Give Work, not One for One
Cynics be damned. Millennials care about social good. Our generation’s billionaire just donated 99% of his wealth to charity. Just 6% of consumers believe the singular purpose of business is to make money for shareholders. 80% of young people want to work for a company that cares about how it impacts and contributes to society.
This explains the rise of for-profit cause brands like TOMS, Warby Parker, OneHope, FEED, and thousands of other consumer companies that channel a percentage of revenues to non-profit partners. The most effective of these, TOMS and Warby Parker, use the “One for One” concept to clearly illustrate to consumers what each product they buy does in the world — these brands package an easy-to-understand donation with a purchase.
OK, so now for something controversial, especially since (full disclosure!) TOMS Capital is an investor in Laxmi: donating free stuff is among the least effective ways to help the poor. Free stuff rarely moves people out of poverty, with the possible exception of medical devices donated under very specific circumstances. Food banks and feeding programs are better than stuff, but still a stopgap rather than a root solution.
This is heresy to many people in philanthropy.
Isn’t giving away stuff noble? Doesn’t it make the giver generous and kind?
Sure. Giving things enriches the giver. But whether those things enrich the receiver, the person we’re really trying to help if we’re truly behaving altruistically, is another story. Famously, Western food aid to Africa — one of the biggest donation programs in history — turned out to have an awful long-term consequence: dumping cheap grain made it untenable for millions of African farmers to sell their food in local markets. Big American agricultural companies subsidized by US taxpayers profited from these contracts, leaving local farmers without a sustainable source of income and perpetuating poverty around the continent. Now, several big NGOs are lobbying to end the tyranny of agricultural subsidies in the US Farm Bill (including one whose board I serve on, CARE).
Many now protest this kind of “big aid” run by governments, and yet they do just the same thing when they buy One for One products.
I’m not saying we should avoid buying One for One-type products. These are far better than doing nothing, especially in the case of health interventions like safe birth kits, eyeglasses (Warby Parker’s partner VisionSpring is an innovative charity that employs low-income people to distribute the glasses), mosquito nets, or food, water and sanitation. But even health interventions are most powerful when they are market-driven — when local people have enough money to purchase the services they need, or to be taxed and thus contribute to funding for services at the government level.
We can do better than One for One. If we really want to make the world better, we have to listen to the people who need our help, and heed the results of research. A preponderance of recent evidence suggests that the best way to help poor people is to give them cash, which they can use to purchase their own goods and services independently of donors, governments, or other institutions. Overwhelmingly, when poor people have cash, they spend it on things that enrich the health, education, and resilience of themselves and their families.
And what’s the most sustainable way to give poor people cash? Employ them. This seems so obvious, and yet we don’t think about poverty alleviation as an employment exercise. The best way to help those who need shoes, or clean water, or eyeglasses? Give them a job. A job pays for school fees, visits to the local clinic, mosquito nets, and anything else we can imagine a poor person may need. Jobs create a healthy check on power, too — when people start paying taxes, they start reinforcing a social contract between the government and its people.
Jobs > Taxes > Expectations About How Taxes Should Be Spent > Accountability to the People
When governments get their revenue from foreign donors via aid programs, this accountability dissolves. Accountability is the only reliable way to build strong people, communities, and nations. And accountability arises when poor people have an income.
Aid, including free stuff, is paternalistic, and a trap — it keeps people poor by depriving them of the chance to make their own decisions about what they need. So let’s demand more. Let’s ask the companies that use One for One models to take their social impact one step further and employ the poor directly, in the supply chain. This may make their products more expensive. It may make their supply chains more complicated. But it will build incredible loyalty among workers and customers. In the long run, governments should provide tax benefits to companies that behave this way and “impact source” from communities in need. And in the short term, let’s demand an end to One for One. Let’s demand of the companies we love to Give Work instead.
Leila Janah is the founder and CEO of Sama and Laxmi. To get regular updates, sign up here.
