Charitable Trusts and Foundations supported by the profits from private businesses are part of a long standing model of philanthropy, and increasingly this business model is being used as a common approach to social enterprise (the Big Issue is a good example of this). In the world of Third Sector researchers/careerists like me, the technical terms for this approach are ‘cause-related marketing’ and ‘consumption philanthropy’.
I recently saw an interesting example of this when browsing the dairy aisle of my local supermarket. One particular brand of squeezy cheese advertises its products with an exclamation that by buying processed cow fat crammed in to a handy tube, you can also help a range of good causes!
A quick look at Primula’s website highlights some good causes that have already benefited from their associated charitable trust. The company is owned by the Kavli Charitable Trust, who use the profits from selling their non-essential item to provide grants for “enthusiasts and social entrepreneurs who can make a difference in today’s society”. This is most definitely consumption philanthropy.
Cause-related marketing is generally defined as a way for businesses to give to nonprofit organisations (while admittedly not compromising sales), and with Primula’s declaration that ‘profits go to charity’ boldly declared on the front of their tubes, this would also fit in to this definition. Increasingly nonprofit organisations have also sought to enhance their cause and/or reputation off the back of a better known brand, and the current relationship between The Prince’s Trust and Starbucks is another great example of the reciprocal benefits of such arrangements.
However, there’s a ‘but’…
You can begin to see how this model might be appealing to social entrepreneurs looking to address social issues in a sustainable way, and as David Floyd highlights, the link to a social cause can help social enterprises gain a competitive advantage. It also fits well with the commonly held assumption that social enterprises should reinvest their profits in to their social objectives. Indeed this is the type of model used by TOMS, who have almost single-handedly created the market for espadrilles in order to provide shoes for kids in developing countries. A detailed deconstruction of this particular approach recently appeared in the New York Times, and while the author of that article suggested that this model can work if such businesses successfully change every decision in their supply change, I would suggest that there are some deeper, underlying issues with this approach which need to be addressed if it is to work successfully:
- Reducing social action to a transaction: In her book ‘Pink Ribbons, inc.’ American academic Samantha King suggests the increase in partnerships between nonprofits and private businesses seemingly ensures that both share the same ““territory” in a “living, altruistic partnership for mutual benefit”. Yet others have argued that this increasingly signals the marketisation of the third sector, promoting “consumption as a practical, effective way to solve social ills” (see here for more on this). Slovenian philosopher Slavoj Zizek supports this claim, arguing that ‘ethical shopping’ helps people fulfil their desire to do something for others and the environment – as it is already included in the price of the purchase. As such, it could be argued that this serves to marginalise other forms of social action and philanthropy, as people feel they are already doing ‘their bit’ and don’t need to do anything else.
- Prolonging social ills, rather than curing them: there is increasing concern that this type of socially entrepreneurial activity does not address the root cause of issues, or as Oscar Wilde put it ‘does not cure the disease but rather simply prolongs it’. Not only does it reduce social action to a commodity transaction, but it effectively means that organisations profit from the existence of these ills, as it theoretically gives them an additional edge. For me, this highlights an inherent issue with this approach which as of yet, I have not seen addressed or answered. How can companies like TOMS for example, tackle the structural issues that mean children in developing countries are consistently without shoes? What would it do to their USP if they were successful?
- The Production Paradox: Having a double bottom line means it is in the interests of companies using this approach to encourage higher consumption rates. After all, you can never have too much squeezy cheese right? Particularly when it’s helping a good cause. And as the New York Times argued, this is less of an issue where companies influence decisions in their supply chain, so that for instance CO2 emissions are reduced in producing these non-essential items. But there remain underlying issues – does encouraging increased consumption deal with the other issues associated with current consumption habits? Some of the examples already mentioned could be seen to contribute to obesity, product turnover and waste, and peer pressure (fashions change, and people are desperate to conform).
The marketisation of civil society arguably creates the false impression that by including social issues in the price of a commodity, capitalism alone can take care of the world’s problems. An uncomfortable truth is that this idea has possibly attracted many people and companies to the idea of social enterprise, with the promise of doing good while doing well. What has not been widely acknowledged is the potential long-term limitations of this approach. Without dealing with the root causes, there is no way of addressing any of the issues outlined above.
But what do you think? Are these issues real enough to be of concern? Know anyone who’s doing anything about them?
- Cause-Related Marketing: When Doing Good Goes Bad (spinsucks.com)