The Power Of Purpose: The Evolution Of Giving At TOMS (Part One)

One of the trailblazers in the business for good space has been TOMS which started over 13 years ago, pioneering the "one for one" model of giving, which has proved so successful that the company has now donated 93 million pairs of shoes since inception–not to mention also giving millions of dollars to causes as well (the company donates between 40-50% of net profits, the highest percentage of any U.S. company). But in recent years, TOMS has come under fire for various perceived problems with its model of giving. I sat down with Amy Smith, Chief Giving Officer at TOMS to set the record straight – and hear more about how the company is evolving its giving model.

Smith talked about how TOMS sees its role as to prove that business and social impact can happen at scale. “I feel incredibly grateful that my journey has brought me here. I'm so excited to see if a company like TOMS that gives at an unprecedented level can scale, and can continue to give at that kind of a level, because I think then we can hopefully be kind of the inspiration (or at least guinea pig) for other companies that are trying to do this. And there's lots of small, amazing companies out there doing this. But I don't know if any of us have cracked the nut on going to scale.”

The company expanded (some would say too quickly) beyond shoes into eyewear, coffee, water, backpacks, watch bands (each tackling a different issue like vision for eyewear, bullying for backpacks, and solar light for watch bands) in attempt to create a truly socially conscious lifestyle brand for Millennials. This led to a moment of internal self-reflection. "We really got to this point of, hold on: maybe having a new give and a new product every year, it might not make sense for us. And so we've since then been taking a pause to say, are we having as much impact as we possibly can have with this level of giving?"

Along the way, TOMS started to hear criticisms from the very people who were once their strongest supporters. Many of the criticisms came about because of a general skepticism about the company's intentions (especially after Bain Capital's 50% investment stake in the company), and also some specific misunderstandings of how the company actually operates. A couple of myths worth dispelling:

Myth #1: TOMS employees ride around on trucks indiscriminately dropping off shoes in underserved communities.

TOMS have a team of 450 people (including international development experts) who work closely with over 90 experienced nonprofits like Save the Children, Children International and Feed the Children . “We partner with the experts. They know what their communities need and they understand what the challenges are in those communities,” said Smith.

These partners use the shoes as part of carefully measured wider social impact programs: as incentives for mothers to get prenatal care or bring their kids to get vaccinated, for instance. “We never give shoes for shoes sake. We always give shoes to these partners to be integrated into their programming as incentives. So if TOMS ever was to go away, we wouldn't negatively impact that program in a significant way, which is really an international development best practice,” said Smith.

TOMS also provides these organizations with a "Last Mile Contribution" to help pay for storage, administration and other costs so the organization doesn’t have to pay for these overheads themselves.” It's a dollar amount on a per pair basis that provides an unrestricted grant to that organization to help them pay for storage facilities for the shoes, to help them pay labor to distribute the shoes, to help them with on-the-ground transportation,” said Smith.

Myth #2: TOMS literally donates the same canvas slip ons you buy to kids in need.

Not true. There are actually four different types of shoes for children, ranging from athletic shoes, to wet weather shoes, to school uniform shoes (a requirement in some countries), some of which have been co-designed with the kids themselves, to suit their specific needs.

Myth #3: TOMS doesn’t give in the United States.

TOMS has impacted people in 85 countries, including the United States where they have given in 37 states.

Myth #4: TOMS shoe donations hurt the local shoe economy.

TOMS has carried out extensive academic research and found no proof of impact in the markets they give. “We commissioned a study to test this. Is this actually true? Are we having a negative impact? Because that's the last thing we want to do. After many months of studies, (I have a 27 page report) the conclusion was that there was no significant set of data that said we were having a negative impact in these communities–because we weren't giving at a significant enough levels,” said Smith.

Myth #5: TOMS doesn’t manufacture shoes in the country of donations.

“One of the commitments that we made back in 2014 was to ensure that our manufacturing as often as possible was where we actually gave,” Said Smith. TOMS currently manufactures in China, India and Vietnam, all three countries where giving takes place, creating local jobs in the shoe industry.

MYTH#6: TOMS doesn’t care about the sustainability of its shoes.

TOMS has invested heavily in looking at everything from the materials used in the shoes to the packaging around them to meet ambitious internal sustainability goals. "We just launched our Earthwise line through our eyewear, which is made with 100% biodegradable frame material and recyclable glass lenses. We've been looking at all sorts of things and you'll see lots more coming out from us next spring,” said Smith.

Smith reflects on the journey so far.  “I think the most important thing to know is that we're a learning organization. We've not figured it all out. We're committed to progress, not perfection. And I think any of us that are focused on perfection are going to miss the opportunity to have positive impact. And so we've embraced that. That also means if you choose that model, you have to listen to your critics. You have to embrace what they're trying to tell you and test it out and make sure what they're saying is accurate, and then to make the necessary changes you need to make to constantly be improving.”

For part two of this interview exploring how TOMS is evolving their model of giving, please click here.