Fast or Frivolous 2018: How consumer brands are evolving, accelerating and evaporating

The Backstory

Fast or Frivolous? How consumer brands are evolving, accelerating and evaporating, our flagship report from 2017, charted the rapid changes—but also continuity—that the internet brought to the consumer economy. Before the internet, the playbook for consumer brands remained largely static, with incremental improvements such as catalogs, but the digital revolution gave rise to a new flurry of activity and distribution methods. Thanks to a the digital point of entry, which requires much less capital and resources, the number of brands flowered exponentially.

But even though the landscape changed, the fundamental process of doing “good business” did not. The maxims, “don’t spend more than you make,” and, “don’t grow too fast,” should have continued to guide consumer brands, but many batted these adages away as antiquated and no longer relevant to their digitally-native philosophies, particularly given the abundant influx of venture capital funneled to digital brands, totaling billions of dollars—a level of financing that legacy brands did not raise. Subsequently, many digitally-native brands grew too fast and spent too much—some have since shuttered, while many others struggle to stand out, stay afloat or find suitable exits that make money for everyone involved in the business.

2018 has been one of the more transformational years in the consumer economy, largely affirming the path Fast or Frivolous 2017 anticipated brands to follow. First, while the rise of new digitally-native brands has not slowed, more are diversifying their channels into offline spaces. Witnessing this return to traditional avenues, we saw the peak of digitization in 2017, and that increasingly, digitally-native businesses are returning to the multi-channel sales strategy that brands have always used, in which ecommerce, retail and wholesale all play a role. As more traditional brands devote greater attention to selling direct-to-consumer as opposed to wholesale and offline retail, multi-channel businesses will grow more uniform, regardless of whether a brand started online or offline.

This report is both a follow-up of Fast or Frivolous 2017—a continued exploration of what the brands featured in the original report have faced over the course of the past year—and now an ongoing annual survey of the consumer brand landscape.

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Altruistic commerce or commercial altruism? The benefits and limitations of philanthrocapitalism

In today’s hyper-globalized and -politicized world, more consumer product companies are seeking to align with initiatives that ameliorate society and the world, either at inception or later in their life cycle. Whether environmental sustainability, social justice or technological democratization, for-profit companies incorporate elements of the nonprofit world into their business models—at least on paper.

But regardless of the sincerity and impact of their socially-minded missions, for-profit companies are inherently driven to generate as much revenue and profit as possible, at the expense of everything else. This report questions the sincerity and effectiveness of their social missions, outlining the inevitable tradeoffs that for-profit companies make in order to both run their businesses and give back to society.

Read the playbook

Playbook: How to balance running a for-profit company with actualizing a social mission

As the complexities of both philanthropy and social enterprises are exposed, there is a resounding need to establish a corporate culture in which CEOs and their for-profit companies are incentivized to give back and create shared value at all and any stages in their business’ life cycle. Particularly for companies that have greater market power and thus face less competition for their products and services, there is little excuse not to strive to use wealth and status in order to do good.

This Playbook accompanies Altruistic commerce or commercial altruism? The benefits and limitations of philanthrocapitalism.

As the complexities of both philanthropy and social enterprises are exposed, there is a resounding need to establish a corporate culture in which CEOs and their for-profit companies are incentivized to give back and create shared value at all and any stages in their business’ life cycle. Particularly for companies that have greater market power and thus face less competition for their products and services, there is little excuse not to strive to use wealth and status in order to do good.

Define your social ethos

  • How does your company self-identify? Is it a for-profit business, a nonprofit, a social enterprise, a philanthrocapitalist venture or something else? What language do you use to describe what your company is and what it does to customers and investors?
    • How closely does this outward description align with your internal business model?
  • What opportunities can you locate in your business model where your company could effectively promote a social good where it may not already be doing so?
    • How can your company treat profit as a means to an end rather than an end in itself?
  • What social cause best aligns with your business and why? How can you incorporate the promotion of this cause into your business model most effectively?
    • What is the best way that your company can balance generating revenue with giving back to society? How will you fold this social mission into your business plan?

Balance short-term survival with a long-term vision

  • How long term does your company think about its business? How can your business model balance short-term survival (generating enough revenue) with long-term effects (minimizing harm and providing a social good)?
    • How can you give back both in the short term and in the long term?
  • What tradeoffs does your company make to manufacture its products and generate revenue while promoting a public good?
    • Is this tradeoff doing more good than harm? Is this tradeoff likely to be resolved in the future?
    • How can you minimize the harm done in order to maximize the potential benefits linked to your social mission?
  • Does your company “do good” retroactively, after accruing wealth, or incrementally, as it grows and accumulates wealth? At what point in your company’s trajectory will giving back have the biggest impact?
    • What are the pros and cons of both? What philanthropic trajectory will best serve your business’ health and best actualize your social mission?
  • If donating in a traditional philanthropic sense, will paying in a large lump sum down the line or donating incremental installments provide the most effective change?
    • Will it be more effective to create your own foundation or donate to other pre-existing nonprofits?
    • How can you indoctrinate your socially-minded goals into your own company as it currently operates in addition to donating to charity?

Set realistic expectations

  • How realizable is your social mission? What specific milestones do you wish to cross, and when do you envision reaching these goals? How wide-reaching is your ultimate goal?
  • What resources will you need to do so?
    • What can you accomplish alone and with whom do you need to work with in order to execute your vision?
      • Would it be more effective to donate funds, partner with a nonprofit or form a social enterprise? Where do your strengths lie and where might you be able to find expertise elsewhere to contribute to a public good?
  • How scalable is your social mission? Is it more effective (and possible) to attempt a global impact or to achieve change on a smaller, local scale?
  • How can you collaborate with other companies that promote a similar social mission or manufacture a similar product in order to maximize your impact without cannibalizing your own business?
  • How can your company minimize the tradeoffs it makes when growing its business and providing a social good?

Involve your customers

  • How can you assess your community’s needs and interests in order to inform and evolve your social mission?
    • How do consumers respond to your social mission?
  • How will you work with public programs to ensure that your social work is desired by your community and doesn’t cause unanticipated damage?
  • If already established, how does your social mission relate to your customers? How closely does it match their interests and needs?
    • Does your social mission enable you to target a core customer base or appeal to another demographic that expands your audience?
    • Does it isolate a demographic or a portion of your customer base? If so, how dramatically does this alter your business health? How can you minimize alienation of a specific group of customers?
  • If not yet established, how might a social mission work to strengthen a relationship with your current customers or attract new customers? Could aligning your company with a social initiative limit your customer base or alienate a portion of your audience?
  • How transparent is your company about business practices and social initiatives? Where can you provide consumers with more information and how can you package it best?

