The Future of the Buy-One-Give-One Model

Emily NowlinThe Stakeholder Organization

Professor Jordi ComasSpring 2016May 8, 2016

Table of ContentsI. Executive Summary..................................................................3

II. Introduction.............................................................................3

a. Blake Mycoskie and TOMS Shoes........................................................................................................4

III. Benefits of the Model...............................................................5

a. Social Value.........................................................................................................................................6

b. Consumer Demand.............................................................................................................................7

c. Marketing and PR...............................................................................................................................9

IV. Recommendations for Social Entrepreneurs..........................10

a. Connecting Your Brand with the Right Cause...................................................................................11

b. Donation Models..............................................................................................................................12

c. Products............................................................................................................................................13

d. Business Strategy..............................................................................................................................13

e. Marketing.........................................................................................................................................14

V. Critiques of the Model............................................................15

VI. Response to Critique............................................................16

a. TOMS Adapts its Model....................................................................................................................16

b. Future Improvements.......................................................................................................................17

VII. Conclusion...........................................................................17

VIII. References..........................................................................18

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I. Executive SummaryThe prevalence of social-driven companies is on the rise in the U.S. market. More and more

social entrepreneurs are entering into the cause marketing space with popular brands which

serve both a consumer and social need. The buy-one-give-one model is the essence of this

activity, and companies in this space are making huge waves in terms of driving both social

impact and purchasing power.

The model started with TOMS founder Blake Mycoskie in 2006, when he set out to create a

sustainable method of providing shoes to impoverished Argentinean children. Since then,

hundreds of brands have followed his lead, and the buy-one-give-one enterprise has emerged

as a new sector of the consumer-product industry. The model is beneficial because of its

inherent social value, its healthy influx of consumer demand, and its attractive marketing

message.

There has been some initial critique on the One-For-One model that TOMS Shoes originally

coined. Many opposers believe that hand-outs are inefficient in solving deeply rooted social

issues such as poverty. Mycoskie has come around to understand this critique, and has since

adapted the model to include tackling important issues such employment, education and

health.

For social entrepreneurs wanting to start their own buy-one-give-one enterprise, this paper

outlines some of the strategic options and important steps needed for entering into this

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market. These include, choosing the right cause for your brand, picking a donation model,

choosing what to sell, pricing, and understanding how to marketing your product.

II. IntroductionThe buy-one-give-one model is a powerful platform which merges the demand for companies

to have a social mission with attractive profitability potential. Though the model has seen

adaptation in its short history, its essence is simple and to the point—buy one (backpack, shoe,

water bottle, blanket etc.) and one will be given to someone in need. Buy-one-give-one

companies partner with non-profits to ensure that impact is maximized and that sustainable

benefit is being provided (Marquis and Park, 1). The model is seen as a great way for for-profit

companies to act as agents for social change, and this sector has been growing rapidly since its

inception in 2006. These companies are using the power of business for good, and are stepping

up to support some of the largest issues across the globe such as: poverty, hunger, and disease,

among others. The public has responded with praise and support, as consumers are choosing to

pay more money for these goods, going out of their way to purchase from these social

enterprises (Nielsen, 1).

While the buy-one-give-one model has received some criticism for the adverse effects of its

hand-out nature, it is currently being adapted and improved from its foundation. UPenn

researchers say: “We’ll need time, experimentation, and rigorous research to answer these

questions” (Wharton, 4). The model is; however, a valuable one, and respected researchers

Christopher Marquis and Andrew Park believe that the it is “a viable way to create both

commercial and social value” (Marquis and Park, 1).

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a. Blake Mycoskie and TOMS Shoes

TOMS founder Blake Mycoskie is considered to be the father of the buy-one-give-one model

since he began his shoe company in 2006. Having had his hand in multiple start ups, the

twenty-nine-year-old felt a greater call to create an enterprise which was more than self

serving. After his trip to Argentina took him off the tourist trail, Mycoskie learned that many

impoverished children did not have shoes. At first, he believed the solution would lie in the

typical non-profit business model (Mycoskie, 5). However, he soon realized that there was too

much unpredictability in finding donors, and wondered how he could create a way to provide a

reliable stream of ongoing support. In chapter one of his book, Start Something That Matters,

Mycoskie states:

“An idea hit me: Why not create a for-profit business to help provide shoes for these

children? Why not come up with a solution that guaranteed a constant flow of shoes,

not just whenever kind people were able to make a donation? In other words, maybe

the solution was in entrepreneurship, not charity” (Mycoskie, 6).

