at the MaRS Centre, which focused on impact investing and social return on investment. The conference was very well attended, with over 400 guests and only standing room in many of the sessions. It offered a variety of engaging and informative speakers and workshops, conveniently organized with a legend that signifies who a workshop is targeted toward, like not-for-profits and charities, investors and asset managers, market builders and financial service professionals, and social ventures and coops, as well as several targeted toward everyone.

    The conference began with opening remarks from Royal Bank of Canada president and CEO Gordon Nixon, who spoke adamantly of the opportunity of social finance and announced RBC’s investment of $1 million over five years in support of the MaRS Centre for Impact Investing.

    The conference’s opening panel featured Andy Broderick, Arlene Dickinson, and Antony Bugg-Levine, and focused on an investor insight into defining impact. The prominent investors discussed what they look for when they invest in social ventures, with the panel agreeing that the business does need to have a promise of investment before they can think of investing.

    I attended SiMPACT Strategy Group’s workshop session ‘Social return on investment 101,’ an Albertan firm whose community investment measurement and evaluation methodology has been used by ventures in the public, private, and third sector in the province since 1993. SiMPACT employs outcome-based evaluation measures, includes stakeholder perspectives, links program reach and implementation, and reflects intention within the program’s logic model, and maintains that SROI is “a story, not a number.”

    Overall I felt the workshops were well organized, specific, and highly informative. There was a consistent energy in the room, and I particularly enjoyed seeing the pitches from the students of the Ontario School for Social Entrepreneurship.

    The conference’s first day featured another announcement in addition to Gordon Nixon’s, as Federal Minister of Human Resources and Skills Development the Honourable Diane Finley spoke during lunch and announced the Canadian government first social finance initiative, a two-month (recently extended to January 31, 2013) call for plans on social finance, for which a website was created.

    I was uncertain at first as to whether or not Minister Finley’s announcement would be well-received – while some have in fact lobbied to Ottawa for recognition and support, like the MaRS Centre for Impact Investing itself, through its Canadian Task Force on Social Finance – however, as pointed out by Toronto Star columnist Carol Goar, they were seeking changes to tax code in order to allow “self-financing social organizations to qualify for tax credits,” and rewarding those who invest in social enterprise. It would seem then, that the general opinion is that the government is trying to alleviate some of the weight of providing basic help to those in need of it most, or, even more general, to private public services. It’s also obvious that some, as Carol Goar alludes, believe the call for concepts is asking those in the social finance realm to steer their time and efforts away from their own efforts, which could use support from the government instead of the other way around.

    I can’t say I entirely disagree with this view, but I also think it’s long overdue that the national government recognized the social finance at all, as this was the first official time. I think that it would be easy for this to be frustrating for social entrepreneurs who have been pushing social finance for years, and then to all of a sudden have it kind of thrown in with the government’s austerity measures.

  • Raising capital through impact investing

    By Editor of SocialBusiness.org

    Social Business has attended two of SocialFinance.ca’s major conferences, the Social Finance Forum. In 2011, when I attended, the theme was significantly centered around impact investing. One piece of literature that was given out in conjunction with the conference was called “A New Tool for Scaling Impact: How Social Impact Bonds Can Mobilize Private Capital to Advance Social Good,” created by Social Finance, Inc. The summary stated:

     Today nonprofits have a new source of capital to scale evidence-based interventions: Social Impact Bonds (SIBs). Aligning the interests of nonprofit service providers, private investors, and governments, SIBs raise private investment capital to fund prevention and early intervention programs that reduce the need for expensive crisis responses and safety-net services. The government repays investors only if the interventions improve social outcomes, such as reducing homelessness or the number of repeat offenders in the criminal justice system. If improved outcomes are not achieved, the government is not required to repay the investors, thereby transferring the risk of funding prevention services to the private sector and ensuring accountability for taxpayer money.

     While SIBs are not a panacea, they might provide a unique way to make effective interventions available to far more people in need than the number that can be reached through traditional state contracts and philanthropy. The best candidates for SIB funding are nonprofits with strong track records of improving outcomes for a well-defined target population. These outcomes translate into government savings that can be achieved within a relatively short time frame and are large enough to cover the program’s cost and a reasonable return to investors.