Practice what you preach

  • How authentic is your company’s association with your social initiative?
    • Why does your company donate and/or involve itself in a social cause? How would you respond to criticism that your company has embraced a public program in order to boost sales?
    • How closely does your social mission align with the history and evolution of your company and its founder(s)?  
      • If it does not, how can the company make amends and dissociate the business from this history or the values of its founders?
  • How can you incorporate social initiatives into every aspect of your business operations?
    • How can you further promote the social values your company stands for within your internal company culture?
    • How does your company relate to its employees? The environment? Consumers? Other companies, especially competitors? How does your company manage the people and places touched by your supply chain? How can your company prioritize better policies across the board?
  • How can you market the authenticity of your mission most effectively? Might the social good you contribute to or provide be the best form of advertising, as opposed to a traditional campaign?

Marketing a social mission: The complexities of Nike and Citibank’s socially-minded campaigns

In their attempt to appease consumers, many companies are tying their brands to social missions, which they can easily promote through advertising. As Scott Goodson, founder of the marketing agency StrawberryFrog, argues, companies may compete on price, but the real way to compete is by “differentiat[ing] on values… It’s in the interests of these companies that they solve some of these big issues. The environment is falling apart? Yes, they should fix it; otherwise they will have fewer consumers.” What Goodson’s remark doesn’t acknowledge, however, is that many of these companies were complicit in the erosion of the environment, among other social causes that they may donate to or actively address as a social enterprise today.

In one of the more egregious capitalizations (and exploitations) of a social cause, the cosmetics company Hard Candy filed a patent in January 2018 to create a #MeToo line of beauty products. New York City’s annual LGBTQ Pride Parade has also grown increasingly corporatized over the years, with companies from Target to Lyft hosting floats emblazoned with company logos. The complications and the severity of the complications with this type of corporate endorsement can range—in this case, it depends on how LGBTQ-friendly their company culture is and how representative their support of the LGBTQ community during Pride is for their entire scope of actions as a business.

The danger in marketing a social mission lies in its perceived authenticity, as tied to the overall brand. As with a company that promotes inclusive values—trans rights, for example—this support is only as genuine as the company incorporates the values in its own business model. In other words, inclusivity should be a means, not an end—or just an advertisement.

Nike’s contract with Colin Kaepernick both capitalizes on and champions social justice.

The “Doing Good” Index: Social justice

On September 3, 2018, former San Francisco 49ers quarterback Colin Kaepernick announced his new campaign for Nike via Twitter that celebrates the 30th anniversary of “Just Do It” campaign. Kaepernick made headlines in August 2016 after he kneeled during the national anthem at a football game to protest racial injustice and police brutality (and subsequently was not tapped by any NFL team in 2017). The ad, displayed on a Times Square billboard, features a close-up of Kaepernick’s face and reads, “Believe in something. Even if it means sacrificing everything”—Kaepernick also provides the voiceover for a complementary commercial. The video first aired during the Falcons-Eagles season opener, only three days after Kaepernick’s announcement. Within less than a month, the video was viewed more than 80 million times on YouTube, Instagram and Twitter.

Kaepernick has been endorsed by Nike since 2011, but hasn’t be utilized in campaigns for the past two years. This new contract is a “star” deal—equivalent to that of a top NFL player, meaning Kaepernick will receive millions of dollars a year, plus royalties. It will also include a branded line of shoes and apparel.

Kaepernick’s announcement, as well as the video ad, quickly went viral, attracting both condemnation and applause. Initially, Nike’s stock fell, but it soon recovered. Three days later, the campaign was worth more than $163 million—Nike sales rose 31% in the first week. On the other hand, calls resounded to #BoycottNike and #JustBurnIt on Twitter. A series of memes quickly emerged, reappropriating the black-and-white Kaepernick ad with figures such as Donald Trump (who criticized the campaign). Other disappointed Nike fans cut the “Swoosh” logo off of their socks—one private Christian school, Missouri College, responding by dropping Nike as its sports uniforms supplier. Three days after the announcement, a poll found that 60% of consumers view Nike in a positive light, but that the percentage of those who saw the company negatively had grown from 7% before the announcement to 24% after its release. However, before one month passed, Nike’s market valuation had increased by $6 billion.

Criticism also emanated from the left, pointing to the tension—and contradiction—between Nike, a capitalist enterprise, and Kaepernick’s social justice platform. This raised concerns about the capitalization of social justice, a cause that companies may see as “in vogue,” and therefore seek to emulate in their brand image and amplify sales. These critics argue that because class injustice cannot be divorced from racial injustice, the campaign is “a reminder that late-modern capitalism can embrace and even promote radical, chic rhetoric as long as it does not call into question the ideology of capitalism itself.”

Regardless of its effect on the social justice movement, the campaign was a business move that was inherently for-profit in nature. It serves to strengthen Nike’s consumer base with a young and increasingly racially diverse demographic, particularly given that two-thirds of Nike customers are under 35. In doing so, Nike is expressing that supporting a politicized figure who happens to align with a core customer base is more important than appealing to everyone.

Others point out that although Kaepernick’s protest launched a movement across the NFL, Kaepernick got the deal while fellow player-supporters did not (most significantly, his former teammate Eric Reid, who has also not been signed by any NFL team for 2018 but lacks the income of a national campaign). In others words, though Kaepernick has suffered job loss, he is now clearly benefiting financially from taking a stance, when others are not.

Taken together, Nike’s campaign with Kaepernick is both a capitalization on and a reflection of a constantly shifting zeitgeist. Kaepernick’s fame and fortune is largely informed by consumer opinion, which Nike is simply (and smartly) reflecting in its sponsorship. In 2017, for instance, Kaepernick’s jerseys ranked among the top 50 NFL players in terms of sales, even though he wasn’t playing for a team. This development also conveniently aligns with Nike’s brand image as countercultural, manifested in the risk the company is taking by endorsing Kaepernick while remaining the official apparel sponsor of the NFL. However, this brings up another point of critique: that the appearance of being anti-establishment is different from enacting real change. “Nike has used the image of rebellion to sell its gear, while stripping that rebellion of all its content,” writes journalist Dave Zirin. The business world’s continued fixation on Nike’s rising market valuation since debuting the campaign further highlights the financial aim behind the company’s decision.

