One example of a social business is Toms shoes.
“In 2006, American traveler Blake Mycoskie befriended children in Argentina and found they had no shoes to protect their feet. Wanting to help, he created TOMS, a company that would match every pair of shoes purchased with a pair of new shoes given to a child in need. One for One. Blake returned to Argentina with a group of family, friends and staff later that year with 10,000 pairs of shoes made possible by TOMS customers.”
They would be considered a social business under like-for-like giving, in my categorization. Toms shoes operates a fairly standard business model. Selling shoes online and through various retailers to its customers. However, there is a vast difference built into this company compared to other shoe companies. For every pair of shoes purchased through Toms Shoes they donate a pair of shoes to a someone in need. Mostly, in developing countries. They operate like a traditional business: receiving investment, selling through normal distribution channels to its customers, and paying out profits or dividends to its owners and investors. Yet, they have a distinct social mechanism built into their operations. The more shoes are purchased, the more children in Africa will have shoes.
I see tremendous value in this social business model. Success Magazine quotes the founder of Toms Shoes saying, “The one-for-one business model is remarkable in that, unlike a straight charity, it’s sustainable. That was Mycoskie’s plan from the beginning. “I started TOMS with about a half a million dollars of my own capital,” he says. “If I would’ve taken half a million dollars and just bought shoes to give to the kids, I would’ve been able to give the shoes once. It never would’ve been as far-reaching and sustainable as TOMS Shoes is now. If you take the option of starting a for-profit business that gives back a large part of what it brings in versus a straight charity, you’re going to help a lot more people with the for-profit business.””. Imagine the impact if more businesses would rise up in this arena; that for every product a consumer would purchase they could choose a normal one, or one of a similar price and quality that goes to a society changing purpose.