Have you ever wished that your hours of online shopping did more than slip into oblivion? What if one of your purchases, for example, could alleviate poverty?
Sounds like a nice opportunity, but how would you know if it was actually effective?
Socially conscious consumerism is popular among Millennial consumers, who have grown up with the novel idea of responsible “global citizenship.” Unfortunately, social consciousness can be too easy for businesses to claim and too difficult for buyers to understand. This combination can result in ineffective, and even harmful, philanthropy. But if you find the right company, making your purchase may truly make a difference.
Three companies, Toms Shoes, JustPorter, and GlobeOne, give us insight into the complicated world of philanthropic capitalism.
With its “buy one, give one” model, Toms Shoes was an early pioneer that popularized the idea of conscientious consumerism. With over nine years in the field, the company offers fundamental lessons on what is, and is not, effective.
If you are unfamiliar with Toms, a simple equation on its website’s main page summarizes it well: “Each pair of shoes you purchase = a pair of shoes for a child in need.” Sounds great, right? Well, not in the beginning.
Shortly after its founding in 2006, Toms fell under criticism from a variety of academics, development groups and writers. Many concluded that the “buy one, give one” model not only failed to address an actual need, but also depressed the local cobbler economy, thereby encouraging dependency on foreign aid. (Global Envision has covered this controversy in multiple articles that can be found here).
Toms responded by moving to locally source its shoes as much as possible. It has also expanded its product line, which adheres to a new form of “buy one, give one” that hits closer to home for those on the receiving end. Today, purchasing Toms coffee funds locally owned clean water systems; buying Toms glasses contributes toward treatment for those in need of eye care; and getting yourself a bag supports training and materials necessary for safe birthing practices.
So, what are the lessons here? First, an effective company will create a solution, not a band-aid. Locally sourced products are a good place to start. Second, the company must understand the actual problem. Although Toms suggests that a lack of shoes can alleviate poverty, the need for health care and local industry is much more urgent.
A backpack company that was still in its infancy at this time last year, JustPorter follows a “buy one, give one” model similar to Toms’. Similar, but not identical. Taking lessons directly from the Toms Shoes’s critics, the company’s founder, Chris Bahr, knew that the one-for-one model could be improved and have a lasting impact if developed “the right way.” By this, Bahr meant with social relevance and local manufacturing.
As explained in a previous Global Envision article, the cost of school materials is a serious hurdle to education. By prioritizing this issue, JustPorter addresses a community’s true needs in the struggle against poverty. It does not stop there. Unlike Toms, every last piece of the school packs and supplies are locally sourced and assembled.
“One-for-one” lingo aside, the backpack company is essentially using money from its online sales as targeted investments in impoverished communities. Here, JustPorter gives us another lesson: invest.
This brings us to the mobile financial services startup GlobeOne, an even newer company that applies a similarly innovative model to banking.
At Mint’s 2015 Financial Inclusion Conclave, Jerry Ross, GlobeOne’s chairman, expressed concern that banks have abandoned “the bottom of the pyramid” to less effective alternative financial institutions. The solution required something big, he said, like the “creation of a new enterprise network which connects banks with other players in a more efficient fashion.” That is exactly what GlobeOne set out to do.
Along with offering a mobile app that opens access to people around the world, GlobeOne’s partner banks have agreed to send 50 percent of the credit interest they earn from users back into member communities. This means that the financial activity of users in more affluent countries contributes to a growing pool of interest income that is shared among the GlobeOne community.
Because it is such a new company, the bank has yet to make an impact. However, based on what Toms Shoes and JustPorter have taught the “one-for-one” community, GlobeOne seems headed in the right direction.