As I said in this The Washington Post article by Olga Khazan, people want to feel the products they buy are more than just products.

The article tells the story of how Holstee’s founders, while launching their business, declared what they stood for in a manifesto.

The manifesto reads like something out of a self-help book: A 15-sentence message comprising brief commandments such as, “Do what you love and do it often,” “If you don’t like your job, quit,” and “Travel often; Getting lost will help you find yourself.”

The Holstee manifesto is the most iconic product of the Brooklyn-based apparel company Holstee. Although the company was founded with the aim of selling sustainably sourced consumer goods, the poster of the manifesto is now one of Holstee’s best-selling items. At one point this summer, they sold out of it with a four-week back-order. The manifesto has been translated into 12 languages, and by Holstee’s own approximations, it’s been viewed more than 50 million times.

Read the rest of Holstee‘s story in The Washington Post.

As a nonprofit, what are all of the ways that your work produces financial returns, directly and indirectly? And who benefits financially from what you do–your beneficiaries? Other nonprofits, businesses, taxpayers or the government?

DC Central Kitchen is a 501(c)3, a legal nonprofit, that solicits donations and foundation funding. It also generates revenue and earns money for its beneficiaries, partners and the government. Here’s how:

Every day DC Central Kitchen (DCCK) collects 3,000 pounds of surplus food from restaurants and local farms and converts it into 4,500 meals that are distributed to 100 shelters, transitional homes, and rehabilitation clinics in Washington, D.C. It runs a culinary job training program that trains and helps employ 90 people a year. These 90 students (recovering addicts, the recently homeless or previously incarcerated) graduate to earn $2 million, collectively, per year.

DCCK also runs a catering company that generates revenue and provides transitional employment for recent culinary training program graduates.

To recap, here’s the nonprofit’s financial impact:

• Decreased waste disposal costs for food service businesses
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• Income for local farms, from which DCCK buys discounted produce
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• Lower meal costs for shelters and rehabilitation centers, freeing up more of their budgets for critical program needs
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• 90 graduates of the culinary job training program earning a starting wage of $11.05 per hour (equivalent to $2 million per year)
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• $209,333 in payroll taxes to the government (2009 graduates)
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• Lowered recidivism and homelessness rates for program graduates, saving tax payers hundres of thousands of dollars in social service and prison costs
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• 44% of DCCK’s revenue generated through Fresh Start Catering (2009)

It would be easy to focus only on earned-income strategies–and that’s a crucial piece to helping nonprofits lessen their dependency on individual and institutional donors–but even an earned-income approach sells a nonprofit short of its total financial impact. Instead, widen the lens to think about your organization’s financial influence. What groups are benefitting, directly or indirectly?

The dazzling part comes when you begin to make connections between your work’s beneficiaries, participants and partners so that one activity benefits three others.

Robert Egger founded DC Central Kitchen  in 1988. I spent this morning preparing some of the 4,500 dinners served tonight. Afterward, I had the chance to talk with Robert about the power (in impact and size) of the nonprofit sector. Our conversation pushed me to widen my view of nonprofit profitability.

This piece was originally written for and published on Reach Students.

If 94% of Millennials condone cause marketing why do only 53% report buying a product that benefits a cause in the past year?  The first finding is compelling, the second certainly is not, particularly given that in many stores you’d have to struggle not to buy cause-related products. So what explains this gap and what can your company do to close it?

The gap exists because cause marketing is predominately used by companies as a short-cut to boost product sales and consumer good-will. So we typically see cause marketing campaigns developed in a stand-alone manner, rather than as one element in support of a company’s larger social mission. Instead, companies should look to influence their selected cause or issue through deep-rooted commitments and multiple points of engagement.

“Cause-related marketing, as we know it, is dead. It’s not about slapping a ribbon on a product any longer.…Americans seek deeper involvement in social issues and expect brands and companies to provide various means of engagement,” says Carol Cone,  managing director of Brand and Corporate Citizenship at Edelman.

Genius brands like TOMS Shoes, Nike and RockCorps Orange and Boost Mobile have closed this gap by building programs around their long-term commitment to an issue and giving consumers the opportunity to participate through volunteering, advocacy and education. Many of these companies’ initiatives aren’t even tied to product purchases. They understand that creating deeper and longer-term relationship with consumers is much more valuable–in terms of products sales and brand perception, visibility, sustainability and  social impact–than an immediate cause-marketing success.

