Delve into Philanthropic Capitalism

1. Delve into Philanthropic Capitalism
As the saying goes, a pair of good shoes can take you to a good place. If you bought a pair of shoes,
those poor children without shoes, in a corner of the earth, will also get a pair, will you be happy
to buy one?
TOMS Shoes has built an ingenious business model and discovered what religious trend of
movements have known for centuries. The TOMS is from the word “Tomorrow” beyond the
original “Shoes for Tomorrow Projects”. The whole idea refers to the “one for one concept” which
intend to donate a pair of shoes by selling a pair of their retailing shoes. The business model is so
praised and welcomed by consumers across the globe. Since 2006, TOMS has been in 60 countries
donated more than 35 million pairs of shoes. In 2011, TOMS also started to sell glasses under the
same concept - buy one pair of glasses to help poor countries eyesight disabled people by offering
free medical services. In 2014, TOMS made one step further to open a coffee roasting beans and
coffee store, committing that for each bag of TOMS coffee beans, it donated 140 liters of clean
drinking water to a person in need. The quantity is equivalent to one person’s one-week
consumption. For every cup of coffee sold in the TOMS store, there is a day’s worth of safe water
for one person being donated to remote countries. Through years of effort and brave attempts,
TOMS’ unique business model has evolved and transformed into a lifestyle company, not just
selling any items. Many enterprises followed suit and adopted similar ideas for selling different
products. TOMS’ model has made a great influence on the industry.

2. TARGET&TOMS
I think TOMS has never stopped of trying new ideas and its effort to extend the do-good model.
There are also known brands who want to try with “one for one” idea. For instance, Target and
TOMS have created a joint line of more than 50 products including shoes, clothes, accessories and
furnishing products. For every sale of these products, Target will donate $5 (equivalent to a piece
of the blanket) to the Red Cross of US or Canada, or donate $3 (equivalent to a meal) to Feeding
America or Food Banks Canada. Besides, TOMS will do the same to donate a pair of shoes to the
needs for every sale of its shoes. This joint effort has made a great market attention. Another
event worth to mention is between Audi and TOMS. They have collaborated to design a pair of
canvas named “Alpargata”. People who purchase or lease an Audi car in “Summer of Audi Sales
Event” will receive a pair, and another pair will be donated. Nonetheless, will the effort make its
intended purpose is entirely a matter of preference？ Looking at the event from a perspective of
charity initiatives, consumer will have to engage with a car product for a charitable action, which
is a bit strange. It is easily be seen as just a publicity stunt. Is that cooperation really for the charity
purpose? I have my doubts.
AUDI&TOMS

3. The do-good model is not free of criticism. Give a man a fish, you feed him for a day, but teach
him how to fish, you feed him for a lifetime. Some people has argued that when you get something
for free, you are actually presented a band-aid. That is the reason why you did not resolve deeper
poverty, and it is likely to inhibit the long-term solution. The poor are poor, not because they are
lacking supplies, but because of the lack of infrastructure to create wealth. It is the crux of the
problem.
On one hand, a new emphasis on social entrepreneurship is sweeping the nation, supported by
high-profile individuals such as President Barack Obama and former President Bill Clinton. It is
likely that many more organizations with a focus on social responsibility will try to replicate the
concept of TOMS’ One for One Movement. TOMS’ business invention may introduce an entirely
new way of doing business and help the society to move forward into future.
On the other hand, the business model has also introduced additional risks. Non-profit
organizations often sell very few products, thus the risks that come with manufacturing are much
lower. Because TOMS sells a tangible product, it requires a supply chain that must be constantly
monitored for compliance. In addition, the company must also manage criticism of its
philanthropic endeavors, an issue being not as common among other corporations in which
philanthropy is a secondary priority.
Now, we turn to see how the business model is generating profits? TOMS will need to keep an eye
on risks that affect both for-profit and non-profit activities. the combination of two has made
TOMS’ business models certain industry-specific risks. For instance, the for-profit business
supports the non-profit component, which means TOMS does not have to rely on donations. Is
the donation a cost-efficient investment to solve the problem as it intended? TOMS’ shoes cost
between $38 ~ $79, which is a relatively expensive pair in the category of canvas shoes. We can
calculate the average price of TOMS’ shoes is $58, which means $29 were paid to the other pair
of shoes as a donation. If you want to provide a small town with shoes, and there are a thousand
of shoes for students, the consumers will spend $29,000. Even if the quality of their shoes is good,
it is a limited to wearing for two years. So the question arise and need to ask: is a direct donation
truly solve the problem of short of shoes? The answer has two fold. One side is how to develop a
better business model to solve the problem in a long run. The other side is how to let the customer
keep loyalty and increase their enthusiasm about philanthropic purchasing.