8 Successful Give-Back Models for Social Enterprises
Let’s look at eight successful give-back models for social enterprises and see how different companies use the power of profit + purpose to make the world a better place.
It’s easy to look at the most recognized social enterprises like Toms Shoes or Warby Parker and think that the buy-one-give-one model is the way to go. But that’s not always the case. There are many strategies that social entrepreneurs are employing to address the issues that they care about when the 1:1 approach doesn’t apply.
Let’s look at eight successful give-back models for social enterprises and see how different companies use the power of profit + purpose to make the world a better place.
1. Buy-One-Give-One
This type of social enterprise can be found in many different variations, but the idea is essentially the same: a consumer buys a product, such as shoes, and the business gives the same item to underserved or disadvantaged people.
This tried-and-true strategy works well when addressing a need that can be solved by a specific item such as shoes, glasses, gloves and scarves, etc. It breaks down when an organization expands beyond that mission or addresses a more complex problem that can’t be solved by at 1:1 purchase, such as homelessness.Smile Squared uses a one-for-one model to bring healthy smiles to children in every corner of the globe through the purchase of toothbrushes. Recently, they added travel journals and pouches that help fund wish trips granted to children facing life-threatening medical conditions.
You can see that the 1:1 model breaks down when the goal is to help kids travel. To solve this problem, Smile Squared devised an effective strategy for adding new products that supported their new efforts.
Always give people an alternate way to support your cause. Twice as Warm offers other items, such as a mug, t-shirts, and a tote bag. Some social enterprises are set up to accept donations as well.
Look closely at your goals to be sure that the 1:1 strategy is the best approach to solving the issue you’re addressing now and any you hope to tackle in the future.
2. Buy Some and We’ll Donate Some Money
With this type of social enterprise, consumers purchase products and some or all of the profits are donated to the cause(s) they support.
The One World Play Project makes unpoppable One World Futbols that never go flat or need a pump. When you buy a One World Futbol, they donate 5% of the purchase price to organizations that help to bring play to youth in disadvantaged communities. Because the company realized that not everyone needs a soccer ball, one of the pricing options is, “Don’t need a ball for yourself? Just Give!” Your donation provides balls directly to the organizations that partner with One World Play Project. This is a good way to expand beyond the one-for-one approach.Newman’s Own gives 100% of their profits to charity. In their 35 years of giving, they’ve donated over $500 million to charities in four areas of focus.The give from your profits strategy has significant upsides. It allows for giving on multiple fronts, much like a foundation. You can make and sell almost any combination of products and services.The biggest downside we see is alienating the causes you don’t support and the time it takes to respond to organizations that don’t fall within your focus.
3. Social Value Enterprises
This is a fine-tuned version of the buy-some-give-some type of social enterprise where the giving creates social value and actively encourages more of the same.
FruitCraft Fermentery & Distillery is an employee-owned business that puts maximizing social value above maximizing profits. Started by two brothers, one component of their social mission is that the business is democratically run by the employees for the benefit of society.They also award startup grants to entrepreneurs who adopt FruitCraft’s pay-it-forward model. We’ve seen a lot of nonprofits use a grant model to encourage entrepreneurship and social change, but this is the first social enterprise we’ve encountered that wants to spawn more social enterprises. This is a good strategy for a company with a social mission to help other organizations do good. In some ways, it can be thought of as the social enterprise version of a foundation. You raise funds, and then use those funds to support other projects that align with your goals and values.
4. Advocacy-Based
These types of organizations advocate for causes directly related to what they sell.
Patagonia is known for both their high-quality outdoor wear and for their environmental activism. Culminating in their Patagonia Action Works program, they support grassroots activists working to find solutions to environmental issues. Founder Yvon Choinard says in their introductory video that, “Patagonia’s reason for existence is to force government and corporations to take action in solving our environmental problems.”
A thriving business, Patagonia has given nearly $90M in support of activism and advocacy. In addition, their products are manufactured to minimize their environmental impact. This dual-pronged approach places them in a leadership role among Advocacy-based businesses. It’s easy to look at Patagonia and think that they are only able to make an impact due to their deep pockets. Keep in mind, however, that Yvon started out selling handmade pitons to fellow climbers out of the back of his car. As the business grew and his awareness of climbing's environmental impact increased, he began placing advocacy at the heart of the company. Today product sales support their robust advocacy work.