The tagline, “buy a shoe today, give a shoe tomorrow: one for one” was constructed and TOMS

(tomorrow’s shoes) was born. In Mycoskie’s mind, the model was valuable because it provided

a constant flow of donations, while also serving a consumer need. What he didn’t realize was

that this model become a vehicle for hundreds of social entrepreneurs to follow in his

footsteps.

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III. Benefits of the ModelThe buy-one-give-one model provides both social and economic benefit. The model is valuable

because it stems from a consumer demand, providing a much more sustainable way to

maintain donations than a traditional non-profit organization. Businesses can leverage

marketing and advertising tactics to get the word out about its products and services, while

many non-profit executives have to deal with tight constraints on budget expenditures, leaving

them unable to spend a healthy amount of money in marketing. Therefore, many non-profits

are unable to achieve the scale that typical for-profit businesses are awarded. The buy-one-

give-one model provides a great opportunity for social value, marketing opportunities, and

consumer demand.

a. Social Value

Buy-one-give-one companies have an inherent social value attached to its products. While

scholars such as Milton Friedman warrant against this type of entity (Friedman, 222), social

entrepreneurs have been pushing the envelope to provide enhanced social change through the

power of business. These businesses have proved Friedman wrong, ensuring that it is possible

to be charitable and profitable at the same time. In fact, the social missions of these companies

are the driving forces behind consumer purchase decisions, creating a world in which

consumerism sparks world change. In today’s economy, only 7 percent of the U.S. population

agrees with Friedman’s belief that corporations solely need to be concerned with their bottom-

line (Cone Communications, 5). Social impact is good for business—and it’s here to stay. Cone

Communications, a public relations and marketing agency specializing in Corporate Social

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Responsibility and cause marketing, believes that “social impact is the new standard for how

companies address social and environmental issues to drive meaningful and positive change”

(Cone, 2013).

As stated previously, non-profits have been relatively stagnant in providing the aid that is

needed to solve the large world problems that our society is facing today. Donors place huge

restrictions on non-profit companies, and many want to see 100% of their donation go straight

to the people in need. While this is logical, seeing that many donors want to ensure that their

donations are not being spent on frivolous activities and perks (such as planes, cars, expensive

trips etc.), this greatly limits non-profits from achieving the scale and scope that is needed to

solve deeply rooted issues (Pallotta, 2013).

For profit businesses; however, do not hold these same restrictions. Buy-one-give-one

companies provide a powerful platform to merge the social benefit of a non-profit organization

with the economic benefit of a for-profit one. These companies are not chastised for investing

in activities such as marketing, thus allowing them to achieve greater returns and greater

impact. This is a win-win for everyone involved, especially since consumer behavior trends are

pointing toward a society which wants to purchase and invest in companies that give back

(Nielsen, 1).

b. Consumer Demand

Consumers are no longer pleasantly surprised with companies that are socially-focused—they

require it. The current marketplace demand for brands that give back is unprecedented. A

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comprehensive study on Millennials and CSR, reveals more than nine-in-ten Millennials would

switch brands to one associated with a cause (Cone Communications, 32). Socially-responsible

companies quickly gain positive brand associations, thus converting consumers into lifetime

ones. These customers then voice their experiences to others, as 84% reported they would tell

their friends and family about a company’s CSR efforts (Cone Communications, 18).

In June 2014, Nielsen released powerful findings in a document entitled: Doing Well by Doing

Good. This survey revealed that today’s consumers expect companies to participate in

meaningful and impactful activities to improve the environment and increase social impact

(Nielsen, 2). The study goes on to state:

“At the moment of truth—in store, online and elsewhere—consumers are making a

choice and a choice that is heavily influenced by brands with a social purpose, this

behavior is on the rise and we are seeing this manifest into positive impact in our

communities as well as share growth for brands.”

Knowing your consumer is essential in succeeding in business, especially for consumer product

companies, which make up most of the buy-one-give-one segment. It is no longer a question of

whether consumers are care about social impact, especially among Millennials who represent a

good portion of those who express interest in socially-conscious companies.

Millennials are demanding that companies attack and contribute to social change through

corporate social responsibility and cause marketing. These consumers are currently 18-33 years

old, representing a group that either has established or is establishing a career, along with a

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disposable income. The future looks bright for companies who have a social mission attached to

it, especially since Millennials are already a potent force. Figure 1 represents the findings from

Neilson, which show the consumer trends that align with socially-focused companies. This

consumer group will come into their own by 2020, when Accenture projects: “their spending in

the United States will grow to $1.4 trillion annually and represent 30 percent of total retail

sales” (Accenture, 1).

