Žižek argues that cultural capitalism (i.e., cause marketing, point-of-sale donations, fair trade and buy-one-give-one) is innocuous and naive. That this type of charitable giving leads both companies and consumers to undeservedly feel they’ve done something useful. That if we all truly cared, we would focus on system changes to eradicate poverty and leave our African-made recycled shopping bags at home.

It’s easy to take this as an argument against sustainable business–I did for a solid ninety seconds, until I thought about what it means to be a truly socially driven business. It’s not about charity. It’s about creating an environment, mechanisms and behavioral influencers that lead to sustainable change. This takes all forms: employee enfranchisement, ethical labor practices, community investment, waste reduction, environmentally sound supply chains, social investments, etc.

Žižek calls out Starbucks and TOMS Shoes for selling a diluted version of change and we, the consumer, for buying it. Surely we all agree that pink ribbons and reusable coffee mugs alone won’t turn Earth into utopia, but they can still alter behavior, priorities and resource allocation. To view this class of action as a roadblock or retardant to deeper change is lazy and short-sighted. While change sometimes looks sudden and instant (a flood wiping out a city) it’s brought on by incremental actions (each raindrop compounded with all others).

We need all manner of change–system changing individuals like Muhammad Yunus and carpooling recyclers who raise bake sale-organizing children (who grow into system-changing individuals).

Change doesn’t hinge on all or nothing. And Žižek knows this. While his critique of cultural capitalism is sincere and pointed, it’s also inspiring and serves to refocus us away from fretting about Earth Day activities to acting on our greater social mission.

HT @JohnCTownsend.

Leif Nelson, an associate professor of marketing at the Haas School of Business at UC Berkeley, ran an experiment to test this hypothesis at a large amusement park. He tested 28,224 people against four conditions to gauge how much they would pay for an action picture of themselves on a rollercoaster.

The four conditions were: Would you pay the asking price of $12.95? Would you pay $12.95 if half went to a nonprofit? What would you pay if you could name your price? and What would you pay if you could name your price and half of it went to a nonprofit?

In Dollars and Cents
Nelson found that only half of 1% of rollercoaster riders who were offered the photo for $12.95 bought the picture, generating a profit of 6 cents per visitor. When half of the $12.95 was promised to charity, only slightly more riders bought it, generating about 7 cents per visitor. The philanthropic element did increase demand, but just marginally.

When riders were able to name their price, more people bought the picture (8.4%) but paid significantly less (92 cents on average, less than the production cost, which caused a loss).

When riders choose their price, knowing that a nonprofit would benefit, 4.5% chose to buy the picture. This figure is lower than the pay-what-you-want non-charity option, but higher than either fixed-price condition. But the thrill is in what riders forked up: an average of $5.33, or nearly 20 cents in profit per visitor (compared to 6 cents in profit at the fixed coast), as well as more money for the nonprofit.

In short, people will pay more when they can choose their price and know that a nonprofit benefits from their decision. This pricing and partnership model is the most lucrative for a company and also produces the highest funds for a nonprofit.

According to Leif, choice is key to the success of the model. Providing customers more choice–like selecting the nonprofit beneficiary–could earn even more dollars for the company and the nonprofit.

What Does This Mean For You?

• It’s worth trying! Although we’re seeing more companies adopt pay-what-you-want models, either in their entirety (One World Everybody Eats, Panera Bread or SAME) or in part (Radiohead’s “In Rainbows” album or Mixergy’s subscription option), the model is still fringe and viewed a bit as black magic.
  .
• Be clear about what you expect. Is it greater net profits? More consumers? A stronger mechanism for social impact? More effective nonprofit partnership? Per Leif’s research you won’t attract more consumers, at least not initially, but you will earn more profits and have a deeper social impact.
  .
• This study hinged on 50% of sales channeled to a nonprofit. I don’t know how it would work with a lower (or higher) donation amount, so be aware of varying results if you try different percentages.
  .
• Beware the paralysis of choice. Leif suggests that giving customers more choice might generate greater results. Again, it’s worth testing by offering a limited number of choices to the consumer. As in all marketing (even more so when it’s cause-related), keep it simple. Too many choices, contingencies and selling points is paralyzing to the consumer.

If you’ve tried something like this or know of other businesses who have (even companies that use a non-charity pay-what-you-want model), please let me know in the comments, on Twitter (@OKL) or through email, olivia[at]causecapitalism.com.

*”Shared Social Responsibility: A Field Experiment in Pay-What-You-Want Pricing and Charitable Giving” published by Leif and his colleagues appeared in the July 2010 issue of Science magazine.

