The company is allowing itself more flexibility with how and where it gives back as it engages a new generation of more informed consumers.
When Blake Mycoskie launched Toms shoes out of his Venice Beach apartment in 2006, the company’s one-for-one giving model was both revolutionary and extremely easy for consumers to understand: Buy a pair of shoes and a child in a developing country gets a pair of shoes. The simplicity of the concept, boosted by a legion of celebrity fans at the time, led to rapid success with Toms becoming one of the first mainstream purpose-driven fashion companies ever. Naturally, that one-for-one idea took off, with other companies like Warby Parker launching with similar models wherein consumerism could result directly in charitable giving of some kind.
Of course, companies evolve. On Wednesday, Toms is announcing that it’s officially forgoing the one-for-one giving model it pioneered in favor of something more flexible. While Toms will continue to distribute shoes — as well as other items like eyeglasses and water as it’s begun doing as its business has diversified and expanded — to those in need, its new giving model is defined thusly: For every $3 the company makes, it gives $1 away. Or in other words, one third of net profits will go towards the company’s giving fund
Of course, Toms’s giving process has been more complex than simply “one for one” for some time now. The company just hadn’t fully communicated that to consumers. It’s doing so with the release of its first-ever detailed impact report that outlines the change the company has created thus far, and its goals moving forward. Some highlights: Toms has given nearly 100 million pairs of shoes to date as well as 780,000 sight restorations and 722,000 weeks of safe water. It’s committed $6.5 million to various impact grants with its 205 giving partners. Additional areas of giving over the past three years have included safe birth services and kits, bullying prevention and response, and solar light. In 2018, Toms made a $5 million commitment to organizations working to end gun violence. The same year, it also became a certified B Corp.
According to Toms’s Chief Giving Officer Amy Smith, the shift away from one for one is about ensuring the company can have the biggest impact possible, and show its customers that. “The consumer is more savvy than ever; they’re more engaged than ever; they’re voting with their wallets,” she tells me ahead of the announcement. “The combination of Toms wanting to do as much as we could in a way that was aligned with the passions of our consumers, we really started to wrestle with this idea of: Maybe it’s time to evolve a little bit and maybe it’s time to do more than just our one-for-one giving.”
Smith employs a giving team whose members help identify how Toms can give back most effectively and through which organizations. “[They] are everything from international development experts to public health MBAs that are really focused on and understand what impactful giving looks like and what community development looks like, so that group has put together a really robust vetting process for our partners,” she explains. “We have account managers on our team so we’re in regular communication with our giving partners around: What issues are they facing, what are they focused on, how can we be most helpful.”
Toms also used consumer insights to ensure that the issues it focuses on align with the ones its customers are passionate about. Earlier this year, it launched “Pick your style, pick your stand,” which allowed shoppers to select a specific issue toward which a percentage of their purchase would go. “All that information informed the three areas that we’ll be focused on giving to going forward and that is: physical safety, mental health and equal access to opportunity,” says Smith.
Given how synonymous Toms had become with one for one, Smith says it was “scary” to have the first conversations about changing it, but she feels that consumers are now savvy enough to understand a more complex giving model.
“With them being much more engaged with the issues, we’re trusting that they’re ok with something that’s a little bit more complicated, and the issues we’re focused on are really meaningful to them, so they’re willing to dig that one click deeper to really understand how we’re going about it,” she says.
One-for-one is also not as novel and newsworthy as it was at the peak of Toms’s popularity and reports suggest the company’s growth has stalled somewhat in recent years. Annual revenue, which the company doesn’t disclose publicly, was estimated at $336 million in 2018. “We’re not kicking ass, but we’re not on the verge of bankruptcy,” Mycoskie told Footwear News earlier this year.
Marrying thoughtful, impactful giving with profitability is no easy feat. (“We give as much as we can while maintaining a sustainable for-profit business,” says Smith. “We don’t let that number dip below 30%.”) Purpose-driven companies are now more common than ever and, thus, more scrutinized than ever by consumers and journalists. The one-for-one model, for instance, has been criticized for being too simplistic, failing to address more pressing issues in the communities or the root causes of their poverty, reducing demand for locally-made goods and even perpetuating imperialism. A more thoughtful, holistic approach like the one Toms seems to be going for might be more effective, especially when executed by a company with as much experience with and expertise in giving as Toms.
It’s hard not to wonder if the company’s decision could spell the end of pure one-for-one models as we know them. Smith thinks we’ll continue to see companies go down the one for one path, noting that, “What will continue to grow and continue to be more and more compelling is purpose-driven companies in general.”