     Social impact bonds (SIBs) are also known as “pay-for-success” bonds and contain characteristics similar to equity and debt, despite the name bond. The problem to be solved, if you will, is that charities and registered non-profits don’t receive the necessary long-term funding in order to be able to increase and innovate their services. In the Winter 2013 issue, Sasha Dichter, Robert Katz, Harvey Koh and Ashish Karamchandani wrote a piece for the Stanford Social Innovation Review (SSIR) on impact investing called “Closing the Pioneer Gap.” Here, the problem is the following: “More money than ever is flowing into impact investing, yet many entrepreneurs creating companies that serve the poor still find it difficult to raise capital, particularly at the early stages of their company’s growth.” Money from philanthropy and prizes can only get most social entrepreneurs so far, maybe through the seed stage of business development but the long-term and ongoing part is left by the wayside. “A broad definition of impact investing is in many ways appropriate because nearly all of this capital has the potential to create positive impacts on society,” Dichter, Katz, Koh and Karamchandani wrote. “But a broad definition also masks the fact that most funds—even those that talk about fighting poverty—bypass the more difficult, longer-term, and less financially lucrative investments that directly benefit the poor, and instead gravitate toward the easier, quicker, and more financially lucrative opportunities that target broader segments of society.” According to the article, only a few impact investing funds actually invest in “high risks and low- to mid-single digit annual returns,” which is essentially what defines these types of markets. Amidst it all, however, there seems to be a notion that as long as we recognize that there’s a long way to go, then we can develop impact investing, and thus, the strength of social businesses, through focusing on talent, infrastructure and solid business models. Dichter, Katz, Koh and Karamchandani close with a touch of optimism:

    Impact investing has come far as a sector. Just a decade ago, the notion that philanthropy could be used for investment was unheard of. The idea that direct grants to a for-profit company could be a mainstream strategy to fight poverty would have seemed absurd. The idea that pursuing social impact could be incorporated in an investing strategy—whether in public or private markets—was seen as a fringe notion. So much has become mainstream, so much more is possible, but only if we realize that we are just at the beginning.

  • Empathy: it’s all good, right?

    By Tiana Reid, Senior Editor of SocialBusiness.org

    Empathy has been studied seriously since the 1960s as something more than an emotion. It’s an affect, yes, but it has implications for things outside of the personal realm. Social activist and cultural critic bell hooks cultivated an idea of “engaged pedagogy” which centers on the idea of mutual recognization.  “Engaged pedagogy rests on a compassionate premise: to be effective, teachers need to be engaged with students, to nurture not only their classroom performance but their whole well-being: mental, physical, and spiritual,” writes Janet M Lucas in her 2011 dissertation “Not just a feeling anymore: Empathy and the teaching of writing.”

    How empathy works in social businesses may be difficult to assess. After all, it goes back to whether or not intentions matter. But empathy has been and continues to be a hot topic online in the social entrepreneurship world. I’d say it’s pretty much a buzz word by now. Intentionally or not, affect and emotion have always held a premier role in social business. Especially when it comes to companies selling products, it takes emotional marketing and/or a “virtuous” feeling on the part of the consumer, to sell a fair trade, environmental, ethical (etc.) product, considering that it’s usually at a higher price.

    Empathy: it’s all good, right? Well, maybe not. In “The risks of empathy: Interrogating multiculturalism’s gaze,” which was published in Cultural Studies, Megan Boler argues that “passive empathy… falls far short of assuring any basis for social change, and reinscribes a ‘consumptive’ mode of identification with the other.” Consuming the other (or “eating the other” if we look at this again through a bell hooks lens) is already a huge issue in social business. The so-called exotic is sold, bought and traded through goods manufactured (but sometimes not) in the Majority World.

    Last year, Ashoka launched their empathy initiative in which they outlined the following: “Empathy. We don’t hear the term every day, but Ashoka Fellows over the past thirty years have shown time and again that there is no practice more fundamental to the human experience and no skill closer to the heart of what it means to be a changemaker. Its presence–and as profoundly, its absence–can be seen amongst the myriad challenges that populate our daily headlines, whether school bullying, ethnic conflict, crime, or the global preparedness of tomorrow’s workforce.”

