Almost a decade after Toms Shoes first launched, its “buy-one, give-one” business model is almost ubiquitous. It’s now possible to buy everything from toothbrushes to houses while sending the same goods to poor people around the world. It’s equally common for brands to donate a percentage of profits to a cause. But a new startup seems to have a new variation on the model: 100% of profits will go to fund meals for hungry children.
In other words, it’s basically a nonprofit, but it doesn’t take any donations. The organization is fully self-funding.
“We knew right from the beginning we wanted to take an all or nothing approach,” says Byron Wiebe, one of a group of activists who co-founded the Vancouver-based startup, Imprint Hat Company, which is currently crowdfunding a new line of hats on Indiegogo. “We want to make a statement that hopefully catches on, and we can grow to more than just hats.”
Half of the company’s profits will go to an organization called One Day’s Wages to help feed children internationally, while the other half will be distributed to food banks and shelters in the U.S. It’s an interesting model–but the challenge is whether it can be financially viable.
“Forecasting and budgeting will be our biggest challenge,” says Wiebe. “We will have more expenses to manage than a regular nonprofit and no saved cash flow like other businesses, outside of what we have budgeted. On the flip side, if we fall drastically short of our targets, we may not be able to cover our expenses.”
The general idea of a self-funded nonprofit could work, says Christopher Marquis, co-author of an article on buy-one-give-one businesses and an associate professor at Harvard Business School. “I like how they are funding their project through sales, which is more sustainable than just looking for donations,” he says.
Still, it isn’t clear whether this particular startup will make it. “Obviously their profit will be driven by their designs, and the appeal of their product, and I am not sure how broad the market for these hats will be,” Marquis says. As of this writing, the Indiegogo campaign had only raised a fraction of its goal.
Arguably, some of the same criticisms of buy-one-give-one companies also apply; giving away meals doesn’t solve the underlying economic problems that lead to hunger in the first place.
Still, it’s an approach that could help avoid the endless cycle of nonprofit fundraising. Paired with the right product and right cause, it’s easy to imagine consumers wanting to support something like this.
“We built our model on the belief that most people in the world truly want to help others in need,” says Wiebe. “It’s a natural instinct we are all born with. We just want to provide everyone with the path of least resistance for following through with this. By providing people with comparable or higher quality products that they are already purchasing, and basically doing the donating for them, we believe we are executing on that.”