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Creative Capitalism, (RED) And A Time To Try, And Believe In, A New Way.
My story is exactly like Bono's.
Well, not exactly, but I think you'll see my point. The ten years I spent at a traditional ad agency were ten years of frustration when it came time to helping people. You'd see all of these great groups who needed advertising and marketing help and then you had all of these great advertising and marketing people who wanted to help, but money got in the way ultimately.
The non-profits didn't have it and, tragically, the writers, directors and producers really kind of needed it to live. It was a Catch 22 that wore me down. I solved it by, after my stint on the Kerry Campaign and after I started writing here the day the Huffington Post opened its doors, by focusing my new agency on new media.
Through new media, with its lower or non-existent production costs, free media outlets and power of the masses, I can do something for a non-profit or cause group at a price they can afford and hire people who can actually earn a living salary to help me do it.
Bono, I have heard, had a moment after LIVE AID a few decades ago when he discovered that all the money raised that day was the equivalent to one day's interest on the loans of the Western World to Africa.
What we shared was the realization that in a capitalistic society, it is very difficult to fight capitalism. Capitalism is not really just the economic system we work under, it is at its core human nature -- another quite difficult thing to fight.
How often has an open piece of land near you gone up for sale and you hear the neighbors say, 'oh they should just give it to the local conservation group.' Really? Why don't you just give all your savings? Or the money you saved for your children's college?
The only practical way to save land is to buy it and be thankful that, sometimes, people will give you some more.
In this week's TIME magazine, Bill Gates chimes in on what he calls Creative Capitalism and while I can't do the entire article justice, read it here, there are a few important things he mentions.
The first is the founding of (RED) which he attributes to a night in a bar with Bono -- I have no proof of the contrary so this is the story of the start of (RED)'s creation.
To take a real-world example, a few years ago I was sitting in a bar with Bono, and frankly, I thought he was a little nuts. It was late, we'd had a few drinks, and Bono was all fired up over a scheme to get companies to help tackle global poverty and disease. He kept dialing the private numbers of top executives and thrusting his cell phone at me to hear their sleepy yet enthusiastic replies. As crazy as it seemed that night, Bono's persistence soon gave birth to the (RED) campaign. Today companies like Gap, Hallmark and Dell sell (RED)-branded products and donate a portion of their profits to fight AIDS. (Microsoft recently signed up too.) It's a great thing: the companies make a difference while adding to their bottom line, consumers get to show their support for a good cause, and -- most important -- lives are saved. In the past year and a half, (RED) has generated $100 million for the Global Fund to Fight AIDS, Tuberculosis and Malaria, helping put nearly 80,000 people in poor countries on lifesaving drugs and helping more than 1.6 million get tested for HIV. That's creative capitalism at work.
In the interest of full disclosure, my company, Common Sense NMS, works with (RED) and we are quite proud to. I also work with the Purple Dog Tag -- created by Ron Lawner and Suzy Marden from Boston. I have met with Diamond Empowerment Fund and hope to help them as well.
All three groups are driven by a greater desire to help, (RED) to AIDS in Africa, Purple Dog Tag to returning wounded soldiers and Diamond Empowerment Fund to helping children in diamond-producing countries.
All three have a commercial angle to them, (RED) has partners who sell (RED) products, Purple Dog Tag sells Purple Dog Tags and net proceeds go to groups like Veterans For America. And Diamond Empowerment Fund receives money from the sales of a beautiful bracelet that Simmons Jewelry makes (Russell Simmons is the creator of DEF)
But two of the three groups, (RED) and Purple Dog Tag have struggled from a perception issue, they are not charities like DEF is and there is this underlying uncertainty about their methods. This uncertainiy is borne I believe of a one part pettiness, one part envy and two parts ignorance.
In the end, it is one hundred percent tragic and comic.
In the two years of its existence, Bono and (RED) co-founder Bobby Shriver have raised over $110,000,000 for The Global Fund, 100% of which has gone to Africa. 100%.
Over $100,000,000 donated because I bought a (RED) ipod for the same price as a blue ipod but because I bought a (RED) ipod, Apple gave money to The Global Fund.
This is a success but because it's a new model, there has been chatter and negativity surrounding the brand that is unwarranted and wrong.
Let me tell you three things.
One, the amount of money that some of the 'charities' you might hold up as examples pay their consultants and ceo's and direct mail houses money that is absolutely outrageous. And many of those charities fail to help those that they say they are helping in any way shape or form.
Wouldn't you rather support an organization that is successful rather than a "charity" that doesn't come close to delivering for the people it's supposed to help?
Second, why wouldn't you applaud someone like Ron Lawner, who after an incredibly successful business career, looked at the lack of care our returning wounded were receiving and said, "I have to do something." Ron's not making money from Purple Dog Tag, he's paying real people real money to make it a real success, it's as simple as that.
Finally, let's say you had a great idea. You were going to raise money by getting companies to pay you a fee to sell products with your name on it. On the basis of those fees, you would build a company. And every product that was sold with your name on it, a percentage went to your favorite charity. I could have James Boyce golf balls from Titleist where they pay me a fee to help make people aware of them but $1 every sleeve goes to help The Open Door, the food pantry in Gloucester, Mass I support.