    But is it really possible to “identify with another person’s feelings” as Mary Gordon’s Cultivating Empathy describes empathy? How could a straight able-bodied white middle-class North American male identify with the feelings of a poor black lesbian from Zimbabwe? But this isn’t about the Oppression Olympics. Rather, if I go back to Boler, it’s about being active in not consuming identities because claiming to empathize is far different than acknowledging someone’s right for self-determination and ownership.

    To problematize empathy isn’t to disregard it, but rather, it’s to take a look at how promoting empathy can blind being critical, which is crucial, especially in an industry that purports to care.

  • Africa is ‘On the Up’

    By Rob and Nikki Wilson, Co-Founders of On the Up and READ International

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    How often do you read a good news story about Africa? Not often enough in our opinion. That’s why we made it our personal mission to uncover Africa’s most exceptional changemakers. In late 2010 we got married and throughout 2011, we took an extended honeymoon and traveled over land from Cape Town to Cairo to find these stories. This year we’ve released a book about our adventure, On the Up.

    From a Zen Buddhist who is training rats to sniff out landmines, to an ex-playboy millionaire who is using his fortune to tackle multinational mining firms, the people we profiled are not your archetypal charity workers. We were specifically seeking out ‘social entrepreneurs,’ people who are shedding fresh light on social and environmental issues. Ranging from social businesses, to registered charities to mass movements – the means that social entrepreneurs use to achieve their goals can be multifaceted and diverse. What makes them unique, however, is that they have created innovative solutions at a grassroots level. From the bottom up, they are driving real, lasting change that larger players, like governments or international charities, often fail to achieve.

    Thanks to networks like Ashoka, we managed to identify an incredible suite of social entrepreneurs across the continent.  And to our delight, getting them to share their stories has been a total pleasure. With open arms we have been welcomed in to spend a day or two with each individual, giving us plenty of time to unpick what makes them tick and their projects fly. Reliably thought-provoking and always deeply inspiring, we are yet to visit anyone whose work did not leave us moved. And in reading our book, we hope our followers will be left feeling the same.

    No matter what flicks your switch when it comes to a good news story, On the Up has something for everyone. Here’s a taster of the kinds of people and projects featured:

    South Africa – Charles Maisel. As controversial as he is kindhearted, this is one man whose view point shakes up charity thinking. Founder of many social start-ups including the award winning employment agency Men on the Side of the Road, Charles takes a founders fee from his portfolio of projects and earns himself a tidy wage in the process!

    Zimbabwe – Betty Makoni. Betty’s incredible organization, Girl Child Network, has empowered hundreds of thousands of girls across Zimbabwe to stand up for their rights and speak out against the injustice of abuse. But Betty has given up more than most to achieve her vision, and has been forced to live in exile by the Mugabe regime.

    Zambia – Simon & Jane Berry. After years of development, Simon and Jane have developed an aid container which fits neatly into the excess space in Coca Cola crates. In a world first, they are about to kick off a trial to deliver essential medical aid to remote areas of Zambia using the Coca Cola distribution network.

    Tanzania – Bart Weetjens. At the bottom of the Uluguru mountains in Tanzania, Bart Weetjens’ organisation, APOPO, is training African Giant Pouched Rats how to sniff out landmines. This story is guaranteed to make you think differently about the powers of our furry friends!

    Rwanda –Mary Kayitesi Blewitt. Without Mary, organizations set up to support the survivors of the Rwandan genocide would not be where they are today. Her efforts to build the capacity of numerous Rwandan NGO’s has helped thousands of widows and orphans to move on from the past and build a brighter future.

    Uganda – Alexander Maclean. African prisons are not pretty places. But at age 18, Alexander set about bringing hope and dignity to the inmates at Ugandan Prisons. His organization,  the African Prisons Project, is dedicated to providing healthcare, education and justice to society’s most condemned.

    Kenya – Nick Moon & Martin Fisher. A new spin on micro-finance, Nick Moon and Martin Fisher founded KickStart to develop and promote technologies that can be used by dynamic entrepreneurs to establish and run profitable small scale enterprises.

