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.
Additional Reading:
- 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’
Update 8/29/16:
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.
I see TOMS as a better than average model and I don't hold it against anyone who buys their products, but I still think there are enough other ethical companies in the same price range that I would rather choose an option that seems ultimately more sustainable. I'm on the fence about the purchase=charity model, because I think it potentially encourages overconsumption without helping people cultivate their ethics in a way that will make a difference in their whole, integrated life, and that's something I think is very important. It's better than nothing, but I don't think it should be the pinnacle of a company model. It's fine as a stepping stone.To you and BA, I REALLY appreciate your feedback and your thoughts on this issue. This is the beauty of putting stuff out there; I think it's good to just be communicating on this so we can discern together. I'll keep thinking on what you guys have said.
I agree that charity and one-for-one models are not "the best or most appropriate tool[s] for fighting poverty." 😏
While this post was well written, I disagree that one-for-one business models are not worthy of support from a conscious consumer. As BA so well stated, companies such as TOMS are constantly working to improve their model, whether it's producing shoes in the communities they donate to or providing glasses/vision surgeries (which you mentioned you do support). I've seen a few companies following this model that didn't sound particularly helpful, but as with all the companies we support I think it's best to look at their individual practices. I also applaud TOMS for the Marketplace. Consumers generally have a limited amount of discretionary income, and seeing as how we are hard wired to be more selfish than altruistic, if it comes to choosing between buying a pair of sunglasses that we need or giving money to a non-profit which will help restore a person's sight, most are going to choose the sunglasses. So it's really nice that some businesses now make it so even when we are just buying the items we want or need, others are getting some of what they need as well. It's not perfect, but I think it's good.
I think to some extent you've misunderstood my post and that's probably my fault, largely due to its brevity. My friend's sister helped get the ball rolling on TOMS marketplace and I think that's a step in the right direction. I also explicitly state that I don't expect perfection. But the one-for-one model in general obscures a lot of the important, behind the scenes work and charity at the end of a process is never as good as regulation at the beginning. I mention, as well, that I know TOMS has made strides to improve their production, which they were initially criticized for. All in all, I agree with you that TOMS was an important catalyst for change in the industry, but I don't think the one for one model is even close to the best or most appropriate tool for fighting poverty. As a gateway into ethical consumerism, sure, but I tend to shy away from these types of companies for the reasons I mention here and in my initial post. Additionally, I think there's a bit of a cult of personality going on with Blake Mycoskie in particular and I don't like the way he talks about the poor. That's something I didn't think needed mentioning in my post since it's neither here nor there, but I feel uncomfortable with his particular way of doing business.What I want is for the one for one models to stop relying on their end game charity as a branding strategy. It can verge on exploitative. I think Warby Parker does a much better job at branding than other one for ones, as I also imply in my post.
Additionally, we should also consider the increased awareness and education about global poverty that can be directly attributed to popular, successful 1-for-1 brands like TOMS and Warby Parker.In a way, rejecting 1-for-1 models outright can be nearly as short-sighted as thinking they're going to solve poverty. It's more effective to learn about how and where our products are made, and about the companies we're buying from.
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This is really well written. I'm big on long-term solutions versus just a short-term fix. One-for-one models market really well and I think for the most part people have good intentions but simply do not have an understanding of the complexities of poverty. A pair of shoes will not end poverty but having a job making shoes will make greater strides to helping people rise above poverty. However on the flip side, like in the case of TOMS, they created not only a product but a platform to make people more conscious of their purchasing habits and the power of our money. I read recently TOMS has started partnering with people in impoverished nations to create some of their shoes. I think it's a learning curve. They blazed the trail for conscious shopping but they to have had to learn and make adjustments to their model in hopes to make a long-term impact and I hope they continue to do so. Great blog. Looking forward to reading this series!
In the last 3 years, TOMS has actively committed to employing and manufacturing in developing countries that need the work, including Haiti, India, Ethiopia, Kenya & Argentina. Also, TOMS now sells fair trade products by makers such as Joyn, Krochet Kids, Raven + Lily, etc. at its stores and online Marketplace, which helps thousands of artisans with employment and empowerment (fair trade models also support education, healthcare, sustainable development, skills training and other economic opportunity). Blake Mycosie started TOMS because he saw kids with no shows and thought of one way to address that problem. When it was brought to his attention that people also need work, he made changes and found some ways to address those problems, too (http://www.toms.com/beyond-one-for-one). Mycosie has been very open and responsive to the critics and is always trying to make TOMS a more purposeful company. I think this shows sincerity, integrity and leadership, and I value that. I don't agree with the notion of rejecting something good because it's not perfect. While I understand that lots of one-for-one copycats may cause some problems, TOMS' efforts are more positive than negative and represent one way of addressing problems that require MANY courses of actions.Barbara-Anne@BAMworksorg
I was watching TOMS a couple of years ago when they responded to criticisms of their business model with a commitment to producing shoes in the countries that they support. I posted about it (over two years ago, so super outdated) here: http://www.birds-of-a-thread.com/2013/11/how-toms-is-getting-it-right.htmlI really want to like TOMS, because they've done such a good job of popularizing conscientious capitalism. Although I haven't looked into it in a while, I'm curious how they've delivered on the promise they made back in 2013. Is it possible that they have/ will move beyond a "band-aid" model and make real change in the communities they serve?
Well written. This model has been such a slippery slope for us as we have found there are some instances that the model is good (socks and blankets for homeless) but many cases where it isn't – researching and truly understanding the impacts behind the "donations" has proven so complex! I appreciate your articulate thoughts on this!
Thank you for writing this! It's so important to consider the impact of donations on the local economy. I am looking forward to the rest of this series!