But as far as activist capitalism goes, Kaepernick is a solid and authentic celebrity to endorse and give a microphone to. The money he earns from his Nike contract will help him continue his youth activism efforts, including the Know Your Rights camp, a free youth campaign that teaches self-empowerment and raises awareness about interacting with law enforcement. Since he first protested on the field, Kaepernick has worked to show that the movement is not about him alone. He has refused to do interviews, choosing to utilize social media instead to voice his opinions (as of September 2018, he has 2.06 million Twitter followers and 3.1 million Instagram followers). Typically, however, Kaepernick retweets or shares the words of others rather than his own so as not to manipulate or claim the narrative. (Kaepernick first spoke publicly during his acceptance speech for the Amnesty International Ambassador of Conscience Award in 2018.)

Nike’s timing with the Kaepernick campaign is also noteworthy considering the potential for a campaign to draw attention away from other aspects of a business. Though it most likely was queued up to launch in tandem with the 2018-2019 football season when it would have the biggest impact, it’s important to remember that Nike is still recovering from its own HR scandal. Since March 2018, a deluge of claims from former and current employees have exposed the company’s toxic, “boy’s club” atmosphere and the company also has a long history of labor rights violations in its factories worldwide. This is not to argue that Nike is using the Kaepernick campaign as a cover up, but it certainly is grabbing headlines for the new ad. Even if some of these headlines are negative, it still means that fewer consumers are fixated on the unequivocally damaging press about Nike’s problematic internal company dynamics.

Boycotts and consumer fatique

As seen with Nike’s supporters and its critics, the politicization of a company always comes with implications, whether positive or negative. Taking a stance means forfeiting neutrality, which can strengthen a customer base and increase sales among some demographics, just as easily as it can plunge engagement with other consumer groups. The response a company receives also largely depends on the platform: Supporting an outspoken figure decrying racial injustice—and using him to campaign—is much more controversial than Patagonia supporting grassroots environmental activists.

Boycotts are one of the most common reactions to a company’s stance on a political or social matter. Though these actions have swarmed the modern-day landscape—from calls to ban In-N-Out after news surfaced that the company had donated to California Republicans to Papa John’s, after its founder issued a racist remark at a conference—these events have major media potential, but little economic impact on the companies themselves.

Even if a boycott spurs a company to make changes in the way it positions itself politically or governs itself internally, financial effects are likely the biggest incentive to alter behavior. In addition, a boycott or negative press may actually cause a company to neutralize itself politically—Chick-fil-A, for instance, has attempted to distance itself as a company from the beliefs and values of its founder. Another more dangerous implication is that a boycott may have the opposite effect than its supporters intended. Public figures in particular will seek to disassociate from a company they are connected with that’s receiving criticism, which “drives corporate donation practices underground, encouraging companies or CEOs to shift towards lobbying contributions or personal campaign donations, which require less disclosure and are harder to trace.”

Today, society may be approaching boycott fatigue. Between 1997 and 2007, only 213 boycotts were mentioned in the six largest U.S. newspapers, but in 2016, the #GrabYourWallet campaign, which urged consumers to denounce the Trump family’s companies, went viral, sparking boycotts of more than 50 companies in only 200 days. For consumers, the ubiquity of boycotts makes for an increasingly long list of rules to follow, not to mention that the more lodged a company and its products are in consumer culture, the harder it is to purge from consumers’ lives. In the midst of mass boycotting, it’s also possible that consumers want companies to simply act as companies, without taking a political stance. While consumers expect brands to “stand for something” more than ever, it’s plausible that over time, the pendulum will swing back, and shoppers will desire companies to remain agnostic, doing what they do best: selling stuff.

After sponsoring Citi Bike, Citibank’s brand image will be dependent on how the public-private bike-sharing program interacts with the New York community.

The “Doing Good” Index: Society, Environment

New York City’s bike-sharing program, Citi Bike, launched in May 2013, but the idea germinated in the Department of Transportation Secretary back in 2011. While the city approved of a bike-sharing program, it refused to sponsor it with tax dollars, leading the DOT to seek out Citibank as a potential sponsor. The bank, which has a long history of public-private partnerships, from financing the Marshall Plan to the Panama Canal, was still recovering from the 2008 financial crisis. But its attraction to the idea of sponsoring a bike-sharing program, especially in the run up to its 200th anniversary, convinced Citibank to agree to the DOT’s proposal.

Citibank contributed $41 million to pay for the program and a large portion of these funds were diverted from the bank’s marketing budget. Essentially, instead of funding traditional commercials, the bank “built something additive that… reduces [New York City’s] carbon footprint.” Coupled with the social mission behind the bike-sharing program, the bikes also displayed the blue Citibank logo, thus serving as thousands of roving advertisements. In 2015, internal research by the bank determined that favorable impressions of Citibank had increased 72% and by summer 2017, NYC was home to 10,000 public bikes in 55 neighborhoods, continuing to expand today.

As a public-private partnership from the outset, Citi Bike has received criticism based on the tensions between its capitalist practices and social mission. The program was founded as NYC Bike Share LLC, owned entirely by Alta Bicycle Share, a private company. Citibank’s association as the program’s sponsor raised eyebrows, not least because banks often arouse a good deal of societal distrust. In 2014, a company called Motivate acquired Citi Bike in 2014, which vastly expanded the initiative, but also added an additional corporate layer to the public program. Then, in July 2018, Lyft acquired Motivate—Lyft now owns Motivate’s technology, including apps, bike-tracking services, customer support and bicycle maintenance systems.

While the privatization of bike-sharing programs isn’t unique to Citi Bike—in April 2018, Uber acquired a dockless electric bike-sharing company called Jump—both Lyft and Uber have problematic histories of exploitation, whether in terms of hurting the taxicab industry or employing drivers for paltry wages. Especially for an initiative so grounded in community life, Citi Bike’s relationship to neighborhoods and residents of New York City has heightened significance. In turn, the overall success of privatized, city-wide bike-sharing programs will depend largely on how well these companies communicate with their municipalities and invest in improving city living conditions without doing additional harm.

While Lyft and Uber’s expertise will probably help the bike programs expand faster, these companies must remain sensitive to the neighborhoods they enter. In some neighborhoods, the bikes have become synonymous with gentrification, which has led city residents to protest. Annual membership to Citi Bike costs $150 and requires a debit or credit card transaction, which some NYC residents don’t have access to, effectively pricing them out. The parking vestibules used for the bikes have also taken real estate away from street vendors, which is the lifeblood of many neighborhoods in the city and the livelihood of their residents.

Still, the program’s director of external affairs has noted that as Citi Bike comes to more neighborhoods, it is collaborating with community-based organizations, “to ensure [they are] inviting community members in to the program from the start.” Citi Bike also offers discounted memberships to NYC Housing Authority residents and IDNYC holders, as well as to SNAP members (1.6 million New Yorkers) for $5 a month.

