Published 8 years ago.
About a 6 minute read.
Image: Nouri Bar
While these models were implemented with the best of intentions, their lack of a holistic approach to the problems they’re aiming to address undermines a key selling point for mission-driven business models: the mutual benefits of improved reputation and profits.
At first glance, the ‘Buy One, Give One’ (BOGO) business model, pioneered by US companies such as TOMS, seems like a triple-win scenario: The consumer is left feeling like they’ve made a positive difference, the company experiences a major boost in its reputation and bottom line, and beneficiaries get a helping hand for free. But while TOMS, for one, has been hailed as a game-changer in promoting social responsibility, its practices have also come under intense criticism.
The core premise of most BOGO models is to help alleviate some of the worst effects of poverty through the provision of resources. TOMS donates free shoes and Roma Boots does similarly for boots; and This Bar Saves Lives and Plum Organics donate free meals to children in need. At face value, it seems like a generous and positive concept. However, simply “giving” resources for free can sometimes result in a backlash of unintended negative impacts.
Let’s be clear: Poverty is not caused by a lack of resources. Insufficient access to basic goods is a symptom of underlying issues rather than the cause of poverty itself. Poverty is systemic; it represents an ineffective social and economic system that fails to provide the necessary infrastructure for communities to generate resources or wealth for themselves. Simply donating goods or resources therefore does nothing to address the core underlying causes of poverty. In fact, donating stuff for free could potentially prevent any transition to a longer-term, deeper solution by creating dependence within a beneficiary community for external help. This dramatically lowers the incentive for communities to develop their own solutions. In fact, an influx of imported, free goods could exacerbate the issue by putting local producers — one of the few ladders to wealth creation — out of business.
Time and again, it has been shown that simply giving away resources is one of the most ineffective and inefficient mechanisms for alleviating poverty. There are a few exceptions to this reasoning: In emergency relief cases, for example, communities need quick access to basic provisions. However, this is only sufficient in the short term — long-term stability requires deeper, more fundamental systemic changes. In some cases, some small dependency may be acceptable if a donor can guarantee a steady, consistent supply of goods in the long term. But here comes the Achilles heel: What happens if a company shuts down, experiences a drop in demand, or has inconsistent sales volumes?
While these models were probably implemented with the best of intentions, their lack of a holistic approach to the problems they’re attempting to address undermines one of the key selling points for developing mission-driven business models: the mutual benefits of improved reputation and profits.
So, how about adapting conventional one-for-one models to make them more effective? To make a sustained, long-term contribution to poverty alleviation, these approaches must focus on the capacity-building aspect of their beneficiaries. Resource provision must be provided in a way that helps to build a local capacity and infrastructure for communities to source and generate goods independently of external donations. Developing local agricultural systems or manufacturing plants is exceedingly more beneficial than donating meals or shoes, for example.
Some BOGO companies have launched with this in mind or adapted their initial models to address some of their critics’ claims:
It’s important to note that BOGO models began with good intentions. Innovative business approaches always come with unintended consequences — some positive, some negative —that are often hard to foresee. The real test of whether a company is truly well-intentioned is its response to emerging evidence of its true social impact. It’s a dynamic learning process. If the evidence says it’s not working, then it’s a company’s social responsibility to change.
A shift in the way founding one-for-one companies are implementing their models and a rise in the number adapting conventional approaches provide optimism that they are changing for the better. These models too will likely come with unexpected consequences. That’s why a continual re-evaluation of their true impact is vital. A critical eye is the only way to ensure they’re providing the social good they were designed to.
Published Feb 19, 2016 2pm EST / 11am PST / 7pm GMT / 8pm CET