This is the first post in a series called Buyer Beware on business models I generally don’t support.
Pitfalls of One-for-One Models
I’ve talked about the one-for-one model before (I’m even advertising one of them on my sidebar), but I think it’s worth mentioning again. One-for-one models, popularized by TOMS shoe company, operate under a “Buy something, give something” branding strategy, wherein the consumer’s original purchase triggers the donation of a good or service to someone in need.
On the surface, there’s nothing wrong with that. But in practice, the model often does more harm than good.
According to the University of Pennsylvania Wharton School:
“When you give away something free, you’re giving away a band aid. You’re not addressing deeper causes [of poverty] and you may be inhibiting long-term solutions,” Miller notes. “Poor people aren’t poor because they lack stuff; they’re poor because they lack the infrastructure to create wealth.”
If your company undermines development of local infrastructure, your model has failed. The article recommends that companies interested in one-for-one as a marketing strategy need to be careful to ask what the needs of the community are before they begin in order to ensure that aid provided is useful long term. That’s why some companies (like ones who provide glasses and vision care, for instance) are fine in my book, while others are just so-so.
The other (extremely important) question to ask of your favorite one-for-one company is this: who produces your product and under what conditions? TOMS has made moves in recent years to ensure that its factory workers are being treated just as well as its beneficiaries after receiving criticism from business experts and consumers. No sense helping one party and screwing over the other. That’s not charity – that’s just crazy!
Some points of clarification based on your (very good) feedback:
One-for-one models, and TOMS in particular, trail-blazed the whole concept of conscious consumerism. There’s no denying it. They also serve as a good introduction into the ethical conversation. I am grateful for that (I wrote about TOMS a couple years ago, too). But I can’t help but feel uncomfortable with a model that uses questionably conceived charity as its primary branding strategy.
Copycats (watch Shark Tank – the millennial wantrepreneurs are all over one-for-one models) take advantage of this marketing strategy to overcharge for their goods without making any discernible changes to their production standards or employee wages.
I would never tell you that you should boycott a one-for-one as long as it’s making strides throughout its entire production process, but it’s important to look past the initial feel-good nature of these companies and ask yourself whether you really want to buy in.
TL;DR: One-for-one models just aren’t ideal, 1. because they don’t solve structural and economic problems in poor communities and, 2. because labor and sourcing issues are often obscured by the glossy finish of the noble cause.
- The Buy-One-Give-One Model Might Make You Feel Good, But It Doesn’t Make The World Better
- The One-for-one Business Model: Avoiding Unintended Consequences
- A Better Way To ‘Buy One, Give One’
New documentary, Poverty, Inc. (available on Netflix) does an excellent job of describing the differences between a charity model that can ultimately harm local infrastructure versus a fair, economic model that puts the power in the hands of the people. I highly recommend it.
Update 4/5/17: I LOVE when other people catch on to this and make quality content for our viewing pleasure. For further evidence that this model is flawed, watch this video:
Update 11/2019: TOMS is shifting away from its one-for-one model.