I never meant to get into the shoe business and would have said you were crazy if you told me five years ago that’s what I’d be doing today. The idea to start TOMS came during a trip to Argentina back in 2006. I met some volunteers who were holding a shoe drive to collect used or slightly worn shoes for children in the community. One of the volunteers explained that many kids lacked shoes, an absence that not only complicated every aspect of their lives but also exposed them to a wide range of diseases. I spent a few days traveling from village to village, witnessing the real effects of being shoeless: the blisters, the sores, the infections—all the result of the children not being able to protect their feet from the ground. I wanted to do something about it. But what?

Like many would-be philanthropists, my first thought was to tackle the problem head on: I could start my own shoe-based charity, but instead of soliciting shoe donations, I would ask friends and family to donate money to buy the right type of shoes for these children on a regular basis. But, of course, this arrangement would last only as long as I could find donors. That was the traditional model of philanthropy: identify a cause and initiate a never-ending hunt for donors. I wanted something more sustainable. These kids needed more than occasional shoe donations from strangers—they needed a constant, reliable flow.

Then I began to look for solutions in the world I already knew— business and entrepreneurship. An idea hit me: Why not create a for-profit business to help provide shoes for these children? It was a simple concept that I call One for One: Sell a pair of shoes today; give a pair of shoes tomorrow. And that’s when TOMS was born.

So far, Toms has given more than two million pairs of new shoes to children in need and recently launched its second One for One product, TOMS Eyewear. TOMS is only one example of a new breed of company that is succeeding at this volatile moment in capitalism. In this fast-paced and constantly mutating world, it is easier than ever to seize the day; but in order to do so, you must play by a new set of rules—because increasingly, the tried-and-true tenets of success are just tried, and not true.

What we’ve found is that TOMS succeeded precisely because we have created a new model. Business and philanthropy are no longer mutually exclusive. We’ve been able to find a sustainable way to give in the areas we serve. Through a simple purchase, a consumer is making a direct impact on someone’s life around the globe. There are no formulas or percentages. It’s simple. You buy something today and help someone tomorrow. One for One.

The giving component of TOMS makes our shoes and eyewear more than a product. They’re a part of a story, a mission, and a movement anyone can join. That, it turns out, is a compelling proposition.



Of course, the key issue of our day is what is the “public responsibility?” Libertarians such as Ron Paul argue that the list of public responsibilities should be as small as possible—smaller government is what we need, and we should leave business to do as much as possible. For example, today’s NY Times reports that Paul wants to do away with the TSA and have airlines provide security. He believes that market pressures would induce the competing airlines to provide just enough security screening to be safe but not so much as to be intrusive. Given that security is a present day operating cost balanced against a potential future threat, I’d argue that the airlines would cut, slice, and eventually abandon security measures as quickly as possible, as they incur costs against the bottom line.



Yesterday’s Wall Street Journal ran an op-ed suggesting that philanthropists start building bridges and investing in the nation’s physical infrastructure. Just a few weeks ago I had a conversation with two colleagues about the “minimal viable role” of government. Defense spending was in there. So were roads. I guess I overestimated. 



How about loans for businesses? Starbucks is working with Community Development Institutions (CDFIs) to launch what could become a significant loan program for small businesses. The “create jobs” plan is good—it has good leverage, gives everyday people a chance to engage, and could actually provide meaningful resources. But don’t fool yourself into thinking that a $5 donation to your coffee vendor is going to save the economy. CDFIs grew out of the mutual aid efforts of immigrant communities a century ago, they were boosted significantly by government support in the 1960s and have drawn significant private capital ever since. Their existence reflects a relationship between government, private capital, communities, and philanthropy. They’ve become core parts of the nation’s commitment to communities and small businesses (even if Howard Schultz had not ever heard of them until recently). Starbucks’ philanthropy can expand this, build on it, and engage everyday people in it—that’s all good. But it can only do so because of the base of institutions that government itself helped build and the regulations that require banks to pay some attention to communities. 



Philanthropy has a role in the ecosystem of funding for public goods. It is one key way that we use private resources for public goods—volunteering and impact investing are two others. Claims that philanthropy can replace public funding fail to understand its actual scope and potential. Counting on it to provide core public services is, among other things, simply undemocratic.