Here are 7 strategies you can use to close the gap:

1. Define your mission.
   Before you think about how to create a smashing campaign, choose a cause that means something to your brand or consumers. Then be specific about who you want to benefit and what you ultimately aim to achieve, both in affecting social or environmental change and in impacting your company.
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2. Invest in the cause longterm.
   A long-term commitment to a cause or organization helps define what your company stands for, enables a greater social impact and makes it easier for you to measure this impact. The whole idea of engaging consumers in your social mission is to take them on a journey of awareness and participation, through which they begin to associate your brand with real impact, action and commitment to good. Switching up the issues you care about confuses your message, weakens your impact and leaves consumers rolling their eyes at another ill-fated attempt to influence what they buy by way of their heartstrings.
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3. Lead with impact, not branding or splash.
   A quick way to turn off consumers and taint your brand is to use customers as a pawn in a high-on-glitz-but-low-on-impact campaign in the name of doing good. RockCorps‘ partnerships with Orange and Boost Mobile, in the United Kingdom and United States, respectively, focus on community involvement and volunteerism rather than cell phone ownership and use.  ”You can’t buy a ticket, you have to earn it,” is RockCorps’ tagline and mission. These RockCorps partnerships organize A-list concerts with a unique ticket policy: tickets can’t be bought, only earned by volunteering for several hours at a community event organized by RockCorps. This model shifts the focus to giving back to your community, rather than who can and can’t afford which phone or a ticket to hear Busta Rhymes.
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4. Be specific.
   Sixty-one percent of consumers take the time to learn the details of a corporate-nonprofit partnership before deciding whether to support it. The more specific your commitment is, the stronger the appeal. A commitment of one donated vaccine for every t-shirt purchased is stronger than a commitment of 10% of sales (how much is that?), and 10% of sales is stronger than “a portion of the proceeds.”Here’s one suggestion from a 16-year old American woman, “On the label, [there should be] a little paragraph about why the product is helping the environment and how it is made differently. That is something a new, limited-time organic Target brand did and it was very neat to know what special process went into making the clothes,” (quote taken from Alcatel Teen Lab).
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5. Connect customers to the cause.
   While 81% of consumers still want to support your company’s cause through transactional purchases they also want opportunities to volunteer for the featured cause (72%) and to provide feedback on the product or campaign (75%), per Cone Inc.’s 2010 Cause Evaluation Study. TOMS Shoes is known for its transaction-focused buy-one-give-one model.  But the company has also done an excellent job of providing customers opportunities to act, for example, through Style Your Sole shoe painting parties and annual “One Day Without Shoes” events that mobilize thousands of students to go barefoot for the day.

   Nike has partnered with Ashoka’s Changemakers to run several online competitions that challenge young social entrepreneurs to develop ways to leverage sport for positive social change. The initiative is completely independent of product purchases. By separating its commitment to sports for social change from its products, Nike is using its brand to motivate change and empower athletes and entrepreneurs. In the longterm, this visibility and consumer association could translate into product sales, but product sales are only one potential outcome–the other being social impact.
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6. Don’t exploit the cause or your consumers.
   Your cause is indicative of the impact you want to have. Don’t play fast and cheap with it, which means no pictures of abandoned dogs and ravaged children. Instead, find ways to communicate the urgency of their needs with dignity. The same is true for your consumers. When reporting on the brilliant success of your campaign, stay connected to the impact you’ve had and the ultimate change you’re determined to make, not how your campaign spiked product sales or utilized a new technology.
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7. Report on impact.
   Seventy-five percent of consumers want to hear more about the impact of corporate-nonprofit partnerships. How much money was raised and who did it help? How many people were served? How were they specifically affected?  The desire for feedback means you’ve successfully involved the customer in the cause. They feel personally connected to it and are interested to know how what they stood behind made a difference to someone. As a company, this is the best part because you’ve created a unique opportunity for an individual, or a million individuals, to make an impact.

Scandal in-the-making, customer-pleaser, tax write-off, nonprofit cash cow or game-changer?  Which hyphenated phrase will best describe Nordstrom’s new concept store, which will donate all net profits to charity?

I was interviewed recently by American Public Media’s Marketplace on the Nordstrom concept store, set to open in Soho next fall, and on the growing appeal of retail philanthropy. A recent study from Cone found that 83% of consumers “want more of the products, services and retailers they use to benefit causes.” Seems Nordstrom read the report. But I hope they studied it because the concept is rife with potential, public sand traps. Little information has been released (or decided), but here’s what we do know from Nordstrom spokeswoman Pamela Lopez:  The store won’t have Nordstrom’s name on it, use its shopping bags or take Nordstrom credit cards, but will function as a wholly owned subsidiary.  The concept is based on the retailer’s “general spirit of philanthropy.” Nordstrom hasn’t yet identified how it will pick its nonprofit partners or solidified a merchandising strategy. If I were leading this initiative for Nordstrom, here are 10 guidelines I’d follow:

• Define your mission. General spirit of philanthropy is not enough. Who do you want to benefit and what ultimate result do you want to achieve–both in impacting funding recipients and Nordstrom as a company?

• Be obsessively transparent with employees and consumers. Be upfront about how you are selecting nonprofit partners, what the partnership involves (for example, are partners expected to market on your behalf?), how much money is going to which nonprofits based on what amount of sales, how the nonprofits are using the funds and how constituents are impacted.

• Invest in the causes longterm, either by continuing to support existing Nordstrom charities and partners, or committing to a new long-term investment. Long-term partnerships help define what the company stands for, enable a greater a social impact and make it easier for a company to measure this impact.

• It’s not enough to just give nonprofits money. Really, it’s not. Nordstrom would do well to treat these organizations as partners, not charity recipients. There’s much more at stake with this experiment in ultimate retail philanthropy than funds raised and a branding victory for the retailer. Treating nonprofit partners as equals entails greater cooperation, satisfaction, creativity and impact. Avoid the common pitfall of thinking that whomever holds the money calls all the shots.