Key Takeaways for Social Enterprises From TOMS’ Latest Move
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5. Social Benefit Through Economic Support
This type of social enterprise provides opportunities for disadvantaged people or communities to use their own hard work to improve their economic situation.
Thrive Farmers “ensures stable and predictable wages for our farmer partners. Through our innovative revenue-sharing platform, farmers have a direct market to their customers and are freed from the effects of a volatile commodities market, creating better financial futures for their families and communities.”
You can achieve a lot by helping people help themselves. By providing assistance in taking products to market or gaining access to previously unknown or unattainable markets, your efforts can create opportunities for people to succeed on their own merits.
Access to markets may only be one challenge faced by the people you’re trying to help. Be sure you have a holistic view of their challenges before you focus entirely on a sales and marketing solution.
6. Social Employment
These social enterprises focus on helping struggling people find employment.
Cornbread Hustle is a staffing agency that advocates for second chances and recovery. They teach entrepreneurial skills to help people become better employees, find meaningful employment, or start a business. It also serves as a resource for socially conscious employers looking for skilled workers.
Their model is designed to improve society by opening doors and creating opportunities for employees that have experienced traumatizing hardships. This approach is an evolution of workforce development—a well established program for many nonprofits. Keep in mind, however, you’re essentially setting up a staffing agency with a twist. You have to be able to effectively run the primary business in order to add the additional challenge of assisting the underserved people you intend to help.
If you have these skills and the network (or are willing to build one) then this type of social enterprise might be just what you’re looking for.
7. Awareness Brands
The goal of an Awareness Brand is to promote social change by informing people about the cause they address.
Beautiful in Every Shade is an empowerment movement with the goal of transforming the way everyday people from around the world look at themselves and others. They sell graphic t-shirts that financially support their cause and convey their message.
It’s a simple strategy to empower those who wear the shirts and engage others in the movement. Graphic T’s, posters, stickers, etc. are all good ways to present a message and fund the efforts to achieve their goals.
Just keep in mind, if the products or services you’re selling are misaligned with your awareness campaign, this might turn people off. Imagine the results if it's discovered that an organization fighting for fair employment is selling tote bags made using child labor. Be sure to always think through the full social and environmental impact of what you sell.
8. Multi-Purpose Mission
This type of social enterprise is formed to address more than one cause at a time. Most often, the causes are related to each other, such as sanitation and the environment.
Australia-based Who Gives A Crap, built two social missions into their business. As toilet paper manufacturers, they make their products from 100% recycled paper and boldly claim that, “All of our products are made without trees.” They were inspired to start a social enterprise when they learned that 2.3 billion people across the world don't have access to a toilet. To address this unhealthy sanitation issue, they donate 50% of their profits to help build toilets and improve sanitation in the developing world. Similar to Patagonia and Beautiful in Every Shade, their product sales align with their social mission, but they address it differently.
Their approach has several benefits. First of all, everyone needs toilet paper on an ongoing basis. Unlike a single purchase of apparel that produces a one-time impact, their subscription model ensures recurring sales. Secondly, buying toilet paper from a company that improves sanitation conditions around the world is a clear market differentiator that will lead social consumers to choose their brand. We should know—we’re one of their customers.
This two-pronged approach is powerful. However, it’s a rare and difficult combination to implement effectively. If you consider building a company around this idea, make sure that there’s clear synergy between the different elements and that you’re able to execute both missions successfully. If not, your company may feel unfocused or schizophrenic.
New Frontiers
As social entrepreneurship grows, so too do the strategies that founders are applying to achieve their goals. If you’re deciding to create a social enterprise, be sure that the type of social enterprise model you choose makes sense for what you want to achieve, is scalable, is economically sustainable, and resonates with your customers as well as your cause.
If you’re a social entrepreneur and don’t see anything on our list that conforms to what you want to do, invent something new. The social enterprise market is open to innovative approaches.
Are you a social enterprise that doesn’t fit the mold? Contact us, we’d love to hear about your strategy.
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