Figure 1: (Nielsen, 2014)

c. Marketing and PR

Marketing is often synonymous with pop-up ads and annoyances that get in the way of

everyday life. Consumers are flooded with messaging everywhere they go, and advertisements

are often overlooked as they blend into the everyday lives of individuals. However; one type of

marketing that consumers enjoy is cause marketing—a mutually beneficial partnership

between a non-profit organization and a for-profit company which produces benefits for both

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parties (Cone Communications, 26). In fact, an astonishing 88% of American consumers want to

hear about cause marketing efforts.

Clearly, buy-one-give-one companies have an automatic leg up in this arena. The missions of

these social entities are simple, concise and achieve consumer attention easily. In the Stanford

Social Innovation Review, scholars Christopher Marquis & Andrew Park state: “the social impact

is clearer, easier to understand, and more personal than that of a traditional cause marketing

company, such as Product Red, that donates a percentage of sales” (Marquis and Park, 30).

Consumers find the messaging to be attractive, and are inclined to buy based off of the

emotional and social benefits of these products.

Furthermore, buy-one-give-one companies receive a lot of free press as a result of being

mission-focused (Marquis and Park, 30). In fact, TOMS Shoes owes most of its gain in popularity

to Vogue, who ran an article about the company during its initial stages of growth (Mycoskie,

3). This article sparked celebrities, as well as the general public, to endorse the brand for its

social mission. Marquis and Park state:

“The press is attracted to a story of a company doing good, and the simplicity of the

message, the emergence of more and more buy-one give-one companies, and the growing

consumer trends around social responsibility make these companies great candidates for

media attention” (Marquis and Park, 30).

This is just one of the many perks that buy-one-give-one companies receive for being socially

focused.

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IV. Critiques of the ModelWith any new idea, comes critique and opposition. While the One-For-One model has been

praised for its innovative perspective in how the public sector can act as agents for world

change, many opposers of the model believe that its handout mentality causes beneficiaries to

become dependent on free aid, thus hindering local economies. In 2008, scholar Garth Frazer

set out to understand the correlation between used-clothing donation and apparel production

in sub-Saharan Africa. In his study, Frazer identified that “there is a negative correlation

between the apparel production and used-clothing imports.” The study goes on to state: “In

terms of magnitude, the imported used-clothing imports are estimated to be responsible for

roughly 40% of the decline in apparel production and roughly 50% of the decline in apparel

employment in an average African country over the period 1981 to 2000” (Frazer, 2008). This

reinforces many common criticisms of the One-For-One model, and may serve as evidence that

it needs to further evolve in order to deliver a true sense of aid to developing countries.

Another common concern about the model is that it is short-sided and only addresses

immediate solutions to greater problems, such as poverty. These issues are highly systemic, and

are rooted in complex social structures (Marquis, 1). Many opposers point to TOMS’ business

model when thinking about these issues. An article published by Wharton School of Business

states: “Mycoskie has a good heart. But, I have matured to see that following the heart to fight

poverty is a terrible idea,’ Widmer notes. ‘It pleases you more than it helps anything. To give

anything is always a bad idea when you’re trying to fight poverty” (Wharton, 1). Some even go

so far as to claim that TOMS is using impoverished children as poster children, or as means to

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an end to generate revenue for the company. While this critique holds a lot of weight for the

company, one look at the company’s internal motivation would signal that TOMS truly cares

about the mission, which is deeply embedded into the the company’s fabric.

V. Response to Critiquea. TOMS Adapts its Model

Since Mycoskie is considered to be the father of the buy-one-give-one model it is important to

look at how his company TOMS has managed critiquw. While opposition can often cause

founders to respond with haste, Blake Mycoskie feels that there is a lot to learn from his critics.

He is working to improve the model so that it enables far-reaching social impact. In an interview

in 2015, Mycoskie stated:

“If you really are serious about poverty alleviation, our critics said, then you need to

create jobs. At first I took that personally, but then I realized that they were right… using

our model to create jobs is the next level” (Short, 3).