And here's the best part. The sleeve of Titleists costs the same as every other sleeve so for the golfer, who cares? The regular golf balls and the James Boyce golf balls, same price.
That, essentially, is the idea Bono had in that bar that night. That's the idea behind (RED) that Bobby Shriver helped bring to life.
That's what Bill Gates calls Creative Capitalism. He sees the Capitalism part to be as important as a the Creative Part.
Naturally, if companies are going to get more involved, they need to earn some kind of return. This is the heart of creative capitalism. It's not just about doing more corporate philanthropy or asking companies to be more virtuous. It's about giving them a real incentive to apply their expertise in new ways, making it possible to earn a return while serving the people who have been left out.
The next time you hear someone talk about an idea like (RED) or Purple Dog Tag remember:
We live in a capitalistic society and the bottom line matters.
How much have they given?
If you have an idea that gives away $100,000,000 in 24 months, I don't care if you're a charity, a non-profit, an NGO or a damm limited liability dual action reverse partnership.
I'm going to say two things:
Great idea.
And thank you.
Follow James Boyce on Twitter: www.twitter.com/jamesboyce
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I have no beef with the RED campaign. I don't care if rich people/ business owners give back because they have an agenda, want to have attention heaped upon them, or will gain financially in the process. I don't care what the motivation behind financial contributions to needy causes, I care that those causes receive help.
But I don't really see why the author is bashing charitable institutions in general, this seems to be a very irresponsible thing to do. He would have done better to just suggest that you fully investigate a charity before you donate to it, as there ARE many charities out there which are ineffective and a waste of your money. There are several organizations like http://www.charitynavigator.com that you can utilize to find out which charities are the most effective, and how much of your donation will actually be given to the people in need.
Non profits aren't by default ineffective. I work for the Dana Farber Cancer Institute; which is a non profit organization and consistantly ranked as one of the best cancer treatment centers in the world. We've developed major innovations in cancer treatment. Dana Farber has been extremely successful fundraising through The Jimmy Fund, thanks in part to local sports teams the Red Sox and The Patriots doing wonderful work in raising money and awareness. Its employees are well paid with great benefits, and it is consistantly ranked as the best hospital to work for in Boston.
How about Creative Capitolistic Socialism, solutions that not only make sure our lives are secure and sustainable but that give us opportunity to start new endevours of business if we wish. Just raise the floor for everyone, level the field, but keep the opportunity for growth and challenge and commerce in place. Hmm? I think this is where we are headed, not because of profits but because of Compassion. Being wired to the whole world makes it harder to stay in denial about how "the other half lives."
That's all very good and nice, but why knock smaller "charities"? Having worked in non-profit organizations most of my life, I can tell you there is overhead-- there are administrative costs to operating an organization. The smaller the organization-- the higher a percentage of what they raise has to go into these costs. This doesn't mean they are less effective however. Often the smaller organizations are doing LOCAL work and involving people in your community in the work they do. They are run by passionate people who are willing to work for less than average wages in order to serve the public. Unlike mammoth organizations -- doing work overseas, you can visit the organization yourself and get to know what it is doing with your money. There are other ways to give, besides buying things for yourself.
I've red that RED is in the hole. that by March of 07 it had SPENT 100 Million on Marketing and raised 18 million. By February of 08 they claimed to have raised over 100 million...but how much had they added to that 100 million marketing bill?
I think we are better off giving to charities that do the work instead of buying product that somehow marginally give something to a charity on the side to get our business.
Perhaps that's the core issue here. People who believe in the nanny state are looking for the large organization to solve the worlds charity problems when the real answer is to let the little people give and deal with the charity issues directly. Maybe that's why red states give more to charity than blue states. Blue states are looking for government or big business to solve the worlds problems.
The economics of the family is "communism". Jesus himself was a socialist (if you paid attention in sunday school) who preached that you are your brothers' keeper. Yet in capitalism, if you are a sick person with no money...you have "no" demand for medical care. It really gets to be simple, the question is one of efficiency. How do you take care of aids in Africa? And you are right about one thing, "money" by itself is not the solution. Little George (our war criminal president) has given $billions of red state money for aids in Africa. Yet he is opposed to condoms. Like I say, efficiency has to sneak into the argument at some place. Advertisers, like the author, are interested in money only.
People who believe in the nanny state are looking for the large organization to solve the worlds charity problems when the real answer is to let the little people give and deal with the charity issues directly. Maybe that's why red states give more to charity than blue states. Blue states are looking for government or big business to solve the worlds problems.
Oh please private charities have a pittance compared to what goverments have to deal with.
I have yet to see a 'private' charity FULLY STABILY FUND FOREVER any big necessary goverment function- hasn't happened yet.
actually you are incorrect
RED does not spend any money on advertising and marketing though their partners do, this is often a point of confusion,
the total given is 110 million plus now so they're in the black not the red :)
This is a great article. Refreshing to read about something that is working. I purchased a (RED) iPod shuffle for my Mom for Mother's Day, and chose it simply because of the charitable connection. My Mom loved it, and it made me feel great.
