I had a series of bad interactions with a Charity Enterprise that I love. It's caused me to reflect on my own work and the social enterprise industry at large. I don't want to identify this company, but they're one of the dozens that sells consumer products that have been made by at risk populations - people for whom a job means they can avoid jail, trafficking, putting their children in orphanages, etc.
To be fair, we all make mistakes. Every day. I'm not stellar at returning email and I can't remember names. So the lessons I'm sharing in this blog are ones that I'm trying to take to heart for Impact Foundation. Maybe they'll help you as well.
First, a bit of the back story to help explain my points. I'll try not to complain. Between my oldest son's December birthday and Christmas presents, I have a lot of shopping to do. I bought as much as I could on online for a decent price while still trying to buy locally and/or sustainably.
I was so excited to find out that the sweatshirt my son really wanted could be purchased from a Charity Enterprise that sources from production facilities that pay well and treat employees ethically. A three-way win. On December 15, I purchased the sweatshirt online and got an immediate confirmation email. So far so good.
But my son's birthday came and went. No sweatshirt. No update email. I called the company just after New Years and, although it was within the company's posted open hours, no one answered. I left a message. When I still hadn't received a call back, I tried again. A week later, still no call back. I sent an email. Still no response.
Why does this matter?
The long-term viability of investing for impact is at stake.
Who is going to invest in companies from which they will not buy? Despite the hype around the phrase, impact investing already faces an uphill road to mainstream adoption (see more from SSIR). Among other concerns, investors worry whether you can make real money while pursuing social aims. Philanthropists, for their part, wonder if they can achieve greater impact with traditional investing with market-rate returns to be given to a traditional charity. Even though the early data looks promising on these points, many remain dubious.
If we want to see real money flow into the sector, early practitioners in the space need to be be better than expected. We need to run excellent businesses with real impact and provide the data to back up our claims. Unanswered emails are not the right start. We have to be at least as good or better than mainstream businesses.
Which leads me to my next point: beware the trap of confusing your mission for your customer.
A Charity Enterprise/Impact Company/social enterprise must concern itself with at least two key constituents -- those whose lives it seeks to impact through job creation or other social mission and its customers whose purchases fund the mission. Arguably, a business has many other constituents to worry about from vendors to employees, but let's keep it simple for today. Ignoring either the impact group or the consumer group can lead to failure.
The tension is especially strong for a Charity Enterprise, a business run by or alongside a nonprofit. Sometimes the passion of the mission can cloud leaders' thinking about the business of serving customers. If so, leadership needs to replace itself with people who have track records of success in whatever industry.
Passion cannot excuse bad business practices forever.
P.S. - There's a new business opportunity here. I'd love to see a company that becomes the distributor for the social enterprises that are trying on their own to sell products to consumers. Instead of Charity Enterprises and Impact Companies doing house parties and relying on limited traffic to their individual websites, someone could become the central place to bring great ethical products to consumers, like Amazon or Etsy. The products themselves still need to be beautiful, competitively priced, and comparable quality, but at least a middle man would relieve some of the sales and marketing burden.