Consumer goods

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The busy holiday period is a good time to highlight one of the many charity based business models. The revenue model that is being used by these organizations is often not that complex. Many of them simply ask for a donation while others will give a commodity in return. A pencil, a plant, a newspaper and so on. But asking thousands of families for donations is labor intensive so when you’re trying to do something valuable, a B2B charity business model might be a better option. Freeset is such a company. They realize they are not in the product business, but in the reputation business. So when you’re selling the value ‘doing good’ the focus of your branding will not be the functionality of the product. Freeset sells Jute bags so they won’t last forever. But even this lack of quality is being used as positive feature. Using Jute makes Freeset bags biodegradable so that makes them (more) eco-friendly. Not only the product is focused on ‘doing good’. The business model of Freeset is build on top of a revenue model where the profits are being used to fight sex trafficking. Thereby the fair-trade business of Freeset is being perceived as People-friendly as well. So when clients are buying these event bags, they are ‘doing good’ and receive a platform (the bags) to show this to the world. Events itself are generally build to give companies opportunities to get exposure. And sadly it is exposure what you need when you are selling charity to businesses. Doing good, without anybody noticing, is economically not interesting.

Large companies that are trying to be eco-friendly, people-friendly and thereby claiming to do good are having a hard time online. When done right a profitable revenue model can be the result. Freeset is therefor a good example. But brands that are using charity or good causes as a marketing gimmick will be publicly crucified. See how even Apple is trying to coop with bad publicity on their green efforts. They make attractive products but being green is currently not their focus. Consumers have more power than ever. This forces companies like Apple to be more transparent on their efforts. But when you’re active in the ‘charity business’ you better do this over the top like Freeset. Eco-friendly, Fair-trade, People-friendly and so on. Do it and show it to your clients.

Entertainment & tourism, Non-profit & public

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Many free business models are based upon advertising while others are based on direct exchange of services. You do something for me and in return I’ll do something for you. Everybody happy! This new approach by Disney combines both methods. In order to get free publicity they are encouraging people to do volunteer work with the Handson Network. When someone gives a few hours of his precious time to such a good cause, Disney will give that volunteer a free visit at on of its theme parks. Visitors of Disney Land or Walt Disney World will admit that this is truly a unique experience. The return Disney receives is off course a better reputation and that without the need to spend big advertising budgets.While more and more charity based business concepts do pop-up, we see that only few of them use it in this fundamental new way. Most of the time a company only promises to donate a part of the profit to charity. By doing this they hope to convince people to buy more goods. All the ‘RED’ products use this method: Charity as a sticker. But in this Disney case there is no direct money involved and that is not a problem at all! Disney is a marketing company, one that sells brand reputation. So anything that can strengthen their reputation will be directly linked to higher profits elsewhere. If you’re a simple product seller you can’t rely directly on such a concept since you don’t have other revenue streams. Maybe in that case a ‘Buy one, give one’-concept will be a more sustainable way of using ‘charity’.

Banking & professional services

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Ello Mobile gives 100% of its profits to charity. A “profit for non-profit” business model. The Belgian mobile operator is purely web-based and aims to attract 1% of the Belgian market by 2014, thereby gathering minimum 6.2M euro per annum for charity. Projects are selected by an independant jury, and support initiatives in Sumatra’s rainforest and Mobile schools in South-America. Similar, the Dutch Call4Care donates 10% of your phone costs to charity.  TOMMY Telecom used to reward customers for sponsoring causes, but it is unclear if this is still the case after integrating with Nederland Mobiel. Ello Mobile and Call4Care’s “profit for non-profit” model offers people a convenient opportunity to support a good cause without any complexity or price premium attached to it; charity without a hassle or price tag.

Charity Upgrading – upgrading your product or service by systematic donation to charity – is applied outside the telecom sector as well, for example in gambling and waste handling. Bet2Give is a real-money prediction market where participants invest in predictions about the future, and give their winnings away to non-profit organizations of their choice. College Hunks Hauling Junk donates a portion of its revenue to College Bound, a non-profit scholarship program. Do you know other examples? Can you upgrade your product or service by supporting charity? Or can you link your good cause to a “no hassle” product or service offer?