In any case, Citibank, Motivate and Lyft have certainly helped make biking more accessible and affordable in New York City, incentivizing more residents to use an alternative form of transportation and feel safer doing so. Since its debut, Citi Bike’s presence has catalyzed the city to build 98 miles of protected bicycle lanes, further altering the urban landscape for the better. The program has expanded the number of transportation options for residents, thereby decreasing overpopulated New York subway cars, and reduced the city’s energy footprint. While it would be too expensive for Citibank to reproduce NYC’s bike-sharing program in all the cities where the bank operates, focusing on the nuances of New York life and the needs of its residents—thereby minimizing any adverse effects and maximizing beneficial contributions to the city—will only become more important as the public-private partnership grows.

Digital utopianism: Facebook, OLPC and Tesla’s grand visions and debatable impact

While consumer goods companies have more recently taken on a mission of environmental sustainability, the tech industry has been a forerunner in “changing the world,” or so it purports. But while Silicon Valley has unabashedly embraced a goodness doctrine, numerous companies have come under attack for HR scandals, environmental damages and half-baked social initiatives. Attention to the internal dynamics and external effects of tech companies—most recently with Uber to Facebook—has exposed more vividly the tradeoffs these companies make, sometimes to the detriment of society, in spreading their innovations and generating revenue.

Facebook promotes the internet as a human right, but only when it controls the web.

The “Doing Good” Index: Technology, Socioeconomic

Facebook first launched Free Basics, an internet package for developing countries, in 2013. The idea behind the program was that internet is a human right, and Free Basics set out to provide it to a greater population, allowing mobile users to access Facebook and a certain number of other websites free of data charge (basically, Facebook would be the internet for these users).

Facebook sold the idea to local mobile providers by pitching them the “freemium-to-premium” model—that customers would eventually buy data, if they first started accessing it for free. By August 2016, Free Basics reached 42 countries, almost half of which were on the African continent. On Facebook’s Q1 2018 earnings call, Zuckerberg announced that almost 100 million people now have access to the internet thanks to the service.  

But Free Basics did not exactly solve the problem Mark Zuckerberg first identified. Most users turned to Free Basics only when they had run out of data, but preferred full access to the internet when they could afford it. Additionally, only 10% of Free Basics connections came from a new internet user.

But more importantly, the program did take the long-term into account. Zuckerberg promoted Free Basics as a “human rights mission” that provides underserved populations with the internet, but in doing so, he advocated that a Facebook-centric internet was more important than helping other countries develop internet infrastructure indigenously and exercise decision-making on internet-related issues. Facebook partnered with local mobile providers, but the program inherently deprived the governments of developing nations of the opportunity to create their own mobile service infrastructure and work with local companies to do so. Its range of sites wasn’t simply limited, but curated—some critics condemned Zuckerberg of digital colonialism, or of “offering hungry people half a loaf of bread.” India also rejected Free Basics, arguing in favor of net neutrality (the idea that the consumer should decide how he or she uses the internet, rather than a company), and other countries such as Myanmar have voted to shutter their Free Basics programs.

One Laptop Per Child wanted to donate laptops to underserved kids, but failed to provide the necessary educational training.

The “Doing Good” Index: Technology, Socioeconomic, Education

The nonprofit One Laptop per Child (OLPC) was established in 2005 to create low-cost, low-power laptops, funded by members of companies such as eBay, Google, Marvell Technology Group and Quanta. At the time of launch, a laptop cost an average of $1,000 and the nonprofit wanted its own version—“the green machine,” or XO Laptop—to cost $100 and be both mobile and durable. The goal was to create a laptop that required so little electricity to function that a user could wind it with a crank and extend internet connection to others.

OLPC received a glowing review from then-UN Secretary General Kofi Annan. In 2006, the nonprofit struck a deal with the Taiwanese computer manufacturer Quanta, announcing that by the end of the year, it would ship 1 million laptops to seven countries each (Quanta was also considering building a commercial version of the laptop). By 2007, the nonprofit collected $600,000 in sales for Mexico, Uruguay and Peru, though this number was vastly lower than its original estimate of $5 to $15 million.

In 2010, however, the price of the XO Laptop still hovered above $200. Many of the laptops broke down within the first two years of operation, and more importantly, the nonprofit focused little on providing technical support and teacher training to the very populations it sought to help. Peru, for example, ordered nearly 1 million laptops, but children found them difficult to use, their schools lacking in consistent electricity and their teacher lacking in support.

On an existential level, OLPC also failed to identify whether it was a hardware startup, a tech company or an educational initiative—the latter of which was OLPC’s original intention. OLPC also received sharp accusations for its “one-shot” approach—the idea that simply sending a child laptop was enough to provide them a new world of educational opportunity. As one critic put it, “We already knew that kids could learn to use computers… What the project did not demonstrate is that kids could use computers for learning.”

Over time, it became clear that OLPC’s desire to build a wide-reaching nonprofit empire as fast as possible was more important than 1) creating a product that would last and 2) establishing an educational system that would help realize the full potential of its products and overarching vision. OLPC’s desire to grow to a great size compelled the nonprofit to meet with top state officials and over-promise on price and product, leading to its own downfall. Though many heads of state inquired as to whether they could produce the laptops domestically, which would help activate their own economies and allow OLPC to focus more on educational initiatives, the nonprofit chose to manufacture its hardware in China, where the cost of production was cheaper. In the end, the Zamora Teran Foundation, a nonprofit founded by the Nicaraguan banker Roberto Zamora, acquired OLPC in 2015. Today, the organization is keeping the OLPC mission alive and working on a new laptop model, though it has slowed growth considerably in order to provide both technology and educational infrastructure to recipients. Other OLPC projects are still operating, either through governments, nonprofits or private entities, but at a smaller scale than the original founders intended.  

Despite the pitfalls of OLPC’s business model and ultimately, its ability to effect change, the initiative did inspire a boom in cheaper, education-oriented laptops, including Intel’s Classmate PC, which it has sent to Mexico and Brazil for $200 to $400. (In fact, the Libyan government once cancelled an order of 1.2 million XO Laptops in favor of Classmate PCs.) Overall, OLPC’s narrative points to the difficulty in balancing healthy business practices with a realistically achievable social mission. Had OLPC focused on the educational aspect of its project instead of on fast growth, perhaps it would have been better equipped to realize its goal and create a successful business venture with a bigger impact.

Tesla envisions an environmentally sustainable future, but needs to come clean about its own impact.