    Sudan – Emmanuel Jal. A former child soldier, Emmanuel has transformed his life and is now a world renowned rap star. Using music as his medium, he is inspiring the Sudanese youth to overcome destructive divides and unite for a better future.

    On the Up became a reality thanks to generous support from the Vodafone Foundation and the Winston Churchill Memorial Trust. If you’re looking for funds for an inspirational journey, this might just be the place to start! You can buy the book on our website. Please ‘Like’ our page on Facebook.

  • 1 to 1 models: are they a social business?

    By Stephen King, Founder at SocialBusiness.org

    Popularized by Tom Shoes, the 1 to 1 business model is when the consumer buys 1, the company gives 1 to those in need for free. This has become more and more popular over the last few years for any product or service within the price range of $20-100. The likely first version of this was the Aravind eye institute, who has being giving cataract eye surgery for paying customers through one door, and the same surgery for free through another – they have been doing this for over 40 years.

    The business model is popular in part because of the elegant in its simplicity. For the entrepreneur it is very easy to understand the concept, write your business plan and even now point to successful examples to more easily secure funding. It is also a great story to attract talented employees, that might just work for less than the equivalent job at another similar product company. The marketing is also very straightforward and compelling; buy one of these, and I will give one to someone who cannot afford them. If the product is of the same quality, and about the same price, then you will convert consumers. This has been true of the Fair Trade coffee movement in the past, get the products to be the same priced with equal quality and the consumer will switch over to the more socially minded product.

    It all sounds good, and these companies are doing great work. But are they really a social business? Is this not the same as giving away some of your profits to charity? What happened if Dell computers gave 1 computer away for every computer bought to someone disadvantaged?

    The definition of social business is widely contested; let’s make an assumption that it is about the company doing something that is socially and environmentally beneficial and continues to do this through earning revenue by operating its service or selling its product. If we use that as the basis, does it qualify? The business helps people without shoes, get shoes – that is good. It does it in a sustainable manner through earned revenue from selling a pair to other people. You could ask where are the materials sourced from, and whether this is an environmentally damaging company, although that is covered at least by TOM’s shoes. Sounds pretty good to me, in particular because as long as TOM continues to sell shoes to customers, we know another customer will get a pair; and I also like how easy it is for me to audit whether or not the company is keeping to its promise of doing good. My belief is that the 1 to 1 model is a social business, the concept of giving a free ‘1’ away with the buying of ‘1’ is intrinsic to the business model.

    And this then takes us back to doing this on a larger scale, and the case of Dell computers. Large companies are having a really tough time lately, as they are not seen to be able to achieve any good, and if they try we are generally suspicious. If Dell or any of these large companies started doing what TOM’s shoes is doing the world would be a much better place. Alongside of the remarkable amount of technology that would now be in the hands of those that could not afford it, I am positive that Dell would learn a lot about how to innovate in order to deliver on this promise. Imagine a computer company that could really give one away every time you bought one, that would be a remarkable offering that would grab the market.

    We need to focus on the improvement from where we are currently and then look to critique constructively on how we can move forward. If more people were to buy TOM’s shoes the world would be better. And in the long-term it might be even better for the recipients of TOM’S shoes to be in a position to afford their own shoes, as they would have a job and are able to take care of themselves. A pair of shoes helps in many ways, and they are hugely valued, although it is not boosting the local economy in the same way that jobs can support independence and reduce the need to rely on aid. This is the longer-term goal, and we will get there, with 1:1 companies now in many markets around the world.

  • Wait — which kind of social business?

    By Bianca Bartz, Editor in Chief of SocialBusiness.org

    When I tell people I write about social business, most people ask “what’s that?”

    A few know I write about businesses striving to make profit to further a social cause, but a good chunk think that I write about businesses that use social media. Although they’re wrong about what we do, it’s a fair assumption. Here’s why:

    Particularly in the last year, the term “social business” has been widely used to describe businesses that regularly integrate social media into their business practices. Makes sense.

    ImageBut prior to that, most online references to “social business” were connected to the ideas of Nobel Peace Prize winner Muhammad Yunus. The “Banker to the Poor,” as he’s often referred to, started Grameen Bank, which began offering micro loans in India in the early 80s. Today versions of the model are found in 100+ countries, all geared at helping entrepreneurs launch businesses so they can lift themselves out of poverty and stimulate their economies.