Innovation in this country has been absolutely stifled by the obnoxious priority to first figure out how to maximize profit. Capitalism in and of itself is not all bad. It has been hijacked by opportunism and greed, and THAT is what is bad about it.
The US economy and the greater good of our society depends on an equilibrium between capitalism and socialism. It's what made us great. It is that lack of balance that is now tearing us apart. The kind of creative capitalism discussed here is the perfect illustration of the innovative US of which I am proud to be a citizen. It needs to be celebrated and encouraged.
Hm... I'm not sure where you get the idea that "the greater good of our society depends on an equilibrium between capitalism and socialism." I don't get the sense that the creative capitalism described here is in any way socialist. It's benevolent. It's humanitarian. But that doesn't make it socialist.
I think there's an attitude that has taken hold in the past few years that I can best describe with this little story:
Someone showed me a very popular YouTube video that was a lego-animation of the entire first level of Super Mario Bros. It was meticulously crafted, had the music, the invincibility, the fireworks at the end, etc.
The top comment was "Mushroom should be smaller."
This attitude has been the centerpiece of the backlash against creative capitalism. "(RED) raised 100+ million dollars for AIDS in Africa, but consumerism is like... bad... so screw them." It's equal parts nitpicking and the punks hating to see the captain of the football team doing volunteer work. I commend people who have understood that it's the money and impact that matter, and put that above all else when it comes to much needed humanitarian aid. Good piece.
I've always been skeptical of capitalism, but if we're to tackle the desperate social challenges we face, then we need an open-minded approach that's willing to consider all possible solutions, regardless of our preconceived notions.
Whatever works is what matters now. Nice article.
Eric
http://www.changeany1thing.com
What's been lost is that "other side " of capitalism, which is the lack of accountability or responsibility when their "business plan" doesn't work out they way they planned.
Shows fail on Broadway all the time.
Now, THAT'S raw capitalism.
Fallacy to get out there and DENY..deny, deny about NON-PROFIT STATUS.
Going NON-PROFIT does NOT mean the employees cannot earn a fair wage or have security in exchange for their professional work ethic and actions.
NON-PROFIT means the "earnings" are put RIGHT BACK INTO THE NON-PROFIT structure. NOT paid out to a public (manipulative and subjective markets).
This is extremely important for NON-PROFITS that maintain our literal physical and virtual infrastructures in many ways (the arts/affordable medical care access/public libraries and communication access points)
Capitalism is as Capitalism does.
It borrows and sells. It has no conscience or a soul.
It's only there for the power and wealth associated with that borrowing and selling.
Where's your hand out in that equation?
Are you giving those FOR-PROFITS the money it needs to keep you from putting that money where it will effect your actual, virtual, physical community that supports your family?
I gotta agree with BADEN.
Any system that allows random, miscellaneous people (i.e. your corporate boss) the power to fire you AT WILL, without any reason, thus placing you in tremendous hardship and even poverty, is a system that will never have my respect or loyalty.
Communism didn't fail because of its philosophy, it failed because people are inherently selfish and corrupt, something Bill Gates alludes to in his article. It also failed because a gigantic, corrupt, capitalistic neighbor (guess who) kept making life extremely difficult by jacking up the arms race.
Zimbardo's Stanford Prison Experiment showed the ultimate flaw with corporate capitalism : people simply cannot be trusted to control other people. I've witnessed this phenomenon personally, in a dozen companies.
The other problem, is when people like Bono and Gates get together in a "bar" to solve the world's problems. Gates speaks proudly of $3 billion contributions, when he is worth 50 billion personally. I realize I'm oversimplifying his position, but this is what the common man sees. This is why truth-speaking artists like 50-cent become rich when they say things like "Get Rich Or Die Trying."
The rich people will not save the planet -- there are too few of them to have any chance, despite their "trickle down" billions. Salvation must come from the common man, from the grassroots, from the salt of the Earth.
But the common man is too busy working his ass off, trying to survive.
I agree with both you and BADEN
The consequences of trying to apply trickle-down development in Russia were a shot in the arm for organised crime. Without the checks and balances of a democratic society and free press it re-introduced serfdom as quickly as communism overthrew it.
Our primary interest in these countries is to secure part of the the hydrocarbon yield. BP and Vanco Energy being recent examples of greed which backfired.
Creative Capitalism doesn't have to be about wealthy plutocrats and trickle-down. My private organisition works in these countries, beginning around 1999 with a strategy paper which proposed trying it another way, through targeted microeconomic development to leverage local enterprise.
10,000 new small businesses and a microfinance bank were the result for one city and recently I learned about the plans of one of the major agencies to follow in these footsteps. It began with a paper, making the case for replacing the non-profit paradigm with a more inclusive form of capitalism which would re-invest in social and community purpose.
Today here in the UK we have what are called community interest companies, overseen like charities by a regulatory body, which makes this model a recognised form of incorporation.
I have no doubt that Creative Capitalism is well under way because I've already seen what it can do.We like to think of it in terms of people before numbers.
http://www.p-ced.com/about/background/
Jeff
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