The “Doing Good” Index: Technology, Environment

Even when for-profit earnings are poured into social enterprises, the social impact itself may be dubious or much more complex than an entrepreneur lets on. Elon Musk landed $160 million when eBay purchased his company PayPal, much of which ended up at Tesla, his electric vehicle, lithium-ion battery and solar panel manufacturing company. Today, Musk is building a Gigafactory—the largest factory on earth where all of Tesla’s batteries will be made—with plans to break ground for more locations in the near future. But while a simple Google Search on Tesla surfaces hundreds of laudatory articles about the environmental sustainability of Tesla’s products, each stage of an electric car’s life comes with environmental impacts.

Electric vehicles operate approximately 30% more cleanly over the course of their life cycle than vehicles with internal combustion engines. Parts of a Tesla’s lithium batteries are recycled upon expiration, portions of their rare metals recaptured. These batteries can also serve as energy storage containers themselves, capable of sending energy back to the grid and offsetting a portion of the environmental cost of production.

However, with electricity as their fuel, and this fuel tied to the local electricity grid, the cleanliness of this energy ranges. Only in the best case scenario does a grid utilize majority renewables like wind and solar—far from a guarantee, since energy comes from a range of other sources, from natural gas to nuclear power. Additionally, the metals that make up a Tesla’s lithium batteries are mined, often in environmentally deleterious ways; a typical mine contains only 0.2% rare metals, meaning that 99.8% of what is extracted (and now contaminated with chemicals used in the mining process) is poured back into the earth. As electric batteries grow in prevalence, they have the potential to put major strains on utilities grids, demand for which needs to be coordinated to prevent maxing out. About half of a battery’s emissions stem from electricity used during the manufacturing process. However, an EV will make up for this energy used within two years of operation—perhaps even faster if its grid uses majority renewables. Tesla’s trade off is embodied in this incongruity: The company believes that transitioning the automobile industry to run on sustainable energy sources is worth the deleterious effects of mining the rare metals found in lithium batteries.  

The recycling process itself, which requires separation of electronics and other waste, is quite laborious, making it unprofitable in the U.S. In addition, few companies can currently carry out this recycling process. For this reason, companies often turn to countries like China, which has no minimum wage. This further perpetuates systemic socioeconomic disparities, as large private companies maintain highly centralized wealth at the expense of cheap and outsourced labor.

If Tesla and electric vehicles more generally continue to grow in popularity, recycling facilities will grow in prevalence in the U.S. and become cheaper to operate. In turn, Tesla’s beneficial impact on the environment will expand. However, in order to realize its long-term plan, Tesla needs to make as much profit as it can right now so it can pour that revenue into making the next vehicle model and improving the car’s performance, benefitting both consumers and the environment.

As of now, electric vehicles make up only 1% of car purchases and lack the necessary charging station infrastructure. Most current Tesla owners have long-duration chargers in their personal garages or at work so their vehicles can juice up all day (there are also “destination chargers” at hotels and other locations like wineries, where the Tesla consumer might want to take a road trip), but the company considers expanding its charging options to be “the last barrier to sales from the general consumer.” More recently, Musk has stated that he is open to allowing other EV manufacturers to use the Tesla charger network, which would help reduce fossil fuel emissions at a faster pace and grow the EV market in a more sustainable way. Still, Tesla is taking a financial bet—what if it pours millions into Tesla-branded infrastructure, but then fails to sell enough cars to make up for the money spent?

This is not to overarchingly condemn Tesla’s attempt at forging a social enterprise, or to identify the company as an antagonist to environmental sustainability. Solar panels are also composed of metals that are mined harmfully, as are traditional fossil fuel-operating cars. Not to mention a car that runs on a higher percentage of renewable energy is better off than a car that uses fossil fuels. But looking at environmental impact, it’s necessary to judge a consumer item not solely on the effects of the final product, but on the effects of each part that makes up the whole: What it took to make the final product, how the final product operates now, how it will operate over time, and what happens to it when it expires or is discarded by the consumer.

For these reasons, Tesla provides a useful lesson about sustainability, both in terms of business health and the environment: that sustainability is about transparency. Though Musk recently tweeted that he was planning on taking the company private (he later rescinded this intention), Tesla is still a public company about which the general public knows very little. As David Abraham, author of “The Elements of Power,” writes, “We need to invest in the science of understanding the impacts of the products that we’re making.” Consumers and investors should understand what it takes to make the materials that enable their green choices—how decisions are formulated, what tradeoffs are made and what the pros and cons are to each. Tesla or not, transparency should be a main goal for any company, especially one that claims to lead with corporate social responsibility.

Social enterprises: Reformation, the Renewal Workshop and Apple help consumers buy better

As philanthropy evolves, a new model has emerged that attempts to interlace social development with for-profit business practices. These so-called social enterprises encapsulate the credo popularized by the pharmaceutical and healthcare company Johnson & Johnson, whose mission statement notes that, “If you give someone a fish—that’s charity, but teach them how to fish—that’s sustainability.” The basic idea is that corporate social responsibility, in whatever form it may take, allows businesses to do what they do best (i.e. run a for-profit company) while simultaneously giving back. Meanwhile, promoting a social cause is a way for these for-profit companies to reflect on their internal dynamics and improve their brand.

Reformation and the Renewal Workshop profit off of minimizing waste.

The “Doing Good” Index: Environment

The majority of companies now trumpet a social mission of some sort, even if the authenticity behind the message is skeptical. But a growing handful of companies—particularly younger for-profit startups—are genuinely attempting to lead with socially-minded practices from day one.

Reformation, a women’s apparel brand, was founded in 2009 by Yael Aflalo, who crafted an ethos that’s opposed to overproduction; its design process “starts with… thinking about what we really want to wear right now” in order to “bring those designs to life quickly” with minimal waste and sustainable fabrics. Each SKU listed on Reformation’s site informs consumers about how much carbon dioxide, water and waste they will save in purchasing the item (metrics that the brand calls “RefScale”). The company also publishes a quarterly sustainability report to hold itself accountable to its mission and establish greater transparency with consumers. On the company’s site, visitors can learn about everything from certified dyeing and packaging to supplier standards, community service and Reformation’s factory tours, where Reformation highlights its green building infrastructure, as well as its focus on training and growth opportunities “to invest in the people who make this crazy revolution possible.”

The RefScale.

Reformation’s sustainability mission somewhat falls apart upon inspection of its business, which, at the end of the day, exists to sell clothing: essentially, the brand prioritizes minimizing environmental impact at every stage of its business, but is still based on creating demand for its products. To truly deplete waste, Reformation would not be producing new clothing in the first place, and shoppers would not be purchasing new items, regardless of what energy was wasted in their creation. For instance, Reformation markets a pair of skinny jeans by telling customers that they will save 22 pounds of carbon dioxide and 711 gallons of water by purchasing the item—but not buying the jeans means that the consumer won’t waste any energy at all. In other words, Reformation is still making you buy, but it’s making you buy better.