    Professor Yunus helped bring the term “social business” into popularity after publishing the book Creating a World Without Poverty: Social Business and the Future Of Capitalism in 2007. In a June 2010 Forbes interview, he defined it as such:

    I define social business as a non-loss, non-dividend company dedicated entirely to achieve a social goal. All profits, or “surplus revenue,” is ploughed back into the venture for expansion and improvement. In social business, the investor gets his or her investment money back over time, but never receives dividend beyond that amount.

    Our definition is similar. (You can read it here.) Like Yunus, we love the idea that, unlike charities that have to work with low overheads, have little budget for innovation and expansion and that rely completely on fundraising, social businesses are self-sustaining and have the opportunity to grow exponentially.

    As Yunus said to Forbes, “A charity dollar has one life; a social business dollar has endless lives!” 

    Social Business: Social Media vs Social Enterprise

    ImageBut back to the confusion. Last fall we noticed the term “social business” gain traction online, particularly on Twitter, and soon after in blog posts. Unfortunately, it wasn’t because more people were talking about using business for good. It was around the time IBM came out with a big social business campaign focused on making businesses more social online with their customers. Then we read about the Social Business Forum, based on the same concept. Shortly after, Fast Company wrote an article based on IBM’s initiative, and interviewed Ethan McCarty, IBM’s Senior Manager of Digital and Social Strategy. Here’s how Ethan defined social business:

    Social media is about media and people, which is one dimension of the overall world of business. With social business you start to look at the way people are interacting in digital experiences and apply the insights derived to a wide variety of different business processes.

    Others started adopting the term faster than we could track, and we were suddenly unable to monitor online references to “our” version of social business anymore. Dang. Frustrated that the term was being diluted and losing context, and passionate about clarifying the difference, our community manager, Tia, pitched Fast Company on an article detailing the growing confusion. Unfortunately, we still haven’t heard back. That’s OK though. We’re defining it now.

    Social Business: How it’s Perceived Online

    Not to get too nerdy, but I wanted to show you an example of how search terms — and, accordingly, online perception — pertaining to “social business” have switched largely from references to Yunus’ type of social business to IBM’s. I took screenshots from the top news results in the US for “social business” in 2011, and the same for “social business” in 2008.

    In 2011, only the last result pertained to social enterprise, the result were social media focused.

    In 2008, there were few results, but all were about social enterprise.

    At the end of the day, I love both types of social business and work in both industries. In fact, we’ve merged them at SocialBusiness.org, using our Facebook, Twitter, LinkedIn, Google+ and even Pinterest to help promote purpose-focused businesses. I just wanted to clarify the difference :)

  • Do intentions matter?