1. 15 Social Venture Capital Firms That You Should Know About

2. 10 More Social Venture Capital Firms That You Told Me About

3. Will B Corp’s New Campaign Be The Death Knell For Cause-Washing?

4. The Fundamentals of Building an Employee Volunteer Program [interview with Chris Jarvis]

5. Trouble Brewing For Green Mountain Coffee?

6. Microsoft’s Organic Approach To Its $90M Employee Philanthropy Program [interview with Akhtar Badshah]

7. What Is Cause Marketing and Is It Right For You? [interview with Joe Waters]

8. 13 Benefits You Can Count on if You’re a Company with a Social Mission

9. The Woman Who Hires Do-Gooders [interview with Ellen Weinbreb]

10. The Best Kept Secret to Social Venture Funding?

11. Why Your Company Should Have a Social Mission

12. The Empty Suit: 5 Cause Marketing Mistakes to Avoid

13. 12 Ways To Convince Your Boss To Add Social Responsibility

14. Can You Crowdsource Your Sustainability?

15. This Is What Customers Want To Know About Your Cause Marketing Partnerships

Observations

• I do a mix of expert interviews, tactical/resource articles and thought pieces, which is fairly well represented in this list. Takeaway: Interviews take a heck of a lot of time so I’m glad to see they’re valuable.
  .
• This list represents three prime areas: funding, cause marketing and social mission. Takeaway: I’m pleased with the topical base, but am setting a goal to publish more on measurement and evaluation, hybrid models, consumer engagement and emerging markets.
  .
• I also pulled the 15 most tweeted posts (many of which aren’t reflected here). Takeaway: My content is seen by two distinct audiences–a social media audience and an information-hungry audience. The first is inclined to tweet interesting titles or favorite bloggers casually and rapidly. The second audience is hunting for specific information on how to engage employees or establish strong nonprofit partnerships, for example. This audience of entrepreneurs and employees connects with Cause Capitalism through search, reads the content and leaves (to implement the tactics and measure their impact, fingers crossed).

Three words–easy to understand, easy to share.

This list partially represents the 155 blogs I’ve written this year, but it’s nowhere near complete. Add your triplets in the comments and I’ll be sure to tweet them out.

Stand for something [Tweet]

Make sustainability personal  [Tweet]

Own your mission [Tweet]

Don’t please everyone [Tweet]

Reject your ego [Tweet]

Do not pretend [Tweet]

Inauthenticity will bankrupt [Tweet]

Practice sustainability now [Tweet]

Leverage your strengths [Tweet]

Set big goals… [Tweet]

…But start small [Tweet]

Network before need  [Tweet]

Tap your peers [Tweet]

Fire-up your employees [Tweet]

Recruit internal stakeholders [Tweet]

Launch before perfection [Tweet]

Be obsessively transparent [Tweet]

Form creative partnerships [Tweet]

Build long-term partnerships [Tweet]

Observe what motivates [Tweet]

Make consumers altruistic  [Tweet]

Give consumers details [Tweet]

Recognize all stakeholders  [Tweet]

Beware brand misalignment [Tweet]

Try, fail, try [Tweet]

Become a B-Corp [Tweet]

Internalize your sustainability [Tweet]

Voice your passion [Tweet]

Measure it all [Tweet]

Focus on outcomes [Tweet]

Keep deliverables doable [Tweet]

Evaluate mid-program [Tweet]

Adjust to improve [Tweet]

Report impact constantly  [Tweet]

Support cause long-term [Tweet]

Let mission guide [Tweet]

Don’t mark-up prices [Tweet]

Funding isn’t necessary [Tweet]

Understand funding types [Tweet]

Waste less waste [Tweet]

Safeguard your mission [Tweet]

Prepare for succession [Tweet]

Hat tip to Dharmesh Shah for the addictive exercise of condensing advice into three words. Don’t forget to add your own in the comments–what practice or mindset have you put to use that might help others?

“Let’s take a look at this phrase corporate social responsibility. Let’s take away social. Now let’s take away corporate. What we’re left with responsibility, which is defined as being accountable for something and the moral obligation to behave correctly. That sounds really heavy and we don’t want that. Why don’t we call it an opportunity.  And what’s an opportunity?  To do something. Really, in essence, we’re talking about corporate social opportunity.”

As an advocate for socially driven business, it’s my responsibility to say, “enough.”

We are on the fringes of some amazing territory, where businesses can be used to meet significant social needs and can be successful doing so. But the territory is still undrawn and I fear that some of us in the party for socially driven businesses are digging sand traps, perhaps unwittingly.

Just as the momentum is gaining–consumers and communities are more expectant of companies to be proactive ethicists, new demographics are being served, and the perceived limits of business are bursting open with innovation and collaboration–there are some who are erecting smoke and mirror sideshows. And if there’s one word that could derail this movement, it’s inauthenticity.

Poorly executed employee volunteer programs and cause marketing campaigns are excusable for first-timers. These companies’ determination to make a social impact will carry them through novice flubs, but what about BSR–that’s Business for Social Responsibility–which invited Monsanto CEO Hugh Grant to keynote the recent conference and shepherded him around like the Maharaja? Nearly 20 years old, BSR is too experienced to make that type of mistake. Which means it’s not a mistake, it’s a hairy tangle of posturing, false marketing and deception.

What are BSR and the Foundation for Social Change, professed support systems for social business, doing? Where is their expression and action for real social impact? I won’t even hold them accountable for large-scale impact (yet), but I will demand honesty of intention in the name of world-changing.

While my bleeding heart is certainly beating strongly at the moment, I’m not letting it trump pragmatism. The stakes for social impact and economic growth are too high to let falsehoods of do-gooding perpetuate. I absolutely believe that through collaborating among sectors, meeting new market needs and working for our grandchildren’s world, we’ll see ample businesses that succeed by doing good and more individuals who benefit from business.

If you’re not on board, that’s okay, but please don’t stand in the way promoting false sustainability. There’s too much at stake–and too much opportunity–to turn this into a distorted fun house.

Image credit: Alicia Hayes