Innovation in Social Cause Business Models

NBA legend Magic Johnson recently spoke at Wharton’s first Social Impact Forum saying, “Legacies are not built on how much money is made, because after all there are a plethora of millionaires in the world. Instead, they are built on how many people can be touched with the amount of money made. Individuals are able to set themselves apart by helping communities get on their feet.” Today, it has become fashionable to do good and many entrepreneurs are building businesses with generosity at their core focusing on urban renewal, children’s initiatives, and even the basics such as food and water.

Urban Renewal
In the case of Magic Johnson, he has concentrated on urban renewal through the Magic Johnson Theater in urban areas of Harlem, Cleveland, Atlanta and Los Angeles. The venture ended up being so successful that it was purchased by AMC. More recently Magic Johnson connected with Howard Schultz, CEO of Starbucks, to gain traction in urban America. Johnson urged Schultz to visit potential urban areas to establish Starbucks cafes, replace menu items like scones with sweet potato pie and pound cakes, and play soft R&B music over the distinctive tunes of the Starbucks soundtracks. Johnson’s company continues to work with Starbucks, contributing to community development and the environment.

One-for-One Donations
We’ve covered the success of TOMS Shoes at length here at Sparxoo. TOMS Shoes has been so successful, that other entrepreneurs are embracing the one-for-one concept. Philadelphia-based Warby Parker has stylish glasses that are offered online for $95. For each pair of glasses it sells, Warby Parker donates to nonprofit Restoring Vision, which then donates a pair of glasses to someone in need. Like TOMS Shoes, Warby Parker has avoided the expense of retail locations and leveraged the web: consumers can try on frames via virtual try-on feature using an uploaded photo, or via free, 7-day home trial of up to five styles at a time.

Similarly, FIGS is a California-based tie maker that donates a school uniform to a needy African child for each purchase on its site. The pitch: help those in poverty-stricken areas to attend school where a uniform is necessary. The company sells a wide variety of neckwear—in varieties including Italian silk woven, pure British woolen and fine wool tartan—at prices ranging from USD 105 to USD 140 each. Given the price points of $95+, there’s more than enough room to fund social budgets and it’s worth every penny as it drives demand.

In a one-for-one twist, Choose Change ATM has developed a brand of ATMs that lets users donate $1 of each $2 transaction fee to a non-profit organization of their choice. Users select from eight non-profits, supporting causes such as disaster aid, poverty relief and human rights. The ATMs are installed at no cost to retailers and Choose Change handles all of the maintenance and refills.

The Basics
TOMS, Warby Parker, and FIGS all matched their charitable donations to their product. In the case of CellarThief, an online wine vendor, donating wine might not serve the same generous purpose. Accordingly, they’ve found a similar related product, H20, and decided to donate 100 days’ worth of clean water for every bottle of wine it sells. Launched in early 2010, CellarThief sells only three heavily-discounted wines on its site at any given time, hand-picked from world-class wineries by industry veterans. The company has partnered with Charity: Water to provide clean water to those who need it. In addition to the donation made each time a bottle of wine is sold, further donations are made each time a wine sells out.

And if water wasn’t basic enough, how about electricity (yes, that’s something we all take for granted)? The Elle Portable Light Project initiative involves nine top-notch fashion designers who have each created dapper solar-powered handbags. The participating designers are Diane von Furstenberg, Loomstate, Rogan, Vena Cava, Tommy Hilfiger, Lutz & Patmos, Zero + Maria Cornejo, and Joseph Muteti. All of the proceeds go to a non-profit called Portable Light Project that helps to give solar textile kits to women around the world who lack access to electricity.

Image by barunpatro from Stock.Xchng

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