The Renewal Workshop takes Reformation’s philosophy a step further. Founded in 2015 by Jeff Denby and Nicole Bassett, it recycles products that are already on the market, instead of producing new items. “For garments that have been produced but cannot be sold, the creative, physical, natural and financial resources invested in them are lost,” the company’s mission statement begins, going on to outline the environmental and financial drawbacks for brands and consumers alike.

The Renewal Workshop takes unsellable inventory from brands and retailers and discarded textiles and recycles them into new products. Its factory operates at zero waste and brings circularity to a historically linear industry that churns out vast amounts of material that cannot be sold, filling in the gaps of what brands, retailers and consumers can’t accomplish on their own. Ideally, the company functions in a way that allows consumers to reduce their waste. To maximize this circularity, the company also sends data it collects in its own work back to its brand partners in order to enhance their product and design moving forward.

Both Reformation and the Renewal Workshop don’t just stand out against companies like Berkshire Hathaway and Amazon for their smaller size. When Aflalo, Denby and Bassett launched their companies, they did so to provide both a public good and to generate revenue from the get go—in contrast, Buffett and Bezos grew massive companies and only turned to philanthropy after amassing great wealth. Looking to the future, it will be important to watch how large companies like Reformation and the Renewal Workshop grow (some growth is inevitable because of inflation), and to observe how well they are able to scale their social missions in tandem. There is also price sensitivity at play—leading with low-waste policies often requires more expensive technology, and producing fewer SKUs always comes at a higher cost to a brand. So, seeing how these companies navigate continuous price pressure will also be an important marker of environmentally sustainability moving forward.

Apple improves environmental sustainability, but still relies on planned obsolescence.

The “Doing Good” Index: Technology, Environment

Tech companies often talk about what their company and products do, but not about how they are made. Though the environment factors into every element of its global supply chain, it took Apple more than three decades to address environmental sustainability—a plan that first emerged in a 2007 letter by the late co-founder and CEO Steve Jobs, who stated that the company would remove toxic materials from its products by the end of the following year (a promise largely brought about by Greenpeace criticism). In 2009, the company also began releasing an annual environmental responsibility report.

In the ensuing years, Apple has made great strides in environmental sustainability and transparency. The company launched a clean energy program for its suppliers in October 2015, with the short-term goal of generating and sourcing four gigawatts of new clean energy by 2020, which accounts for one-third of its current manufacturing electricity footprint. Apple has reduced its carbon footprint every year since 2011, when it reported 137.2 million metric tons (in 2017, it recorded 27.5 million metric tons). In 2018, the company also achieved 100% renewable energy at all of its retail stores, corporate buildings and data centers. It also releases environmental reports for each product, outlining its impact on climate change, energy emissions and recyclability.

The iPhone X Environmental Report.

Despite these positive changes, Apple continues to lead with design and user experience at the forefront to make profits, at the expense of creating products that are more durable and minimize environmental impact. This is not to say that Apple should walk away from design and user experience—two aspects that have defined the Apple brand. But the company’s production schedule remains guided by planned obsolescence—Apple products are built so that upgrading their operating systems is only possible to a certain point before the consumer must trade them in for new products—sometimes each year. This cements the idea in consumers’ minds that they must trade in their old version for the latest one and it also drives Apple forward as a for-profit company that must produce more in order to sell, sometimes subjecting workers in its global supply chain to do so. The company’s 2017 revenue numbers reflect this: iPhone sales accounted for 61.6% of revenue, and iPhone, iPad and Mac sales made up a whopping 81.3% of revenue.

This stands in contradiction to Apple’s environmental mission, particularly because the manufacturing process produces the greatest energy emissions in a product’s life cycle. When it comes to the environmental effects, 70% of the energy a laptop uses in its lifetime is spent during the manufacturing process—the negative impact occurs before an item reaches a consumer’s hands. In 2017, Apple recorded that 77% of its carbon emissions came from manufacturing, 17% from product usage, 4% from transportation, 1% from facilities and less than 1% from products’ “end of life.” Manufacturing accounts for more than two-thirds of the company’s carbon footprint—an aspect of the supply chain that Apple downplays in its environmental responsibility reports by highlighting other improvements. While establishing 100% renewable energy to operate its facilities is a feat, wouldn’t it be more effective to use 100% renewable energy to power its factories, the main drivers behind Apple’s carbon footprint? Everything Apple has accomplished in the past few years is a start, but the company has a long way to go.

Apple’s sustainability is also a question of making products built to last so that consumers don’t have to replace them when a new model goes to market. Apple could do more to help customers repair their products even if newer products have a better user experience and the company makes more money selling entire devices as opposed to upgradeable parts (which third-party companies sell relatively cheaply). Making products easier to upgrade and repair would help the company’s purported sustainability message materialize and in turn, could enhance the brand in a new way that goes beyond design.

The hypocrisy of philanthropy: Warren Buffett and Jeff Bezos’ great fortunes and delayed charity

Published in 1889, Andrew Carnegie’s essay, “The Gospel of Wealth” claimed that economic inequality was “the price of progress” and therefore unavoidable. He urged the wealthy to donate their fortunes, endowing institutions that that would aid “those who desire to rise” such as universities, public libraries, and music halls. Seeing these types of endowments as transcendent from mere charity given their intention to uplift society, many entrepreneurs continue see “The Gospel of Wealth” as the ultimate playbook for modern philanthropy. In 2010, Bill Gates, Warren Buffett, Michael Bloomberg and others led and debuted a contemporary manifesto called “The Giving Pledge,” which promises most of the signatories’ wealth to philanthropy.

Giridharadas’ book points out some of the contradictions in this line of thought. “The winners of our age must be challenged to do more good. But never, ever tell them to do less harm,” he writes. Though for-profit companies as diverse as Walmart, McKinsey & Company and Facebook may tout a mission to “change the world,” their continued prioritization on generating revenue—and the effects that come with it in the short term—can overshadow their ability to generate “economic value in a way that also produces value for society by addressing its challenges” in the long run.

In other words, charity doesn’t make up for poor business practices that hurt other people, the economy or the environment. When for-profit companies decide to give back only after amassing great wealth, they inherently maintain their position at the top of the socioeconomic ladder, even if their donations help address societal inequality. It’s equally important to questions the intentions behind a for-profit company’s altruistic endeavors and how the history of a business aligns with its charity. Even if Carnegie’s name is attached to various educational and social institutions, from Carnegie Mellon University to Carnegie Endowment for International Peace, his business practices had a darker side, particularly when it came to his anti-union policy.

