TOMS Shoes defines cool. These hip slip-ons are the garnishment of urban hipsters, but even much-less-cool folks like me love when companies give back. The winning equation for TOMS has been the “buy one get one” approach they pioneered: You buy slick kicks…and poor kids get free shoes. This equation has propelled TOMS to corporate superstar status.
All companies practice and celebrate their do-goodism. There’s even a cumbersome title for it–corporate social responsibility (CSR). Analyzing corporate charity models is one of my hobbies. Today’s doing good battle is between TOMS Shoes, the hipster heavyweight, and Whole Foods Market, the granola momma’s utopia.
VS.
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TOMS: Lots of good, but some areas that could be tweaked. Please: Don’t chuck your TOMS at me just yet. Hear me out.
The good: They connect their product–shoes–to their charity–shoes for poor kids. Rather than supporting something entirely unrelated, like well-drilling in Africa (leave well-drilling to Aquafina and Dasani), TOMS’ charitable endeavors are a foot-in-shoe fit, you might say, with their business.
Needs Improvement: First, though fabulously intended, I’m in the choir of skeptics about the impact of distributing free shoes to poor kids. In short, giving away free stuff, whether its TOMS Shoes, school supplies, or castaway Super Bowl t-shirts, almost always has a negative long-term impact on local economies.
Second, their social mission is sold as an add-on to their business. Like many other companies, they slice off a share of revenue and use that to fund charity. Giving is a good thing, don’t get me wrong, but companies like TOMS celebrate the toppings rather than the sundae itself. They splash a “charity cherry” on top of their business, but often neglect to acknowledge the core contribution they make to society: Providing meaningful jobs and cool shoes to our world.
Whole Foods Market: Though much more nuanced than TOMS, their approach to doing good is “best in class.”
The good: On a recent trip to Whole Foods to buy a bouquet of flowers for Alli, I left deeply impressed with the way their charitable efforts are woven into their core business: Selling healthy, fresh groceries. Rather than highlight their food donations, or the food relief agencies they could financially support, they celebrate the livelihoods they support across the globe and the nutritious goods they provide to their customers. I got this simple flyer with my flower purchase featuring Alfredo, one of the farmers:
Let’s be clear: Whole Foods profits from my purchase. They are not motivated to work with Alfredo solely because they want to help the vulnerable. They work with Alfredo because he grows gorgeous flowers and enables shareholders to earn big returns.
Still, they do business with Alfredo in a redemptive, equitable way, shedding light on the real people–the breeders, bakers and butchers–who produce their groceries. Like Whole Foods, Starbucks shines as a kindred spirit in the way they treat and celebrate their 75,000 coffee farmers.
The verdict: Like TOMS, Whole Foods gives a percentage of their revenue to provide additional support to farmers like Alfredo, but that becomes cursory, their add-on, to the livelihoods they support. Rather than voicing poetic kudos to their corporate tithing, Whole Foods highlights the inherent and more significant value their business brings to our globe. The clear winner? Whole Foods. They do good well.
Excellent, Chris.
These are the types of companies that I find myself more and more passionate about supporting – and as you know, the everyday conscientious investor can do so through Biblically Responsible Investing vehicles like Timothy Plan and Stewardship Partners.
This is what gets me passionate about helping out on so many fronts. The individual investor (making a good return), the do good company (doing well by doing good), and the beneficiaries of the do good company (a lot of mankind).
Thanks for a great post, Chris.
Interestingly, psychologist Marty Seligman, one of the leading proponents of Positive Psychology, has found that when people do things to help others (rather that simply to please themselves), the feeling of satisfaction runs deeper, lasts longer and “infects” other relationships in a positive way as well!
Sounds pretty Biblical to me!
