By Karolina Reiss
When you buy a service or product from a regular company, what do you expect in return for your money? Good quality, decent customer service, a low price. You don't necessarily expect the company to be ethical in its dealings with its employees, suppliers, shareholders, or the environment. In other words, you don't expect such a company to give back. You have engaged in a transaction. Not a promise.
Many of us, however, are dismayed by the lack of respect large companies are exhibiting towards their stakeholders and our planet. So we seek out companies that deliver on their promise to do socially good, to give back.
Our desire to support companies that support others in return has paved the way for social enterprises, which are on the rise. TOMS, Warby Parker and FEED Projects are just a few enterprises that have a mission beyond profits. They give back on a large, effective scale and thereby transform the lives of many in need.
When you acquire their products you know exactly the social benefit your purchase will create: buy a pair, give a pair or feed X number of children. Their promise is simple and transparent.
Transparency is what allows those social enterprises to gain our trust and support so they can grow.
Unfortunately, many social enterprises don't believe that transparency is important. Let me give you a couple of examples; 1) There are two coffee shops in my neighborhood, which are co-owned by an A-list Hollywood actor. That company claims to give 100% of its profits to charitable causes. 2) A few days ago, I was shopping at "Whole Paycheck" and stumbled onto the lifestyle goods area. There, I saw a really amazing bracelet and started to read about the company's mission in the attached booklet the piece of jewelry came with. It said that 10% of proceeds will benefit a charity in the developing world.
100% of profits. 10% of proceeds. Really? What does this even mean?
Anyone with a basic understanding of accounting knows that such claims are meaningless. How are those profits calculated? Do you even realize that "proceeds" is an accounting terms for money generated from a bond issuance or the net gain from a sale of a fixed asset? How does this even compute when selling bracelets?
I went to the coffee shop's website to find out how profits are calculated and what the estimate on those would be but this information is nowhere to be found. It really annoyed me. I am no longer going back there for my caffeine fix.
Same thing happened when twisted the website of the jewelry maker - there was no info whatsoever about what those proceeds really represent.
I could be cynical and say those companies are purposefully dishonest in riding the social enterprise trend and are coaxing us into buying their goods under the pretext of doing good to turn a profit. And many probably are. We just don't know it yet.
But I think that more likely those social enterprises are just figuring out the "giving back" part as they go along and that's why we see those wishy-washy promises of profits and proceeds benefitting some charity somewhere. But this is still disheartening. Here's why:
There really is no excuse for lack of transparency on giving when you run a social enterprise. Companies like Warby Parker and FEED Projects have laid out a blueprint on how your purchase benefits others in very clear, understandable terms that leave no room for misunderstanding: one pair is given for one pair bought, each bag feeds X many children and so on
Simple and transparent. It's doable. Those brands have proven that it works. No gimmicks.
I am a firm believer that transparency is what sets a social enterprise apart from regular companies.
If you as a social enterprise don't have a clear understanding or plan or goal or intent to properly articulate to your stakeholders how much exactly you are going to donate, then you fall somewhere between fraudulent and lazy on the "making a promise to give back" spectrum.
It would be such a shame if the blurry actions of a few spoiled it for the rest of us and the causes we support by eroding the trust of the customers we collectively made a promise to.
Karolina Reiss is the founder of the soon to be launched social enterprise CarpeCultum.com, a shoppable experience site at the intersection of limited edition lifestyle goods and charity. Carpe Cultum promises its customers to divert 10% of the pre - sales tax purchase price on each and every item sold to a charity that the customer chooses from Carpe Cultum’s charity partner list. Connect with Karolina on Twitter @CarpeCultum.
Image: tj staab