Buffett made a fortune endorsing fast food, but turned to philanthropy late in the game.

The “Doing Good” Index: Education, Social justice, Socioeconomic

Warren Buffett’s holding company Berkshire Hathaway has grown to be Coca Cola’s biggest shareholder since the eighties, when it first invested $1 billion in the beverage company. Since then, Coca Cola’s value has more than tripled and the company is now worth $16.5 billion. Berkshire Hathaway’s portfolio also includes banks, insurers, manufacturing companies and railroads, but it also holds a distinct number of unhealthy and fast food-related companies beyond Coca Cola: Wrigley, Heinz, Dairy Queen and See’s Candy (Buffett owns the latter two). Since Buffett acquired See’s Candy in 1972 for $25 million, sales have risen from $30 million to $400 million in 2014.

Buffett has built a cult of personality around his “everyman” lifestyle which features both Cherry Coke and McDonald’s—notoriously, his wife puts out either $2.61, $2.95, or $3.17 in exact change each morning, depending on what Buffett plans to order from McDonald’s for breakfast. Buffett is also continuously profiled as one of the most charitable billionaires. However, much of his business history has prioritized “giving people what they want,” rather than innovating, in addition to profiting off the promotion of an unhealthy lifestyle. Though Buffett once lauded the cigarette business to fellow investor John Gutfreund—“it costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty”—he personally saw owning a tobacco company as a burden. But candy—also cheap to make and hard to resist—is not much different.

For years, Buffett thought that society would benefit more from letting his money pile up before donating it. Though this brought him a good deal of criticism, the “godfather of compound interest” believed that he would have the biggest impact by managing his money until his death, and then giving it away to charity.

However, Buffett’s first wife’s premature passing in 2004 and other considerations led him to announce plans to donate 85% of his wealth—about $37.4 billion—in Berkshire Hathaway stock to the Bill & Melinda Gates Foundation and other philanthropies starting in 2006 in annual installments. This promise was reinforced by Buffett’s signature to “The Giving Pledge” four years later; the year-to-year schedule for the donations also helped crystallize Buffett’s desire to forge a long-term investment in society rather than giving away a large lump sum. In July 2018, Buffett again made headlines after donating $3.4 billion in his annual gift of Berkshire Hathaway shares to the Bill & Melinda Gates Foundation, and to four foundations run by his family members (an education-focused charity named after his late wife Susan (scholarships to college students in Nebraska); Sherwood Foundation chaired by their daughter (social justice in Nebraska); Howard G. Buffett Foundation (international poverty), led by his son; NoVo Foundation, run by his youngest son Peter and his wife Jennifer (international collaboration, partnership). Including this latest donation, Buffett has given a total of $31 billion to these organizations—and more to others.

However, Buffett’s contributions to a high-sugar, high-fat and high-cholesterol lifestyle have not inspired him to donate to any obesity, heart disease or diabetes initiatives (recently he has considered a joint venture with J.P. Morgan Chase and Amazon to alleviate high cost and bureaucracy of U.S. healthcare system). It’s possible he may have to confront this reality increasingly as time goes on, particularly as Coca Cola is now struggling with declining sales for its sugary drinks, pointing to a shift in consumer opinion.

Bezos became the richest man in the world without paying sufficient attention to Amazon’s global impact.

The “Doing Good” Index: Consumer, Education, Socioeconomic

Jeff Bezos reached a financial zenith this year, garnering a fortune of $167 billion (as of September 2018) and becoming the wealthiest man in the world. But for years, Bezos’ lack of philanthropy—he has donated $68 million since 2000, about 0.04% of his fortune—has been sharply derided.

Critique has only been aggravated by reports on the company’s mistreatment of employees, particularly in Amazon’s warehouses, whether in the form of crushing unionization, low wages, surveillance or repressive noncompete clauses. The company’s impact also extends far beyond the workplace; opening Amazon fulfillment centers lowers the wages of other warehouses in that area, for example, wielding massive influence over entire city economies.

In May 2018, activists in Seattle lobbied their city council to pass a “head tax” on companies in the city that make more than $20 million in revenue. This singled out Amazon to advocate that the company fund municipal projects like affordable housing and homelessness. But after Amazon threatened to scale back its business in Seattle, the council repealed the tax plan.

Traditionally, the more most for-profit companies make, the greater their contribution to society in the form of taxes. They also bolster the economy and GDP by selling products, which raises the standard of living in their country. And, as these companies grow, they provide employment to more people. Amazon, however, most recently came under fire for the zero federal corporate income tax dollars the company paid in 2017, despite its $5.6 billion in profits and $177.9 billion in revenue. In terms of bolstering economies and living standards, Amazon has established new fulfillment centers in numerous municipalities, bringing in an influx of business and employment, but typically tries, and often succeeds in receiving tax breaks. Since 2014, Ohio has granted more than $125 million in tax breaks and cash grants to Amazon for new warehouses. While this has brought vast new employment opportunities to Ohio, more than 10% of Amazon employees in the state rely on the Supplemental Nutrition Assistance Program (SNAP) to purchase groceries (a governmental program funded by tax revenue).

While there has been little transparency on how Amazon is imploring states around the U.S. to bid for the location of its second headquarters (HQ2) since it announced the plan in September 2017, publicly available proposals point to massive tax credits and other financial incentives that states are offering to win the vote. The new headquarters, however, will drastically alter city life, inflating housing prices and pricing out long-term residents. Amazon’s profitability only exacerbates concerns among consumers and local and federal government officials alike, as this wealth has been achieved in large part by investing huge sums in operations and expansions that have continuously reduced prices for Amazon’s customers, only made possible thanks to Amazon’s cheap labor force.

In the past, Bezos has said that “the only way [he] can see to deploy this much financial resource is by converting [his] Amazon winnings into space travel,” referring to his aerospace company, Blue Origin, which he funds with $1 billion each year via the sale of Amazon stock. With Blue Origin, his long-term goal is to build infrastructure for future space entrepreneurs, parallel to how USPS and FedEx gave Bezos the delivery infrastructure to build Amazon. But in June 2017, facing prolonged criticism, Bezos decided to crowdsource ideas on Twitter for a philanthropic strategy that “would stand more at the intersection of urgent need and lasting impact.”