First of all, good man for buying flowers for Alli. 🙂
Second, I really appreciate you pointing out the good Whole Foods is doing by supporting farmers like Alfredo. So many shun Whole Foods because it’s expensive, but paying people a fair wage for their products is good and right… and more expensive than not doing so. I recently read that the majority of migrant farm workers in this country make less than $10,000 a year for full-time work. We celebrate cheap groceries, but at what price? These are our neighbors. They deserve fair compensation for their work. And we probably ought to be paying a little bit more for our food.
hi chris –
great post. just wanted to give you a heads up about more info re: TOMS.
they work with NGOs and local experts to identify the communities that will benefit from the distribution of shoes due to economic, health, and education needs, and where local businesses will not be affected. lots more about why shoes and how they give in the “TOMS Giving Report” here: http://www.toms.com/givingreport
also, the business is built on a One for One model. there is no percentage of revenue that fuels a charity – there is no charity. TOMS is a for profit business that gives one pair of shoes for every pair of shoes (or tshirt or hoodie, etc) that you buy. One for One is built in to the core of the brand, and it has been that way since day 1.
hope that helps you understand TOMS and One for One a little better!
thanks.
Caitlin,
Thanks for helping to clarify the TOMS model. I hope you know I am a TOMS aficionado — and think they have been an incredible force in pioneering a model of business which promotes doing good.
I think it’s great that TOMS works in under-resourced communities and works in partnership with local NGOs. Still, even if there are no local cobblers who are put out of business due to the shoe distributions, the fact that so many are receiving free shoes is an inhibitor for local entrepreneurs attempting to meet that need. They will never be able to compete with free. We saw this same reality in Ukraine at HOPE (I linked to that story above).
In regards to the One for One model, I guess my point is less about where the revenue for the shoe giveaways comes from, and more about the core value TOMS is adding to our world. You have to be employing dozens, if not hundreds of innovative folks in your manufacturing facilities in Argentina, China, and Santa Monica. In some ways, it feels like those livelihoods are more of an afterthought — or a means to an end — to giving shoes away. Whether the funds for the free shoes are funneled through a related nonprofit or directly from TOMS corporate isn’t really the issue.
Again, I really do love TOMS, but think that the Whole Foods model of affirming the livelihoods they are supporting through their entire value chain, is perhaps a more holistic approach to CSR.
Thanks for the feedback. Really grateful!
Chris
I’m sorry, but TOMS shoes is charity. It really doesn’t matter to the recipients how your company makes its money or what business model you’re following – the impact is the same. While TOMS always claims that they don’t hurt the local market, they have yet to prove that shoes cannot be purchased locally. Show me a single country where shoes are not for sale. TOMS shoes would have a far greater positive impact by purchasing shoes locally, thereby actually supporting the local economy and potentially creating jobs for the parents of the kids that are receiving the shoes.
You’ve been very successful at turning one for one into an advertising campaign, so it’s been good for your company but that doesn’t mean it’s good aid.
Sigh, yet again a triumph of style over substance. Personally I’d rather buy flowers from a flower farm/nursery that grows them than get swept away by the pretty photos of some poor person on the packet, but that might just be me.
I have quite a bit to say about this, and I never post on online forums because I do not like how often constructive discourse turns into petty arguments. I want to forewarn that I am very passionate about this subject, but I do not mean to offend anyone through what I am about to express.
I grew up in Argentina which is the country that inspired the creator of TOMS shoes to create the One-For-One model. Understanding the economy of Argentina, I am not sure that I understand how it is that giving free shoes to children in poverty is at all taking away from the local economy. The poverty experienced by this group of the population is so extreme that even if there is a local cobbler, these children would never even be close to being able to afford a pair of shoes.
To put things in perspective, my mother has a bachelors in civic justice and taught at the secondary school level in a suburb of Buenos Aires. I remember one specific month during which her paycheck for the entire month was equivalent to US$12. More importantly, I remember her explaining that this would not be enough to even buy me a pair of shoes. Even if a shoe factory was established, only the middle-class (which basically disappeared in the crash of 01) would possibly be able to afford these shoes.
Sometimes when I hear these arguments against giving, it makes me think that it is a very American mindset to believe that injustice and poverty can be fixed through capitalism. I also think it is sometimes difficult for Americans to understand and imagine the level of poverty that is being discussed in these countries.