    By Editor of SocialBusiness.org

    Social businesses, like charities, often have lofty ideals about changing the world through their mission, message and impact. Press material, websites and Twitter bios are often swarmed with rhetoric like “changing the world,” “making a difference” and “join the movement.” Regardless of how the overuse of these sayings can prove meaningless, mission statements should reflect the intentions of the organization itself. In a recent interview with Sissy Rooney, the founder of the UK-based social enterprise Street Style Surgery, she urged aspiring social entrepreneurs to write their mission statements right off the bat. She had hers posted above the computer from which we Skyped. “We don’t have an obligation to solve America’s problems,” a current Apple executive told the New York Times in January in a piece about American job loss and foreign manufacturing. “Our only obligation is making the best product possible.” That speaks mountains. While I would consider the “best product” one that takes in mind problems in its home country, that is, unemployment, traditional corporations, of course, don’t operate like that. Of course, the very idea of a “social business” conjures up ideas of good intentions—no matter what.  The quote speaks to the notion that a sentence or two can encapsulate how the main goal, or “obligation,” of a business is engrained into day-to-day operations. Because they’re unquantifiable, how do you judge the mostly good intentions of social businesses and social enterprises? Do we even need to or is it impact that’s more important? I’ve been writing about social businesses and working for SocialBusiness.org for over a year now, but even before then, I’d been skeptical about the relationship between intentions—whether good or bad—and outcome. As a wide-eyed undergraduate in international development studies, I was full of good intentions and I thought that my zealousness would be reflected in everything I studied. But regardless of intentions, bad things happen. Unintentionally or not. Also, intentions portrayed to those outside of the organization aren’t necessarily the intentions that dictate business behavior. How and why do social businesses negotiate intentions into their business models and daily practices? Let’s take a look at TOMS, a socially driven for-profit, and a company that some consider paramount when it comes to the successful integration of money and meaning. I’ll use TOMS as an example because the brand is exceptionally popular, especially among students. The idea for TOMS started when Blake Mycoskie was traveling and met Argentinian children with no shoes. Since then, he’s been providing shoes for children all over the world through, well, selling. Now, I’ll save my complaints of consumerism for another piece but here’s one way to think about it: Is buying a pair of shoes that donates a pair better than buying a pair of shoes that doesn’t? And what’s the alternative? There are countless criticisms of TOMS. In 2010, GoodIntents.org posted a succinct point-form criticism called “TOMS Shoes: Good Marketing – Bad Aid.” In a similar vein, Kelsey Timmerman of Where Am I Wearing? points out that TOMS products are made in China, and thus don’t create jobs for local communities. A free pair of shoes won’t last long. Yes, it means children are in a better position to attend school, but the impact of a well-paying job, water infrastructure or clean and reliable energy would undoubtedly have more of an impact. “Yes, someone giving you a pair of shoes would sure be nice if you didn’t have a pair,” wrotes Timmerman in a blog post. “But a job that allows parents to send their kids to school could change your family tree forever.” Timmerman uses the example of SoleRebels, a company SocialBusiness.org covered in 2011:

    Let’s say that every worker at SoleRebels has five kids (the fertility rate of Ethiopia). The workers send all five kids to school and since they have an education they don’t grow up to be shoemakers. They do something that pays better and they send their five kids to school. A job, a good job, has an exponential impact. Within a few generations the 100 jobs at SoleRebels have impacted tens of thousands of people. Within six generations, the jobs have impacted millions. Now imagine if SoleRebels sold as many shoes as TOMS. This isn’t just life-changing stuff, this is possibly country-changing, poverty-fighting stuff.

    The YouTube video “A Day Without Dignity” spun off of the TOMS “A Day Without Shoes” publicity stunt is a dig-deep take on how donations create a tremendous amount job loss. According to the video, which was put on by GoodIntents.org, handing out free goods out-competes local markets. What’s more, used-clothing imports to Africa caused 50% of the increase in unemployment between 1981 to 2000. This isn’t to say that TOMS didn’t (and doesn’t) have good intentions, for the business, for the people who receive the donations, and for the world. But intentions don’t predict outcome or prevail over the messiness of complexities like local government, natural disasters, corruption, etc. It’s unscrupulous to ignore mutated results even when someone is sincerely trying to “do the right thing.” Intentions, too, shift. They transform and they mutate. Clearly, good intentions aren’t enough to create on-the-ground impact. What’s necessary is, yes, purpose, but also checks and balances, transparency and the willingness to admit, perhaps, that your outcomes have overpowered your intentions. What are the needs of the community you are serving? Have you asked them? Have you considered all the parties involved? Who and what will be affected? It’s about looking beyond mere “giving” and toward partnership. Peppering your messaging with intention-revealing buzz words can have an impact on engaging an audience that might not otherwise care about your cause, however, there runs a risk of losing integrity. And integrity in social business, by the nature of the field, is crucial to creating an image with the public, doing well financially and serving local communities, which should have been the point of creating the company in the first place.

  • Cause marketing vs social business: looking at the soul of shoes

    By Bianca Bartz, Editor in Chief of SocialBusiness.org

    The purpose of this blog post is to highlight the emerging opportunities that ethical consumerism is bringing. It’s also to illustrate the difference between cause marketing and true purpose-driven business, or social business.

    A recent study showed that 94% of consumers will choose a cause-oriented brand when faced with the choice between two similar, equally-priced products, when the other has no social/eco impact. Another study from StatsCan showed that Canadian men are just as likely as women to make a purchasing decision (either buy or boycott) based on ethical reasons. It also showed that people with higher educations tend to be more politically involved, and in turn are more likely to make purchases based on ethical reasons — 41% of university grads made purchasing decision based on ethics  in 2008 vs. 8% of high school grads.