Mycoskie is following through on his promise. According to its website: TOMS now produces its

Giving Shoes in Argentina, China, Ethiopia, Haiti, India and Kenya. As a result, 700 jobs have

been created, and over 10 million giving shoes have been produced in these 5 countries. These

factories employ an impressive equal ratio of male and female workers. Furthermore, the

company’s coffee business is 100% sustainably sourced (toms.com). This ensures that farmers

are being paid a fair wage for their crafts, and that farming practices are environmentally

sound.

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Furthermore, the company has responded positively to critique, offering aid beyond the One-

For-One model. Aside from donating shoes (a material need), TOMS has adapted its model to

help provide sight, water, safe birth and bullying prevention services to people in need

(toms.com). In order to do this, TOMS partners with non-profits to ensure that aid is maximized

and beneficial in addressing communities’ access to health, education and well-being. TOMS

has also championed a program called “Start Something That Matters” to help social

entrepreneurs grow their ideas and businesses. The company has invested in over 20

companies with a social mission, thus increasing the total social impact provided from TOMS.

b. Future Improvements

TOMS serves as a great example for how the model needs to be adapted to ensure that social

reach is maximized. The literal interpretation of the model (buy one product, and another will

be donated to someone in need) needs to be improved to include important economic factors

such as employment. By attacking these problems from the bottom up, companies can begin to

chip away at solving systematic issues such as poverty. Social impact needs to be the driving

factor behind buy-one-give-one companies’ motivations. Companies need to drive value

through providing local impact in the communities it gives back to. Providing a physical item will

only last so long, so buy-one-give-one companies need to ensure that social impact is fully

maximized through sustainable activities and thoughtful partnerships.

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VI. Recommendations for Social EntrepreneursAlthough there is some critique, it is clear that the buy-one-give-one model is attractive for

businesses, consumers, and the social missions which are attached to these companies. With

more and more socially-focused brands emerging on the marketplace, it is important to note

that just attaching a cause to a company’s name is not enough. Social entrepreneurs need to be

whole-headedly invested in achieving social change in order to come across as genuine.

Millennials are already skeptical of cause-washing practices and are looking for genuine,

mission focused companies to enter into their worlds. The following sections outline a potential

course of action for social entrepreneurs who want to start their own buy-one-give-one

enterprise.

a. Connecting Your Brand with the Right Cause

For many buy-one-give-one companies, the causes behind the products limb from founders’

past experiences, which move them to create a brand that gives back. Marquis and Park state:

“In our discussions with social entrepreneurs from leading buy-one give-one companies, we

found that many had unique stories that led to the genesis of their enterprises. In nearly every

case, the founders’ personal experience or passion was the impetus behind the company’s

pursuit of shared value” (Marquis and Park, 31). This is a great place to start, and such passion

can lead to a great deal of grit and determination, which is an essential trait for founders in a

marketplace full of competition. However, just because you didn’t experience a moving

personal crux, doesn’t mean that you can’t become apart of a generation of social

entrepreneurs willing to step up and make a difference.

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Connecting your brand with the right cause is essential in order to gain popularity among

consumers, but it can often be difficult to do among a sea of social causes, all with important

missions and goals. While this may seem shallow to some, it is important to note that buy-one-

give-one companies are successful because of the simple messages that these products

produce. Companies are not simply using causes as a means to an end, but rather as a means to

provide substantial and sustainable support for a given cause.

The top causes from Nielsen’s study, for which 50 percent or more global respondents indicate

extreme concern, include: increasing access to clean water, improving access to sanitation,

eradicating extreme poverty and hunger, combating non-communicable diseases, ensuring

environmental sustainability and reducing child mortality (Nielsen, 11). These causes provide a

great springboard for buy-one-give-one to come alongside and champion.

b. Donation Models

After choosing which cause to focus

on, buy-one-give one companies

must decide how they will interact

with their cause through various

donation models. Although the buy-

one-give-one model suggests that

companies may provide a literal one-

for-one donation, in reality, there are Figure 2: (Marquis and Park, 2014)

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multiple ways that companies can interact with donations (Parka and Marquis, 31). Some

companies, such as Smile Squared and Warby Parker, donate a same or similar product for each

one sold. Others, such as 1for1 Water, donate a percentage of sales toward a monetary

donation to a non-profit. Some companies, such as TOMS and KNO Clothing, do a combination

of the two. These models can be seen in Figure 2. Deciding which model to use will be

beneficial to brands as they move forward in the marketplace. Companies can then

communicate the imapct of its model to potential consumers, educating them on the ways in

which its products produce social benefit. This type of dialogue is necessary for consumer

retention and loyality.

c. Products

The buy-one-give-one model is relatively new to the marketplace. It will be interesting to watch

new companies bring innovation to the marketplace, but today, most buy-one-give-one brands

sell consumer-products. This is greatly attributed to the evidence that consumers want to make

a statement. Whether unconscious or not, consumers want to signal to peers that they care

about society and giving back. This is reflective of their own lives, as 43% of Millenials reported

volunteering and/or donating to organizations engaged in social and environmental programs

(Nielsen, 1). Products such as clothing, eyewear, water bottles etc. provide an opportunity for

consumer to reinforce their purchase decisions through public acknowledgement.