Some of the shoes that TOM’s gives away are manufactured in Argentina and Ethiopia. The rest are made in China. This speaks largely to the fact that countries such as Argentina manufacture goods in ways that would not be acceptable to American consumers. Capitalism does not fix everything, and if anything, the poverty that is experienced in most of these nations is in large part caused by the influence of capitalism. I think that as we sit in our comfortable homes, discussing how we want high end retailers to impress us through their giving and chastising them for trying to convince us that a $20 bouquet of flowers is worth it because it assists a farmer, we should question how much we have done to assist both our local and global community in need, and if perhaps we ourselves are practicing the moral guidelines that we demand out of corporations that only exist because we allow them to.
Andrea,
You bring up MANY great insights. I value your tone and points which you surface in your post. It is absolutely not my intention to insinuate that capitalism is the sole solution to global poverty! I do think capitalism can be an incredible tool for good — and has been one of the main drivers in slicing extreme global poverty in half over the past 30 years (source: see World Bank study posted here – http://smorgasblurb.wordpress.com/2011/02/03/the-best-broken-system/). However, it is still not an end-all, be-all solution. We need a healthy social sector and public sector for societies to prosper.
I actually work for an organization (www.hopeinternational.org) with operations in countries significantly worse off than Argentina — Congo, Haiti, Burundi, Afghanistan, etc. In my opportunities to visit these places, I have met with many cobblers and shoe sellers who sell their products to VERY poor families who need shoes. See Leonie’s story from Burundi as an example: http://blog.hopeinternational.org/2010/11/26/one-changed-life-leonies-story/
You can imagine how challenging it would be for Leonie to make a living if her community was flooded with free shoes. Even in the poorest communities, there are industrious people like Leonie who are impacted. There have been countless stories of the free food drops we have done in places like Haiti and elsewhere which have driven farmers out of business. Why grow grain if USAID is giving it away for free?
I think you make some great points…and capitalism is absolutely not the solution to the world’s problems. My main point is that free giveaways (they’ve now given over a million shoes away — that has an impact on economies!) are very rarely helpful in the longterm.
Chris
Thanks Chris! Informative article!
I think the points you brought up about TOMS are valid and relatively true. I didn’t know that Whole Foods was such a “good doer” store and I’m impressed with what they do for their farmers. But, I don’t think that comparing the two companies to see who is better at doing the most good gets us anywhere. I think the focus should be that the corporations are in fact making a difference in the world while simultaneously making a profit. That’s a great accomplishment and shouldn’t go unnoticed. Maybe comparing companies like TOMS and Whole Foods with companies that are doing nothing to benefit others would be more effective.
Brooke – Thanks for the comment. I think there’s a lot of merit to your comments. As many of my peers view TOMS as the only beacon of corporate light in the world, I attempted to celebrate the things we all know they do well while also challenging some of the weaknesses in their approach. Still, the comparison is perhaps more fun than it is helpful. In a recent related post – Western Union vs. American Apparel ( http://smorgasblurb.wordpress.com/2011/11/21/western-union-vs-american-apparel/ )- I think I found a better contrast. Thanks again for the comment!
I don’t think capitalism is the answer. I think there’s something else we need to find and work out. But in the meantime, the opposite of capitalism takes countries to scary places. Certainly, capitalism creates certain classes where someone will always be less wealthy than the other. But if it can take a country out of poverty by even 30%, isn’t that worth it? It would be a temporary solution, but once economies are established one can hope the government is a good one who can allow for laissez fair economics to take over but all the while provide tax breaks and subsidies to help folks who are being left behind and below the “middle class” or have the upper and middle class work together to help the poor is ideal. There’s an interesting model I read, where the organization put cash into the hands of folks to go out into their local markets to buy classroom supplies rather than give supplies side steps this big issue of hurting local markets. But again, I don’t know how doing that effects the local economy – that’s something I need to look into further. But on the surface, like the one-for-one, sounds like it has immediate impact and help.
I have to wonder on the quality of on shoes they are donating. If they are ones with flaws that the factory makes and are just donated so the company can take the “loss” of the imperfect item as a tax write off at the price of the cost for the shoe to be made. As a company I cannot see how they would be able to stay afloat after years of giving away half of their product without making money off the shoes they give away. Has there been any investigation into how that would work?