    But there is a new motivator beyond education that is spurring consumers to buy cause-supporting brands, thanks to a gamechanging business model. You have heard of TOMS, right?

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    TOMS Shoes has become famous for its one-for-one giving model, a creative way to do business while also doing good. Blake Mycoskie, who founded TOMS, launched the social business after a trip to Argentina where he saw how many children live without shoes, and are thus left vulnerable to disease, not to mention discomfort. Not letting a lack of knowledge in the footwear industry hinder him, he launched TOMS in 2006 with a promise to give a pair of shoes to a child in need for every pair sold. He’s kept his word: by September 2010, TOMS had put shoes on one million deserving feet.

    People want TOMS shoes. Badly. That’s not necessarily because they’re the most beautiful shoes; in fact, TOMS are quite simple in style, inspired by the South American alpargata shoe. They’re revered for being comfortable, but the leading reason people flock to these shoes is for their story, and because they let the customer be part of something bigger than themselves. “When I bought these shoes, TOMS gave a pair of shoes to a kid who needed them.”

    As happens when an idea hits it big, spin-offs start to arise. In the case of TOMS, other social entrepreneurs began adopting and adapting. I recently featured an article of 10 Shoe Brands With Soul that covers footwear businesses that have incorporated social impact right into their business models. What I omitted from that article were limited edition shoes that benefit charity. I was just looking at the social businesses: the ones with giving in their DNA, not just in their marketing plans.

    There’s a big difference there.

    Yes, other social entrepreneurs were inspired to use the one for one model to give back using business principles. That’s cool, because they were inspired by the idea of making an impact while also making a living. But not everyone was inspired in the same way: some companies saw the TOMS story of success and wanted the same attention, so adopted the model as a cause marketing initiative. See how they differ? It’s all about the original intention. At the end of the day, however, people are helped, yet the karma points don’t stack up the same way — and increasingly, consumers are looking at those stacks.

    ImageTake BOBS for example. All you need is a glance at the name to see where this Skechers line got its inspiration. They also adopted the alpargata design TOMS uses, as well as the one for one giving model. Not surprisingly, people were quick to critique BOBS, including  Fast Company and Digital Mom Blog. Why? Because they immediately recognized it as a marketing stunt.

    Of course, even TOMS has received flack, but never because people questioned its will to do good. The key criticism has been that the shoe drops have taken away income from local shoemakers, and thus the economy. That was never Mycoskie’s intention, of course; he wanted to help, and he does — if he had already reached a million kids by fall 2010, imagine how many have been touched now. Nevertheless, the model wasn’t perfect (what is?), and it left an opportunity for innovation.

    ImageEnter  TWINS for Peace. The founders of TWINS were inspired by the TOMS story when they launched their social business, but they also examined the product and what was being said and used it to tweak their model. Instead of a simple design, they opted for edgy and high quality, crafting sneakers from Italian leather. They use 90% recyclable packaging. They pay fair wages at a family-owned factory in Portugal. And they provide income-earning opportunities in different countries. As I wrote previously:

    Each collection of TWINS for Peace shoes supports a different NGO-led Shoe Project—and rather than simply making the second pair at the factory in Portugal, the donated pair is made in the country of the according Shoe Project. This not only allows shoemakers to tailor the shoes to the children, but also provides employment at a local level.

    As I said in the beginning of this post, my intention here is just to highlight an opportunity, and to clarify the different ways businesses can give back. I barely touched on the environmental side of ethical consumerism, but the bottom line is simple, and it comprises three parts: honour people, planet and profit (aka the triple bottom line). Consumers increasingly care about a brand’s impact on the world, so to remain favourable in the eyes of their customers, businesses will need to focus on purpose. Genuine purpose. The next gen has a radar for it — if it’s not genuine, I promise, they’ll sniff it out, and call you out.

  • Buddhism meets business

    By Bianca Bartz, Editor in Chief at SocialBusiness.org

    For the longest time I wondered how I could do good in the world, while still earning a good living. Was that even possible? Would my yoga practice be my way of contributing to peace and kindness, and volunteering on the side be my way to give back?