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d. Business Strategy

The business strategy in the buy-

one-give-one sector is no

different than typical consumer-

product pricing decision. Nielsen

found that 55% of consumers

will pay extra for products and

services from companies

committed to positive social and environmental impact. This statistic is up 10% from 2011, and

is growing considerably each year (Nielsen, 6). Figure 3 shows some examples of companies

who chose various pricing and business models to support their products.

e. Marketing

In 2012, Forbes came out with

an article entitled: Dear Brands, Tell us a Story- Love Consumers. This article showcased a new

consumer trend that has recently emerged—story telling. Consumers no longer want to be told

to buy a product, they want brand to connect with them on an emotional level (Olenski, 1). This

is an area where buy-one-give-one companies have an automatic leg up from traditional

consumer products. The stories attached to these products are often touching one, pulling at

the heartstrings of consumers. Social media is a great place to do this (Marquis and Park, 31).

Cone Communication’s report states:

Figure 3: (Marquis and Park, 2014)

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“Half (51%) of Americans report using social media to engage with companies around

social and environmental issues – and they’re doing so mostly to companies’ advantage.

With tablets and smartphones at their fingertips, more than a quarter (27%) of U.S.

consumers use social media to share positive information about companies and issues

with people in their networks, while a similar percentage (26%) is leveraging social

media to learn more about specific companies and issues.” (Cone Communications, 24).

Buy-one-give-one companies should incorporate social media strategy at the hear of what they

do. These platforms provide an easy way to connect with customers and push cause marketing

efforts, a marketing technique that consumers actually enjoy interacting with.

VII. ConclusionThe world has changed. Consumers are demanding that companies become socially

responsible, and the buy-one-give-one enterprise is here to stay. As the Millennial generation

grows and shapes the economy with its massive buying power, it will also shape CSR efforts and

the standards in which companies ought to operate in the marketplace. The buy-one-give-one

model provides a simple message—connecting a company’s core business strategy with social

impact.

The buy-one-give-one model is only gaining speed in a race that is sure to last for a long time.

The industry will certainly see growth and change throughout the coming years, but one thing is

for sure, the world will be a better place because of social entrepreneurs who were willing to

step out and take a risk.

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VIII. ReferencesDonaldson, Thomas. “Kant’s Global Rationalism.” Traditions of International Ethics(n.d.): 136-57. Web.

Frazer, Garth. “Used-Clothing Donations and Apparel Production in Africa*.” The Economic Journal 118.532 (2008): 1764-784. Web. 12 Apr. 2016.

Marquis, Christopher, and Andrew Park. “Inside the Buy-One Give-One Model.”Stanford Social Innovation Review (2014): 28-33. Web. 12 Apr. 2016.

Mycoskie, Blake. Start Something That Matters. New York: Spiegel & Grau, 2011. Print.

“The One-for-one Business Model: Avoiding Unintended Consequences.”KnowledgeWharton The Oneforone Business Model Avoiding Unintended Consequences Comments. Wharton School of Business, 166 Feb. 2015. Web. 19 Apr. 2016.

Short, Kevin. “Toms CEO Blake Mycoskie Offers Surprising Answer To His Critics.” The Huffington Post. TheHuffingtonPost.com, Nov. 2013. Web. 19 Apr. 2016. <http://www.huffingtonpost.com/2013/11/14/toms-ceo-critics_n_4274637.html&gt;.

http://www.forbes.com/sites/marketshare/2012/10/30/dear-brands-tell-us-a-story-love-

consumers/#3f23319028ff

https://www.accenture.com/us-en/insight-outlook-who-are-millennial-shoppers-what-do-they-

really-want-retail.aspx

http://www.conecomm.com/stuff/contentmgr/files/0/e3d2eec1e15e858867a5c2b1a22c4cfb/

files/2013_cone_comm_social_impact_study.pdf

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