New Business Model Redefines Giving

 　　An increasingly popular business model lets participating companies give to charity while making a profit. But the approach is blurring 1 the lines between for-profit and not-for-profit organizations and raising questions about the real drivers behind this business model.

　　TOMS Shoes of Santa Monica, California is one of the most prominent businesses to embrace this idea, known as social entrepreneurship.  The company has donated more than one million pairs of shoes for the equivalent sold since September 2010.
　　And Great American Days, an Atlanta, Georgia company that sells gift packages like hot air balloon rides and white water rafting, donates "as little as a few cents" to "as high as $6,000," depending on the project, said its Marketing 2 Director Jan Stockbridge. “When someone buys an experience from our water category, we donate to projects that build wells and provide fresh water," she explained.
　　Many donations are made through Buy1Give1 (B1G1), a four-year-old Singapore company that offers more than 650 charitable projects in 29 countries to which members can link products or services. Buy1Give1 describes itself as “a social enterprise that supports, inspires and educates businesses globally.” Its Chairman Paul Dunn said B1G1 lets donors 3 know the outcome of their charity.
　　The company includes B1G1 PTE LTD, or private limited, which deals with marketing and membership, and a separate entity 4 called B1G1 Giving.  “A 100 percent of the funds that go into B1G1 Giving must go to the designated projects or causes … chosen by the members," said Dunn.
　　Once funding is available for a given project, the company partners with humanitarian 5 and non-governmental organizations to implement 6 it. The fruits of this labor 7 can be seen in western Kenya’s Mama Ann Odede training complex, a project of World Youth International (WYI), a non-profit group that encourages young people to volunteer overseas.
　　Fred Mito, WYI In-Country Coordinator 8 and CEO of the complex, said in an email interview that the buy one, give one model has allowed the community to buy goats and to move ahead with plans to upgrade to higher-quality goats. The goal, said Mito, is to create “a cottage industry to produce milk for direct consumption and goat milk by-products [for] sale," bringing "a sense of sustainability” to the community.
　　Hybrid 9 firms are becoming more commonplace, matching an “enormous growth in the number of people who do both charitable work and business work in ways that are very different than the past,” said Eugene Steuerle of the Urban Institute. They include for-profit firms, non-profits operating a business that conducts charitable activities, non-profits operating private businesses related to their mission, and not for profit firms that are “not charitable in the sense that … they basically keep their profits to zero and do business activities,” Steuerle said.
　　Marketing charity can do some good in society, although Steuerle cautioned that some charities use charitable activity to advertise themselves. “They’ve obviously got a business model that works, so they’re making money, but they may also … want to give a fair amount of the money,” Steuerle said.
　　The University of Michigan’s Professor of Marketing Aradhna Krishna agreed that it is a good thing for companies to help charitable causes. But she said, "I don’t think that for many of these companies that is the primary purpose. The primary purpose is to increase market share and to get higher profit. Now, if in doing that they can help the charities - that is fantastic," said Krishna.