• Lead with impact, not branding or splash. Go back to your mission; who are you aiming to serve and how? If all you want is a marketing campaign to attract Gen Y women, this is absolutely the wrong strategy. A quick way to turn off consumers and taint your brand is to use customers as a pawn in a high-on-glitz-low-on-impact campaign. Be transparent and proactive in your messaging, your goals and your shortcomings.

• Involve employees. Employees are your greatest brand advocate (as well as the first to smell a rat). Beyond being transparent with employees about the numbers, connect them to larger mission and develop opportunities for them to own and create parts of it.  Per Cone, 93% of employees involved in their company’s social or environmental commitments say they’re proud of their company’s values (vs. 68% of employees who don’t take part in social or environmental activities)..

• Connect customers to a cause beyond the purchase.  Sixty-one percent of consumers take the time to learn the details of a cause-related campaign before deciding to support it.  So teach consumers the root cause of the problem and viable solutions through labels, marketing material, store signage, events, interactions with nonprofit leaders and constituents of the cause and volunteer opportunities (72% of consumers want an opportunity to volunteer for a cause in addition to supporting it through a purchase).

• No markups. Donating 5% or 100% of profits to a cause doesn’t legitimate price markups. Sell the merchandise at a standard price and build the donation into the other elements of your business model. I’m not saying this is easy, but it’s important that you don’t charge consumers for the experience of giving or for supporting your corporate philanthropy.

• Don’t exploit the cause. The cause is your partner, your friend, significant of the impact you want to have. Don’t play fast and cheap with it, by which I mean no pictures of abandoned dogs and ravaged children. Find ways to communicate the urgency of their needs with dignity.

• Report on impact. Seventy-five percent of consumers want to hear more about the impact of corporate/nonprofit partnerships. How much money was raised and who did it help? How many people were served? How were they specifically affected?  The desire for feedback means you’ve successfully involved the customer in the cause. They feel personally connected to it and are interested to know how what they stood behind made a difference to someone. As a company or nonprofit, this is the best part.

In a campaign aimed at promoting “healthy, active lifestyles for kids,” why is KaBOOM! partnering with an historic obesity perpetrator for a campaign aimed at promoting “healthy, active lifestyles for kids?”  It’s a model case of brand misalignment.

With today’s children anticipated to have a shorter life expectancy than their parents (due to obesity and obesity-related conditions like diabetes), obesity is no longer child’s play. Why hasn’t the public condemned this partnership as it did Susan G. Komen’s campaign with KFC?

As I read over different press releases and articles that talked about the campaign, I jotted down its flaws.

Flaw #1
In addition to brand misalignment, this pairing lowers the ethical bar for partnerships between nonprofits and brands. What’s next, the Sierra Club promoting Clorox?

Flaw #2
Amidst vending machines that now dispense carrots and the First Lady’s efforts to curb child obesity, isn’t the connection between play and Kool-Aid a dangerous one to make–particularly for this generation?  The press release on KaBOOM!’s website doesn’t shirk the sugar, describing Kool-Aid as “the iconic soft drink that has stood for fun and refreshment…”  How do you reconcile We’re endorsing something sweet and sugary, but we care about your children’s health?

Flaw #3 The campaign announcement came directly from Kool-Aid’s senior brand manager.  I realize it’s a brand play for a new Kool-Aid product line, but there’s an ethical responsibility inherent in youth marketing that I wish both Kool-Aid and KaBOOM! had taken more seriously.

Red Flag #4 Soul-selling and cavities for a gift of just 44 playgrounds? Surely KaBOOM! can attract other partners to fund 44 playgrounds.  Not incidentally, KaBOOM! is one of my favorite nonprofits for the way it operates. Founder Darell Hammond runs it very much as a for-profit entity, which has contributed to its bonanza growth.

But then I thought past my initial finger wagging. What’s the possible flip side?

Flip Side #1 The average KaBOOM! playground costs $97,500.  At 44 playgrounds, that’s about a $4.3 million investment.

Flip Side #2 Kool-Aid’s playground pledge is tied to its launch of several new, lower-calorie, vitamin-enriched and sugar-free products. Still chemically, still fake, I know, but not everyone can pony up for Naked Juice or Honest Tea or reach for.  By offering products to lower-income families that are less detrimental, is Kool-Aid doing a public service?

This isn’t the first time the ethics of business, marketing and cause-related programs have been argued.  And the partnership still leaves an unpleasant taste in my mouth, but it’s worth reaching beyond any initial reaction formed by personal life experiences to understand the campaign’s potential positive impacts on a different set of life experiences.

I took the time to dig deeper into it because I was curious about KaBOOM!’s motivation and (as I see it) responsibility to uphold some ethical standard. But I wouldn’t have regularly.  Yet despite my calculations of playground costs and re-adjusted socio-economic bias, I still find the campaign harmful, falsely congratulatory and inauthentic. But it was a conclusion worth the extra time it took to form.