“We make money so that we can give it away.” Ratan Tata, Tata Group.
That’s my view, too.
“Doing good” is a big field now. So big, in fact, that analysts and academics have begun to break it down into sub-categories. In last month’s issue of Foreign Affairs, Klaus Schwab (chair of the World Economic Forum) lays out four: corporate philanthropy (i.e., writing cheques); corporate social responsibility (taking care of the people affected by your business); corporate social entrepreneurship (making products that save the world - e.g., Muhammad Yunus’ microcredit program); and global corporate citizenship (making long-term investments in social issues like education, health and the environment). This fourth category is Schwab’s own contribution to the taxonomy, and I think its doom is to be another one of those buzzwords that sounds nice, that everyone agrees with, but which nobody can define.
Right now, it’s a race to show your caring credentials. It’s hard to find a start-up that isn’t trumpeting its own efforts to ‘save the world’.
But I’m skeptical. It feels insincere.
In Moniker’s own industry of custom apparel, there’s one, Indochino, that tells a good story about going to Shanghai, and finding a community of stay-at-home women tailors, and building them into a production network with improved wages. But I have to wonder: did the founders go to Shanghai with the intent of improving the lives of stay-at-home seamstresses? Or did they go to Shanghai with the intent of finding cheap garments they could export back to North America at a profit? I can’t help but believe the latter.
If the former, it’s an exceedingly odd humanitarian cause to take up, for two reasons. First, their quality of life is already excellent vis a vis the developing world generally. Any Shanghai resident is already enjoying the top 10% of health care, education and infrastructure that China has to offer -- and the top 1% of the developing world as a whole. More help is always appreciated, of course, but no one with a serious agenda to fight poverty sets up shop in Shanghai. That’s like taking the stairs instead of an elevator and telling people you’re a mountain climber. (By the way, anyone who IS serious about it needs to read The End of Poverty, by eminent American economist Jeffrey Sachs. I had a sit-down with Sachs’ research director, John McArthur, at Columbia University last week. He’s never been to Shanghai (although he’d love to visit); there’s too much urgent work in Africa. (Another must-read I just finished is The Bottom Billion, by Paul Collier.)
But back to Shanghai for a moment, if your mission is to advance the lot of self-employed seamstresses in China, then rather than help maintain their self-employed labor condition, one should invest money in skills training for them and help them gain employment in a good garment house that adheres to international labor standards -- where in addition to ongoing skill development, they would enjoy more stable wages, cleaner work environments, improved access to medical care, child care, and education. (Of course, that would undermine his own business model, which depends on cheaper self-employed labor.)
(Side note: A good example of positive employment in the Chinese garment industry is Peerless Clothing. Peerless Clothing is the largest suit-maker in North America. They own the North American licenses for Calvin Klein， Ralph Lauren, and Chaps (among others): if you live and North America and own a CK suit, it’s made by Peerless. It’s not quite Moniker quality, but for ready-made off-the-peg stuff, it’s good.
I had a sit-down with the North American VP of Peerless Clothing, Eliot Lifson, earlier this week. I found out that they do 70% of their manufacturing overseas, mainly in China (in a city called Dalian). It turns out Peerless has some impressive labor policies -- most notably, to hire office staff from the pool of factory floor workers.)
I’ve got a different solution to the challenge of corporate caring: give away equity to the people who need it more.
My inspiration for this is Ratan Tata, chairman of India’s Tata Group. Tata is one of India’s biggest and most respected conglomerates. In addition to automobile and telecom divisions in India, they own some big brands in global markets: Tetley Tea, Jaguar, Land Rover.
But what’s special about Tata is that it’s 2/3rds owned by a charitable trust. In other words: when you buy a Jaguar, 2/3rds of the profit goes, ultimately, to charity.
To me this is a new, fifth, category of corporate do-gooding：giving equity. And I think it’s the ultimate form. It offers longer-term stability than writing a cheque. And it offers opportunities beyond cash, such as corporate governance experience. It also demands the greatest sacrifice on the part of the giver -- and thus, the greatest commitment to the cause.
I’m going to continue fleshing out this idea in the weeks and months to come, but already a clear intent is forming in my head: to gift a significant equity stake in Moniker (say, half of my personal holding) to a separate charitable trust, administered by a separate board and set up with a mandate to, for example, end extreme poverty in Africa.
That way, when I buy a Moniker suit, I’ll know half my profit is going to the people who need it most.
If I'm serious about corporate giving, isn't this the logical move?
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