This is a great new step for Apple. The company has $76 billion dollars in cash reserves—more than the US Treasury. Since Steve Jobs stepped down, there’s been a flurry of speculation whether Apple will turn over a new leaf and become more philanthropic.

I named Apple as one of the Least Philanthropic Companies in a previous SSIR blog post because it compared so poorly in philanthropy and community commitment to their fellow corporate titans, including Microsoft, Cisco, or American Express.

This employee matching gift program is a great first step. But it still has a ways to go. Apple still does not have a foundation that gives grants; it still does not have an employee volunteering program; and it still does not give nonprofits discounts on Apple products.

Apple is also under fire for its environmental practices in China for the second year in a row. In a report last Wednesday, a Chinese environmental group called Apple “stubbornly evasive,” and said its refusal to discuss suppliers that pollute waters and air with hazardous materials “can only be seen as a deliberate refusal of responsibility” for environmental issues.

There are some people who argue that companies have no obligation to the communities they work in or sell to. In this case, where Apple has profited so enormously, not giving back would show a greed bordering on intentional disregard. Apple is not like an upstart anymore, but one of the most influential and profitable companies in the world. It has started to acknowledge its social and community obligations to its employees and to the customers who have made them so profitable.

Are you hopeful that Tim Cook, Apple’s new CEO, will bring more such changes to the company? If so, what would you like Apple to do next with its philanthropy?

GOOD is a publishing and marketing company “for people who want to live well and do good”. Founded by Ben Goldhirsh, the son of the founder of Inc Magazine (a hugely successful traditional print magazine), GOOD was one of a handful of “philanthropy magazines” that launched in 2007. While the other “philanthropy magazines” folded, GOOD has evolved to encompass online content, live events, and now a kind of advertising/marketing agency that helps organizations do socially connected campaigns.

Now GOOD is buying Jumo. Interesting…

First off, why isn’t Jumo working on a standalone basis? While Hughes says that the organization had a “very successful start” and counts over a million users, in all my surfing of the philanthropic web I haven’t once found reference to activity on Jumo other blog posts saying how great it is going to be.

While people like Amy Sample Ward and Beth Kanter are far better sources to comment on the technology aspect of Jumo, from a donor perspective I must say I don’t understand the drive to create a social network based around nonprofits. Nonprofit and for-profit brands may be ways that people define themselves and thus be the sort of thing that people want attached to their online social persona. But for the vast majority of donors, nonprofits are not the central way that they seek to organize their social network.

GOOD on the other hand seems to be figuring out that there is a huge interest in social sector related content, especially when it is presented as an integrated part of the fabric of life, not somehow separate from politics, business, culture, food and technology. Rather than being for “donors” or “philanthropists” or some other adjective that applies to only a slice of people’s persona, GOOD proudly proclaims it is “for people who give a damn”.

So what will GOOD do with Jumo? Speaking to the New York Times, Goldhirsh said “I’ve always felt the real potential of GOOD was to connect people wanting to take action with the organizations and businesses that could help them do that, and Jumo is the connective tissue that will allow and enable that to happen.”
We’ll have to see how Goldhirsh puts that vision into action, but I’m struck by his choice of words. Rather than seeing a social sector-social network as a standalone entity unto itself, maybe it is the “connective tissue” that ties everything together.

Let’s imagine a 20-something Millennial. She works at a for-profit company importing sustainably grown coffee that hopes to turn a profit while leveraging the power of the free market to pull people in the developing world out of poverty. She listens to U2, makes microfinance loans on Kiva and loves Apple products so much that she wears a t-shirt with the Apple logo. She’s a political news junkie and is disgusted with both parties. She makes donations to nonprofits but feels that the products that she buys, people she votes for and where she chooses to work are just as important elements of her impact on the world.
Our 20-something Millennial doesn’t define herself by the nonprofits she supports.

She defines herself as someone who gives a damn.

What she wants isn’t a special place she can visit to express her social self before returning to the “real world” of work, life and play. Instead she wants a world full of work, life and play that is built around a connective tissue that infuses all of her life with meaning.

There is no work-life balance in our Millennial’s world. No need to “give back” as if her success in life somehow extracted value that must be repaid. There are only meaningful experiences that honor the many priorities of the individual: self, family, and member of the global community (and many smaller communities).