As Amazon’s employee base grows—it nearly doubled in size between 2015 and 2018, largely a result of the Whole Foods acquisition—and it continues to expand its empire, Amazon will be increasingly responsible for all of the people and places it touches with its global supply chain. Though criticism about Bezos’ lack of humanitarianism signals that the public expects a certain level of philanthropy from corporations, it’s important to judge donations with a critical eye when they are made. In September 2018, Bezos announced that he and his wife were putting $2 billion into a philanthropic fund, the Bezos Day One Fund, which will support existing nonprofits focused on alleviating homelessness and broadening access to preschool education. But the fund leaves open many unanswered questions about how the organization will be structured and how it will work with nonprofits in the space. It won’t be a 501(c)(3)—a nonprofit organization that invests in public initiatives and must disclose financial information publicly—as Bezos has already alluded to investing in both public and private initiatives. It will likely be a limited liability company (LLC), allowing Bezos to invest in both private and public initiatives without a public commitment to transparency. But regardless of how the money is used, it does not clean up Amazon’s record. As The Information points out that, “At its worst, charity is said to distract us from the root causes of need. That is, lack of access to well-paid work”—something inextricable from Amazon’s rise and continued domination as an ecommerce platform.

For-profits versus non-profits and the rise of philanthrocapitalism

Today’s rise in for-profit social enterprises diverges from the traditional path consume product companies have taken to “do good”: philanthropy. Traditional philanthropy is distinct (and criticized) for its timeline; it occurs only after great wealth is accumulated rather than as a company grows. With mounting expectations that for-profit companies will do more throughout their life cycle than simply sell products and make money, traditional philanthropy is increasingly seen as working backwards, when for-profit companies should be “doing good” every step of the way, i.e. paying it forward.

More entrepreneurs are now pivoting to a new model of charity called philanthrocapitalism, which folds philanthropy into for-profit business practices. Philanthrocapitalism views capitalism itself as philanthropic because it powers innovation and creates products that improve life, offered at increasingly lower prices. More entrepreneurs are embracing philanthrocapitalism today, guided by the impulse to control where their capital goes; instead of contributing to charity, they use the capital to accelerate economic development. The idea, according to Michael Porter and Mark Kramer, founders of The Center for Effective Philanthropy, is that “businesses acting as business, not as charitable donors, are the most powerful force for addressing the pressing issues we face.” Still, critics point out that philanthrocapitalism takes dangerous steps in privatizing social policy.

The line between for-profit and non-profit companies appears to be blurring more than ever before as buzzwords like “transparency” and “corporate social responsibility” continue to circulate. B Corps, for instance, are for-profit companies “certified by the nonprofit B Lab as voluntarily meeting higher standards of transparency, accountability, and performance.” But as as for-profits take on elements of nonprofits, it’s all the more important to question the intentions and potential impact of any philanthropic donation and any social initiative attached to a for-profit business. Investigating how for-profit companies balance generating revenue and fulfilling a public good helps to elucidate the level of authenticity in a business’ purported social mission.

Intentions and caveats behind for-profit altruism

Though their actions may be guided by the impulse to generate as much revenue as possible, for-profit companies don’t exist in a vacuum. Their decisions and actions, whether within the company, throughout its supply chain, or in the hands of shoppers, have wide-reaching and reverberating effects on employees, consumers, society and the planet. Though it is in a company’s best moral interest to reduce its carbon footprint, provide broad employment benefits, stand for equal rights and create products that improve life without causing detriment, there may not be a financial incentive to do so, especially in the short-term. For-profit companies also are legally bound to make money for their shareholders—a task that has nothing to do with society at large.

At the same time, consumers are demanding more than ever that companies behave transparently about their internal corporate culture and dynamics, their environmental sustainability efforts and ethical sourcing, and their attention to socially-minded projects, whether or not this mission intertwines with or exists outside of the business’ fiduciary health.

This trend is particularly strong among the newer crop of digitally-native brands, from Warby Parker, whose Buy a Pair, Give a Pair program offers affordable glasses and operates a training program for basic eye exams—to Bulletin, a startup retailer that gives digital-first, female-led brands accessible shelf space, hosts events to empower women, and sends 10% of all profits directly to Planned Parenthood of New York City. As consumer perception increases in importance—a survey from 2014 found that only 24% of respondents said they trust the federal government to “do what is right”—companies may be more incentivized to self-regulate and proactively address public issues. If anything, doing so may ensure that more customers open their wallets.

An investigation into for-profit companies that take on a social mission unveils two main ways of “doing good”:

  1. Companies do it as they grow (as they climb the mountain).
  2. Companies (and their leaders) do it after accruing a large amount of wealth (once they have reached the mountain’s summit).

Because there are so many avenues to give back to society, each company establishes at least an implicit hierarchy of “doing good,” determined by their founders and leaders; one may claim that amassing great revenues and then donating millions to charity later on is the most effective form of philanthropy while another may decide it’s more efficient to start giving from day one. In each situation, there are tradeoffs to make based on how the company applies resources to a public good versus pours revenue back into its product business, at what point in a company’s life cycle it decides to give back, and how much giving back affects sales. Any given social initiative may mix and match from a variety of benefits, whether socioeconomic, environmental, technological, societal, educational, etc.

Despite the intentions behind altruism, it always comes with caveats. For for-profit companies, it’s always a risk—alignment with a particular issue can hurt a business, even lop off a section of its customer base. For-profit companies that take on a social agenda are not immune to criticism, no matter what cause they endorse or how they give back. Some critics also decry these companies as hypocritical, masquerading a nonprofit ethos when they still exist to make a profit, and then producing self-aggrandizing advertisements.

Anand Giridharadas, author of “Winners Take All: The Elite Charade of Changing the World,” calls it “fake change”—“change the powerful can tolerate. It’s the shoes or socks or tote bag you bought which promised to change the world. It’s that one awesome charter school—not equally funded public schools for all… It is impact investing—not the closing of the carried-interest loophole.”

Not only are donations often only small cuts out of a for-profit company’s revenue, but the very existence of some of these companies has also resulted in or exacerbated many of the problems they seek to address through altruistic means. Given endemic issues with charity and other forms of humanitarianism—fields that cannot, unfortunately, escape corruption—there’s logic to the argument that both nonprofit and for-profit companies alike might be able to “give back” more effectively simply by improving their own business practices. For for-profits, this may mean paying employees higher wages or reducing carbon emissions in their supply chain. For non-profits, it comes in the form of refusing tainted funds from figures or entities that are incongruent with their mission, or pouring the maximum donations into their public programs. In 2014, for example, a joint investigation by NPR and ProPublica found that the Red Cross’ overhead expenses were much higher than it professed.