Questions

I have an idea for a business that has a philanthropic angle as its main appeal. Any tips on managing the fact the co will still be making a profit?

A portion of the profits will be donated to various charities, but this isn't a non-profit and will have employees with decent salaries. There seems to be a lot of potential for that to be a turn-off for customers. If any of you have had this type of experience, how did you handle the PR? Do you have any advice for someone engaging on this type of an entrepreneurial venture?

8answers

There are lots of great companies that make a profit while helping others. Many times, these companies are formatted as a pair of companies. For example: 'Helpco is a not-for profit corporation that does X and donates proceeds of it's activities to Y.' What is not part of the headline is that Helpco has a management contract in place for administration and operations with ForProfitConsultCo.
Helpco pays ForProfitConsultCo a fee for managing its day to day operations and this is where the salaries reside and the profits for your efforts.
If you look carefully, there are examples of this kind of arrangement everywhere.
I can think of one credit counselling company near me that advertises the fact that they are a not-for-profit and I know the owner is paid a respectable salary via a management contract.
I hope this helps.


Answered 3 years ago

A portion of the profits will be donated to various charities- - This signifies the traditional approach to philanthropy as a process to give money. The modern definition of philanthropy is about solving problems. Problems around which social enterprises could be established. On the same line, you should talk about the problem that you shall be solving, not the intent to donate a part of earning. Donation based mindset to philanthropy, yet omnipresent, is ephemeral.

There's no difference between a typical business organization and philanthropic venture. Both needs model to monetize- not VC money- and achieve financial goal to last long. If philanthropic fund is what you intend to target by speaking philanthropy then it's better to avail them to bootstrap than considering an end in itself.

If you want to commit to some social cause then you should position yourself as a for-profit venture with philanthropic model than a philanthropic organization.

Need know anything in particular? Drop me a message!! All the best.


Answered 3 years ago

Grace & Lace which appeared on Shark Tank & Tom's Shoes are just two examples of companies making a profit and donating.

People are first going to be attracted to the solution your product or services solves. The charity component would be a feature that would help them to decide for yours vs your competitor.


Answered 3 years ago

I don't see a contradiction between philanthropy and getting paid a fair salary for the work you perform. Talent always needs to be compensated, lack of talent will eventually reflect in poor philanthropic results so I don't see an issue there. I am intrigued by the way you present the question because you say the main appeal of the business, is the philanthropic angle itself. If you achieve results and offer a service that caters to a real need, your customers will be willing to pay towards efficient delivery. One word of advice: be straightforward in the way you present your structure, if you hope to masquerade your intention to be profitable with clever PR you are likely to lose your customers' trust.


Answered 3 years ago

Actually, projects that merge profit and social consciousness are extremely trendy right now. Beyond fashion, such projects are rationally what the world ought to be up to, right? No philanthropy is possible without profit somewhere else first.

So I don't think the mixture of "giving back" and profit would be a turn-off for customers. On the contrary. Own it! Be transparent! Brag about it! Make this mixture of sustainable profit and do-gooder social motives a principal selling point. Put it center stage!

When your messaging highlights this mixed approach, nobody can accuse you of hypocrisy or hidden agendas. You preempt those "gotcha" stories. That's how you handle PR.

Then, as long as there is no perceived exploitation of the people you're supposed to be helping, you can be pretty secure in your own skin. Rest easy. Concentrate on the task at hand.

If you'd like help crafting the message, talk to me.


Answered 3 years ago

I would caution against making the "philanthropic angle as its main appeal," if the only differentiator is that you donate a percentage of your profits to charity. As a customer, that just tells me that you are over-charging me so that you can claim a tax deduction and land some PR.

You should explore how to leverage your philanthropic goals to create a broader conversation about the issue that you are addressing (and I would strongly advise that you focus your philanthropy on an issue that makes sense for your business, not just giving it to "various charities"). If you focus on educating customers about the issue that you address, you also deepen your engagement with them -- and, selfishly, make your products more compelling to people who care about that cause.

One thought: there is also a way to make a more sustainable impact on the world while retaining 100% of your profits. It is a model called Good Returns (pioneered by Soap Hope) in which profits are not donated ... but are invested in microloans that empower low-income entrepreneurs.

Learn more about it here:
http://www.goodreturns.org/

(That site includes a TEDx talk delivered by Soap Hope's CEO on the topic)

Best of luck to you!


Answered 3 years ago

Why would it contain the potential to turn of customers? Is not what is central is that those who benefit can continue to receive the benefits?


Answered 3 years ago

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