The following is an excerpt from Derrick Feldmann’s latest book, Social Movements for Good: How Companies and Causes Create Viral Change.
What is the role of business today? The historical answer to this question was quite simple: Develop a strong business, find great people, create great products, and build profit. This equation for success was the mantra for many businesses and continues to be the genesis for success.
Is this wrong?
No, not at all. This type of approach to business has sustained companies for the long haul, weathering the storms of depressions, recessions, and cultural changes. What has been even more interesting about the historical approach to business is that although the focus has been on building an institution that generates profit and great products, there has been a lack of understanding of how that business and its products affect the local areas and communities where it lives.
Traditional businesses have stepped into the social good space by creatively using their products to support and advocate for social issues.
From changes in packaging to cause-related marketing campaigns, these companies are using their interaction with consumers as a way to communicate company values and beliefs, along with support for a cause.
Newer to the business environment is the embedding of social business models for good within the for-profit sector. These companies focus on delivering products and goods that will drive attention to an issue, produce a good for an individual, and create an opportunity for consumers to not only benefit personally but also help someone else.
With the growth of corporate responsibility and benefit corporations, here are five social good business models:
One-for-one model
Consumers purchase a product, and as part of the purchase, a person in need will receive a version of the product for their own benefit. Examples of this model include Warby Parker, Toms, and Harry’s.
Percentage of sale model
In this model, the business creates an approach whereby a percentage of the sale of the product or service directly benefits an issue or cause. In observing this model in greater detail, the cause or issue greatly benefits from the awareness building more than it does from the financial support itself. Examples of this model include Newman’s Own and Ben & Jerry’s.
Percentage of profit model
In this approach, the business has developed within its practices and mission a way to give a percentage of its profits to an organization or issue. We have seen several variations, from a company creating a fund for employees to vote on where to give the money to a company creating a foundation led by their senior executives to create a giving approach based on statements of purpose and impact. Examples of this model include Nau and Salesforce.
Human capital for good model
In this approach, a business may employ a disadvantaged population to help with manufacturing, designing, and creating a product or service. In this approach, the social good framework is based on the human capital rather than a direct financial output or advocacy effort. This approach helps to employ people who typically are not sought after in competitive hiring environments. This model has been used by Bosma Enterprises and VerbaVoice.
Reuse and repurpose model
In this approach, the business repurposes goods, products, waste, and other byproducts after use to generate new goods or fulfill a purpose for the community. This business approach helps the community and environment, and helps the consumer understand the value of repurposing goods. Companies such as TerraCycle have popularized this approach.