There is great need for nonprofit oriented transactional platforms, such as Global Giving, Charity Navigator and GuideStar. But I doubt there is a need for a nonprofit oriented social network.

I look forward to seeing what GOOD does with Jumo. If they pull things off, they might just move from being a content platform for people who give a damn to an immersive experience, extending across the online and offline worlds for a new generation that views social impact as the connective tissue that connects their interests and passions.

Sean Stannard-Stockton is a wealth advisor who specializes in serving philanthropic families. He is the author of the Tactical Philanthropy blog and a columnist for the Chronicle of Philanthropy. A sought-after public speaker, he is regularly quoted or referenced in the mainstream media such as The New York Times, Wall Street Journal, Washington Post, and National Public Radio.

Back in 1973 a group of Chicago social entrepreneurs created a bank holding company, believing they could use the bank’s capital to improve the lives of disenfranchised people living on the city’s South Side. Over the next 37 years the holding company grew, and so did the number of for-profit and nonprofit entities that it created. ShoreBank had an immense impact, channeling billions of dollars to poor communities in Chicago, Detroit, Cleveland, and other aging industrial cities, and improving the lives of tens of thousands of people.

Unfortunately, it all came to an end last year when ShoreBank was forced by the government to shut down. Although many of the entities it created live on in other forms, the power and symbolism of that single institution is gone.

The ShoreBank saga provides important lessons for people who believe that for-profit institutions can be used for social change. The first lesson is that managers running a for-profit business—even one with laudable social goals—need to pay close attention to the profit side of the equation. ShoreBank had the laudable goal of lending to homeowners and small-business people living in inner cities. But those people and businesses were also among the most economically vulnerable, and when the economy collapsed, so did many of those loans. To protect itself, ShoreBank needed to do a better job of diversifying its lending so that it was not so exposed to a bad economy.

But ShoreBank was not the only bank that made poor lending decisions in the last decade. Which brings us to the second lesson, that people engaged in social change—even those building socially responsible businesses—need to be involved in politics and advocacy. The federal government used hundreds of billions of dollars to rescue many of the same banks that caused the financial meltdown, but it refused to use any funds to rescue ShoreBank.

The reason the government didn’t step in is that right-wing advocates put pressure on the federal government not to do so. It’s difficult to know whether ShoreBank could have secured federal funding by building a broader base of political support for its work, but it is certain that without that support it didn’t stand a chance.

On a final note, I want to point out that this issue of SSIR features our first special supplement—“Innovating for More Affordable Health Care”—a 24-page insert brought to you by the California HealthCare Foundation. The supplement has a terrific selection of articles written by some of the leading investors, academics, and thinkers in health care. I encourage you to read it.

Eric Nee is the managing editor of Stanford Social Innovation Review, published by the Stanford Center on Philanthropy and Civil Society. He is also co-host of the Social Innovation Conversations podcast channel, and serves as a judge for the Social Venture Network’s Innovation Awards.

When we sat down with Nikhil, he told us: “We came about this idea of growing mushrooms from coffee grounds just a few months before graduating. [My partner] Alex Velez and I were sitting in class and heard a professor bring the idea up. We had no background in food, agriculture, or mushrooms. I was actually going into consulting, and he was going into investment banking, but in the back of our minds, we had this passion for education and sustainability.”

The pair began sustainably growing mushrooms from recycled coffee grounds in a bucket in Alex’s fraternity kitchen. They brought an early batch over to the iconic Chez Panisse restaurant at a time when its owner, renowned Chef Alice Waters, was cooking. She sauteed a few mushrooms and declared them delicious. Bolstered by this positive reaction, Nikhil and Alex met with similar feedback from Whole Foods, and soon received a $5,000 grant from UC Berekeley’s Chancellor. “It all happened really fast,” Nikhil remembers. “The next thing you know, we went from banking and consulting to full-time mushroom farming.” Their company, Back to the Roots, has been growing ever since. The founders have been featured on ABC and BBC, and have spoken at events like TEDx Presidio. Each week, Back to the Roots recycles 20,000 pounds of coffee grounds that would otherwise go to the landfill.

Few things have been as important to the organization’s growth as great design. “Design is so important. You could have the best product ever invented, but if people don’t get what it is in two or three seconds, no one will pick it up,” says Nikhil. “Since we started to invest in design, we’ve seen a huge difference in sales. If we were to start another company, we would get started on design from day one.”