    (CC) narsul-the-elf via Flickr

    No. That wouldn’t be good enough. As soon as I made the decision I would find a way to do both — to feed my entrepreneurial spirit and my desire to make a positive difference in the world — I stumbled upon the Buddha’s Noble Eightfold Path, his formula to escape suffering. What stood out for me was #5, the Path of Rightlivehood.

    In its most obvious definition, rightlivehood means we earn our livelihood the right way. But what is right? According to the Buddha, the right way is one in which no harm is done to others, nor to the planet. While he broke it into doing no harm to living being (like prostitution, slaughtering animals, dealing weapons) and not selling harmful substances (like alcohol, drugs), his main premise was that we should not create more suffering.

    Wouldn’t the Buddha love the idea of Social Business? And B Corporations? Companies that aim to meet the triple bottom line — people, planet, profit? And what would he say about the booming popularity of social innovation studies at major universities like Stanford and Harvard? It makes me smile.

    Thich Nhat Hanh

    In 1998, in The Heart of the Buddha’s Teaching, Vientamese Zen teacher Thich Nhat Hanh wrote:

    “To practice Right Livelihood (samyag ajiva), you have to find a way to earn your living without transgressing your ideals of love and compassion. The way you support yourself can be an expression of your deepest self, or it can be a source of suffering for you and others.”

    And those are exactly the types of businesses we feature on SocialBusiness.org. Not only do they not induce any harm on others, but they actually benefit society and/or the environment.

    As I started learning more about social enterprise, and reading about the social entrepreneurs who were building incredibly cool companies while doing good, I was overjoyed to see example after example of successful companies making huge, positive impacts. For these people, the better business runs, the more good is done.

    And once I realized that, there was no going back.

  • Advantages to creating a social business

    By Stephen King, Founder at SocialBusiness.org

    Starting a new business is difficult and that is no different for a social business or social enterprise. However, within the difficulty lies a silver lining of advantages for the social entrepreneur, which can come through better operating costs, labour, and marketing.

    Socialbusiness.org is one of the leading online publications following social businesses around the globe, and as such, has seen countless examples of how social businesses have leveraged their social mission to enjoy benefits that a traditional business does not.

    One of the simplest is in marketing, and TOMS Shoes is a great example. We have featured them numerous times on the site and their marketing message is pretty simple: buy one pair of shoes and another pair will be given to someone in need. That message is pretty hard to compete against if you are selling an ordinary pair of shoes at the same price, and thus, their shoes are doing well, having recently expanded into TOMS Eyewear. This one-for-one model is growing in popularity, as it is easy for the customer to understand and for the business to set-up, and we have a gallery of articles on our site showcasing these great social businesses.

    A key part of any business is the people and social businesses often need a wealth of people-power to deliver their services to both rural and urban communities. With social businesses, you can often leverage the charity aspect of your business to get volunteers—yes, free labour! When you are delivering a great food program like FoodCycle, in locations all across England, you need help. Any restaurant takes lots of staff to run, and FoodCycle manages to run many of them across the country using food surplus—400,000 tons of it—and unused professional kitchens. With the majority of the staff coming through volunteers, it helps to keep the costs low and enables the food to reach more communities.

    There are a growing number of companies that are finding it cheaper do the same thing as a big company, although at a lower cost while making the world a better place. GnewtCargo deliver parcels emissions-free for the last mile in London, and they can do this with no fuel costs, less expensive maintenance and no congestion charges. This can make them cheaper than the big guy in diesel trucks. Although it might seem like a paradox at first, social businesses are finding ways to lower operating cost and improve our environment.

    Lastly, our own company, SocialBusiness.org, is enabled by the crowdsourcing power of Trend Hunter. They have been our partner since the beginning and the marketing power of social good on the back of a platform like Trend Hunter has been awesome to watch. The reach and power of our message has been amplified via the crowdsourced model, and we get these benefits largely by association rather than at high costs.

    The in-between state of being a business and being philanthropic has its clear advantages over the regular entrepreneur. The social business can enjoy the perks of the social mission in its ability to attract consumers and people to their cause, and at the same time, see real commercial benefits to their operations. SocialBusiness.org is fascinated by these social businesses and how they are re-writing the rules on how to be successful while making the world a better place.