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Changing the Nature of Corporate Giving to Address Poverty

Words by 3p Contributor
Leadership & Transparency

By Derek Young

Poverty is a crushing and terrible condition. It is a root cause of so many symptoms that stagnate progress and hold back opportunity. It is a disease that continues to exacerbate inequality, food insecurity, failures in our educational system, crime, drug addiction and hopelessness. It is the ultimate barrier to advancement, and it must be fought with every tool at our disposal.

The U.S. poverty rate is estimated at 15.1 percent. That means 15.1 percent of our population is living without enough money to meet basic needs and services.

Poverty is a serious issue across America, but it's especially serious in my home city of Dallas. Nearly a quarter of the city's 1.18 million residents live in poverty, and that number is rising rapidly. Between 2000 and 2012, the poor were the fastest growing segment of the population in Dallas.

Among the main causes for poverty are unemployment and underemployment. Not having a job or not having a job that pays a fair wage are at the very core of our battle against poverty. Nationally, the unemployment or jobless rate is around 7 percent, while underemployment impacts 16 percent of our citizens. Here in Dallas, new information shows that a whopping 39 percent of Dallas lives in “asset poverty,” which means that they do not have the financial means to support a household for three months at the federal poverty level. That is 12 points higher than the still-too-high 27 percent of people living in asset poverty nationwide.

It is absolutely clear that not only do we need to create jobs, but those jobs must provide a fair, living wage if we are reduce the number of people dealing with asset poverty and underemployment.

So, what do we do to help? Can creating jobs provide the dignity and financial stability needed to counter the crushing effects of poverty? Furthermore, who should be responsible for this? Government? The nonprofit community? Is it always to be someone else’s problem, or should this be an issue that the for-profit community embraces and seeks to solve? Is there a way for business to help fight poverty?

The traditional corporate giving method is well documented: A company identifies a cause or agrees to partner with a nonprofit, and then dedicates an amount of money to provide. Today, the most philanthropic-minded companies give between 5 and 10 percent of their profit away. Most companies tend to give less. These philanthropic-minded companies are doing great things, but their business model remains one in which the primary goal is to succeed financially. Only when they are able to do that do they turn their attention to social need.

The introduction of social entrepreneurism has begun to eat away at this model. Companies like TOMS Shoes and Warby Parker have built their business model around addressing a specific cause and have found that doing so has only helped their success not impede it. The question is: Can we go further? Can we develop a model in which a for-profit enterprise can be fully committed to solving a social problem first and making money second?

One company thinks the answer to that question is yes.

9HappyPeople is the result of a group of people who believe that there is a way to harness positivity, produce a great product and provide a solution to poverty -- all by selling T-shirts. It is a reinvention, in a way, of the corporate model -- with a focus on leveraging city-specific subject matter expertise to deliver the majority of profits to organizations and enterprises that are capable of addressing underemployment and asset poverty in Dallas by creating jobs.

The Dallas-based startup committed to cap corporate profit at 9 percent and invest the rest to create jobs. The company invests that money to help create new businesses that will provide a living wage; to support of nonprofits addressing joblessness and poverty; and to help deliver job training and job placement services. The company's goal is: for every T-shirt sold, it creates a job for someone who needs one.

9HappyPeople plans to harness the expertise of leaders in the cities in which it works. By building volunteer councils to help with identifying where we can donate money and to whom we will actually donate we can build and effective process of ensuring that we are getting money into the hands of people who are prepared to make the best use of those funds and are most capable of creating job opportunities for those in need.

We believe in The Power of 9, and how our collective voices can improve the state of the world. If each of us touches the life of just nine people and each of them pays it forward, within 9 links we would cover the entire population of the United States. In essence, a t-shirt can help fight poverty by creating jobs. That is the Power of 9!

Image credit: 9HappyPeople via Facebook

Derek Young is the President of Derek Young & Associates, a sustainability and Social Purpose consultancy based in Dallas, TX. He is an advisor to 9HappyPeople.

3p Contributor

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