At my company, Elefint Designs, we believe great design is an essential component to the success of nonprofits and socially responsible businesses. Great design means more than nice collateral materials and clever logos; it’s about telling a compelling story in a clear and consistent way. Yes, that story must be told through beautiful materials, but those materials must emerge from a strong brand. Your brand is how your partners, customers, funders, and employees experience you at every turn. Your brand is what you do as much as what you say. It’s the collective perception of who you are, and it’s always subject to change.

Just as Apple has demonstrated the overwhelming advantage of a powerful brand by creating products people love and by offering consistently delightful experiences from their website to their retail stores, the social sector is starting to show that it too can harness the power of great design. From its inception, the organization charity: water set out to do things differently. It innovates through simple and profound ideas, such as its 100% model, which funnels all donations to direct services. It created a powerful story from day one and used beautiful design to consistently communicate it. The results have been dramatic, and they are not alone in their success. In recent years, organizations like Teach for America, Kiva, and Tom’s Shoes have also articulated brilliant narratives that have led to innovative, scalable organizations.

Put simply, design matters. Corporate America is waking up to the fact that people have less tolerance for products and experiences that are not meeting their needs. On the other hand, organizations that craft powerful stories, delight customers, and communicate values with strong brands and great design are seeing incredible returns. The work of the social sector matters too much to miss the growing importance of great design.

While achieving great design isn’t easy, there are some simple steps that can get you going in the right direction. In my next post I will share some tips, and pose some important questions that will help you focus on creating a strong brand with great design.

Despite perennial cocktail flurries for finance jobs, some are daring to consider that capital is not the most important factor of production. Even Adam Smith, the patriarch of capitalism, argued that labor was a most important factor of production, and Robert Solow might point to multifactor productivity, or technology—the “perennial gale of creative destruction,” as Joseph Schumpeter described it—as having the highest contribution margin on aggregate output. In short, many would agree that it’s all about innovation.

The truth is that many graduate students have begun to question old notions. Sophists will continue to exist, shouting “might is right” from the pages of Tom Wolfe, the broadcasts of CNBC, and the streets of lower Manhattan. But increasingly often, students in traditional MBA programs are raising eyebrows at the realpolitik notion that the strong rule where they can and the weak suffer what they must. Gordon Gekko, after all, didn’t win any Oscars last year. Face it: Double and triple bottom lines have become sexy.

Thomas Hobbes stated that, “clubs are trumps”—today we call it “dog-eat-dog.” But many have begun to reshape the interactions and to broaden the philosophical teachings of business. Top MBA programs are putting emphasis on Social Entrepreneurship programs, or “doing well by doing good.”

At Columbia Business School, for example, scores of students apply for the Nonprofit Board Leadership Program, allowing them to participate in the advisory of local nonprofit organizations and to gain board experience at a young age. The International Development Club and Pangea Advisors sends students around the globe to perform pro bono consulting for nonprofits—these students author publications with United Nations Development Program Millennium Village initiatives and advise “Missing Middle” venture funds in Central America. The school offers numerous courses in social entrepreneurship, and students are encouraged to create businesses that are as ecumenically noteworthy as they are profitable and sustainable. Compassion and profit can stand together.

Political philosopher Montesquieu claimed that “commerce is the cure for the most destructive prejudices,” and that “peace is the natural effect of trade.” Philosophers Immanuel Kant and Adam Smith echoed the basic notion. And while there are certainly asymmetric impacts across industries and demographics that must be remedied through trade adjustment assistance, the benefits of trade are unequivocal. But more open commerce and capital cannot alone promote peace without developing our own human capacity to provide. Human capital development through social entrepreneurship programs is vital, and MBA programs that have begun to offer social enterprise coursework and guidance are beginning to play an important part.

Most MBA students will continue to embody homo economicus, behaving as “rationalized, individualized, and democratized” individuals, as Austrian economist Joseph Schumpeter once said.  Others, however, may begin to look more like Kantians. These Kantian M.B.As may not seek jobs in Kaliningrad, but they will be moralistic, driven not only by rational self-interest, but also by a new homo philanthropos, a desire to have positive impact. Such action need not be purely charitable but can be driven by a passion to pursue the peace that Montesquieu, Smith, and Kant saw as possible only via commerce.

