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TOMS Shoes: the costs of giving back

News Editor

Published: Monday, January 14, 2013

Updated: Monday, January 14, 2013 23:01

As a consumer, choosing a charity or identifying a good cause can sometimes be confusing. Many charitable organizations utilize a business model that pairs the emotional gain of giving back with a tangible gain – something like a water bottle, backpack or pair of shoes.

The popular brand/social charity TOMS Shoes has made a big business out of striking the balance between giving and receiving. Its trademarked one-for-one model promises consumers that for each pair of shoes they buy for themselves, another will be placed on the foot of a child in need.

TOMS employees and volunteers currently drop shoes in more than 50 countries, from Angola to Zambia, according to the TOMS website, and as of September 2010, TOMS has given over one million pairs of new shoes to children in need.

But does the one-for-one charity model really help people in need? And how should socially-conscious consumers choose to give back?

Miami University economics professor Dennis Sullivan said TOMS is exploring a relatively old business idea that focuses on uniting doing well and doing good.

“[For] TOMS Shoes, the connection is particularly close, because of the one-for-one element,” Sullivan said. “One-for-one is actually a trademarked term, showing how much they want to deploy that as a way of connecting doing well and doing good.”

Brett Smith, founding director of the Center for Social Entrepreneurship, was responsible for bringing TOMS Shoes founder Blake Mycoskie to Miami’s campus in 2009. He said there are elements of the company’s model that are extremely positive.

“What [is TOMS] trying to do?” Smith said. “What they’re trying to do at the end of the day is generate social value through shoes. That’s the way they would describe it. I think one of the things they’ve been incredibly good at is making it transparent to the consumer what difference their purchase makes. One for one.”

Sullivan said the one-for-one model helps the company sustain itself as a business, rather than just a charity. According to Sullivan the model itself is neither good nor bad; it is simply a model that costs consumers a lot of money.

“The question is whether [the model] works all the time,” Sullivan said. “Probably not. We don’t see Pizza Hut saying ‘we’ll deliver pizzas to poor people when you buy a pizza, all you have to do is pay an extra two bucks for the pizza.’”

Sullivan said TOMS’ popularity could just be a fad, and that it is just too obvious that customers are paying more than they need to pay.

There are also problems to consider on the receiving end of the one-for-one model. Recently, TOMS Shoes has come under fire in some Internet and radio communities, including goodintents.org, which dubbed TOMS’ “A Day Without Shoes” “A Day Without Dignity.” Many, like blogger Cheryl Davenport of Fast Company and Amy Costello, host of the philanthropy podcast Tiny Spark argue that TOMS Shoes cripples local shoemaking businesses in the developing economies where they distribute aid.

According to Sullivan, there is always tension between a “hand out” and a “hand up,” or giving people a fish and teaching them to fish. But he said shoes can be both.

“Clearly, the shoes have some immediate benefit, but they’re also in effect an investment in the wearer because of the public health aspect,” Sullivan said. “The fact that they’re onto something that has a public health leverage; it’s not like delivering too many pizzas that you made.”

In terms of TOMS displacing local production, Sullivan said that is hard to assess from our perspective. But TOMS, like any charity, is likely to have some downsides, according to Smith.

“If you want to call it the dark side or the negative side of aid, there are some,” Smith said. “And I think one of those is, one of the potential and generally unintended consequences of aid is it does have a negative ramification on building emerging economies to a certain degree.”

But Smith said criticism of TOMS Shoes is to be expected. He said sometimes people are just too quick to fall in love with a charity, and then just as quickly dismiss it.

Junior TJ Lane, president of Miami’s TOMS Shoes student organization said the group has adopted the principles of TOMS Shoes and applied them locally. Throughout the school year the group hosts events that are sponsored by the national TOMS brand like a “style your soles” party and “a day without shoes.”

But the organization also works with Cane Ministries outside Cincinnati for its own version of a TOMS-inspired shoe drop. Over the last two years the group has donated at least 300 pairs of shoes to the homeless shelter and food pantry and then spends the day volunteering there.

“It’s obviously something that makes you feel good,” Lane said. “You feel like you’ve accomplished something because when you see all the shoes there you know those are going to go to those who really need them and they came from people who probably have plenty of shoes and don’t need so many pairs anymore, it’s just a really good feeling.”

Sullivan and Smith agree that the best thing smart consumers and philanthropists can do before they donate is research. Smith recommends tools like charitynagivator.org, which evaluates how donated dollars are used by charities. In addition, Sullivan pointed to New York Times op-ed columnist Nicholas Kristoff, who publishes lists of charities and humanitarian groups that do well at doing good.

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