Today’s MBA programs are providing social enterprise opportunities that, while not new, are enabling students to embrace their Kantian ideals while still building upon the claims of Montesquieu. One can treat others as ends rather than means, embrace Schumpeterian “creative destruction,” and build upon the ties of commerce to foster greater peace. Hearts may yet trump clubs, but if it’s going to happen, it’ll have to be through sustainable models building upon commerce.

A new social enterprise aims to provide a unique sanitation service to shantytowns. San+Co. produces mobile toilets that fit in slum dwellers’ homes. Waste is stored in a cartridge, which is collected every few days, and sent to a facility that produces and sells fertilizer. The facility also converts methane from the waste into electricity. In return for the cartridge, each family receives a rechargeable battery they can use to power a light bulb or two, and charge a mobile phone.

The system addresses many different issues. It provides a dignified, safe, and hygienic solution to a basic human need. Off-the-grid electricity translates to increased productivity for adults, extra study time for students, and additional safety. The fertilizer is an organic option for local farmers that helps increase their yield per acre. And the system reduces disease by keeping waste out of the local water supply.

San+Co. is in the very early stages, with 50 pilot families. The group is still working on unit economics and scoping partnerships, but the idea is great and the dedication and passion of the team is palpable. I saw them present this past week at the Kellogg School of Management’s KIN Global Prize Competition. Four social enterprises pitched to senior leadership of global corporations, and each audience member was given $500 to award to the idea or ideas they thought had the most promise. San+Co. earned $40,900—the majority of the KIN Global prize money. The McCall Foundation kicked in an additional $10,000, and IndieGogo, an online platform for crowd-sourcing support, offered its services for free. San+Co. has been doing remarkably well at social business plan competitions across the US, and just this past week, it received a $75,000 investment from Village Capital.

What is the secret of San+Co.’s success? For one, its business model does not rely on infrastructure—a luxury that most slums do not have. San+Co’s toilets do not need a sewer system, and the electricity service does not rely on a grid. Its tagline is apt: “Offgrid utility platform.” The system is designed for the poorest of shantytowns, ones that receive no city services.

The other reason for its success points out a truth about entrepreneurship: To succeed, you need a great idea, great execution, and a great leadership team. San+Co’s leaders know how to give a great presentation. With humor and intelligence, they clearly describe the system and business model. They also humanize the results: San+Co. ultimately delivers dignity, health, and safety—basic human rights—in a way that’s accessible, affordable, and aspirational. Once one family on the block can light their home, all the other families want in on the action.

Our new working paper offers an answer that may seem counterintuitive at first: Publicly owned companies will be most effective in creating social benefit when they 1) plan for a long time horizon and 2) focus on a single bottom line.

The long time horizon is the key here, since several years may pass before the effects of social initiatives feed back into profits. But we’ve found that they do feed back in so many important ways that profit-maximizing companies have an obligation to take investments in social initiatives seriously.

Last year, we strategized with a group of multinational companies to create a virtuous circle involving the public and private sectors: Companies would contribute to economic development in the communities where they did business, and governments would provide a favorable climate for working and investing. The companies wanted to create this virtuous circle because they saw how generating social benefit would help them in the long term. With a long enough time horizon, local economic development would be good for everyone—including the companies themselves.

In fact, social initiatives can help companies’ long-term profitability in many ways: better reputation among consumers, leading to higher demand for products; increased loyalty among employees, reducing the costs of hiring and training new workers; deeper skills and supplier capacity in local communities, lowering operating costs; and higher incomes, creating new sources of demand. Social initiatives can also help companies build longstanding relationships with clients—in both the public and private sectors—and understand preferences and priorities in new markets.

In light of all these potential benefits, we came to the conclusion that treating social initiatives like any other long-term investments would lead to companies to invest in them more, not less.

To understand why, consider an executive’s investment decision. Right now, many companies make social investments in an idiosyncratic way, setting a maximum cost rather than a minimum return. By doing so, they put an artificial cap on how large a social investment can be, regardless of the return it might generate. They also leave the criteria for success of social initiatives unclear, which can lead to inconsistent implementation. Furthermore, lacking any means of estimating the value of social initiatives, many executives may respond conservatively and under-invest.

Focusing on a single bottom line with a long time horizon, by contrast, can lead them into bigger social investments and innovations. It also simplifies the planning process for executives, allowing them to use the same tools that they already apply for evaluating other investments.

Though a comprehensive study is yet to be undertaken, many companies are already taking an approach that suggests long-term, single-bottom-line thinking. For decades, the Tata Group in India has made social investments to support the country’s growth and, implicitly, the size of its domestic market. In the United States, Nike’s sustainable business and innovation team is built to both green and grow the company over a long time horizon. And J.P. Morgan arranges private placements for impact investors at reduced rates because of the implicit opportunity to offer its entire range of services to a new set of clients around the world.

As with other investments, the returns to social initiatives can be quantified or, at the very least, estimated within a range. It can be a complex calculation—probabilities must be assessed and the future discounted against the present—but it’s no different from the calculations that large companies already do when estimating the range of possible returns on other investments. Precision is not essential, but executives will invest more when they are confident that returns will reach a minimum standard for profitability.

So, what will happen to social investments that don’t offer a company a competitive financial return? Some of them may still go forward if shareholders and executives agree to pursue an objective other than profit, as in the donation of goods and services for emergency relief. Indeed, companies with multiple objectives—including social enterprises, impact investors, and businesses with social missions (such as B-corps)—can make significant contributions to society. But again, their shareholders do not expect them to maximize profits, and their investments make up only a small share of the private sector’s spending. When society wants to influence the bulk of that spending, it can do so through subsidies, regulation, and collective action, all of which can form part of the context as companies focus on the long-term single bottom line.

One might also argue that double- and triple-bottom lines help to promote transparency and accountability for social benefits, especially in emerging economies. Yet investments that satisfy double- and triple-bottom lines in the short term may not be built for long-term sustainability. Moreover, evaluating and reporting social investments with the same criteria as other investments offers a kind of transparency that we think shareholders will value in any economy.  For most large public companies, we believe that targeting the long-term single bottom line offers clear benefits for executives, shareholders, and, most importantly, for society as a whole.

Paul Joynson-Hicks, founder of Wonder Welders, has neither—yet he has trained and now employs 35 local, physically disabled staff at a welding and crafts workshop in Dar es Salaam, Tanzania.

A photographer by profession, Joynson-Hicks never really intended to take a “market-based approach to creating opportunities for the disabled,” or to develop a social business model that has the potential—with the right kind of help—to scale. But he has.

Back in 2003, Joynson-Hicks would pass by several disabled individuals at an intersection on his way to work each day. Many were victims of polio, which if left untreated and in severe cases can lead to a paralytic disease most commonly affecting the leg muscles, causing them to become weak, poorly controlled, and finally paralyzed. Others he encountered were born with various birth defects, resulting in stunted development or complete loss of control of their legs. Eventually, they started asking for some kind of work. “I was a photographer; I couldn’t give them a job,” he said.

But after toying around in a friend’s welding shop one day, Joynson-Hicks realized that there was nothing preventing the disabled people he met from welding or doing other types of crafts work. In fact, he saw their often-tremendous upper body strength as an advantage. So, in 2004, with seed funding from Goat Race charity, he launched Wonder Welders with just a handful of disabled workers, to make “Hip, Recycled Art” out of scrap metal, glass, paper, cans, pineapple tops, and other donated items.

Despite being a social enterprise that has demonstrated near-complete self-sufficiency (they accept but don’t actively seek out, donations), Wonder Welders does not specifically brand or market itself a “social business.” Apart from its website, there is no indication that products are made by disabled workers, and the organization has never even bothered with an impact assessment. Joynson-Hicks, originally from the UK, has never attended a social enterprise conference and never called himself a social entrepreneur. In Tanzania and other parts of Africa, people with disabilities often are not considered hireable—Joynson-Hicks simply hired them.

“If everyone knew the products were made by disabled workers, many would buy them just to support the organization,” Joynson-Hicks says. “Instead, we’d rather people buy them because they’re high-quality, recycled pieces of art. And they do!”

But Wonder Welders has hit capacity. While Joynson-Hicks has no doubt the model can scale across Tanzania, and even to other parts of Africa, its approach will certainly have to change. The business will need investment, and to attract investment in this space, so the pattern goes, they will need to produce two things: detailed impact reports and a plan to “scale big.”

More images from the workshop below.