Blended Value: The Tango Of Profit And Social Good

According to SOS Children’s Villages, 690,000 children have been orphaned in Argentina, which could diminish their prospects for career placement. One woman and her team are out to change that. Mariagrazia Lauricella is the founder of both Humanity Del Sol, a non-profit dedicated to empowering youth through career skills and trauma therapy, and its sister organization Humanity Wine Co., a social enterprise. (Dr. Hicks serves as a volunteer academic curriculum coordinator for HDS.) Humanity Wine Co. donates 50% of its profits back to Humanity Del Sol, which increases its capacity to do good while offering customers purchase with a purpose. 

Founded by the Argentine working class and based in African tribal traditions, the Tango is a dance composed of the intertwining of two partners in a carefully choreographed dance. It’s not dissimilar to our budding love affair with blended value, the intertwining of profit and social good. 

Known by many names, the idea of comingling for-profit and non-profit interests takes many forms, including the social enterprise, corporate social responsibility, social investing and strategic philanthropy. Collectively, these terms have been coined “blended value” (download required). 

Blended value is the new frontier of sales and could dominate spending in the next decade, particularly with millennial consumers. The 2020 Consumer Culture Report from 5W Public Relations suggests that millennial consumers have a tendency to involve their conscience in spending decisions. Close to 85% of millennials said it’s important that the companies they buy from share their values, per the report. About 71% of millennials would pay more for goods that funnel some proceeds to charity, and 67% said it’s important that the brands they purchase from have a charitable component, according to the report.

These trends are echoed and potentially more pronounced in Gen Z behaviors. As a generation, Pew found they are on track to be the most racially and ethnically diverse and best-educated generation in history; additionally, a large portion of Gen Zers is progressive on a number of issues. As their buying power continues to increase, sales will have to adapt to meet their needs in order to succeed.

So, what exactly constitutes a blended value offering?

Social Enterprise

The social enterprise is arguably the most common form of blended value. When there’s a decrease in government and donor funding, many interested in making a difference will turn away from traditional non-profit models and instead use an entrepreneurial spirit to create for-profit businesses for good.

The Social Enterprise Alliance recognizes three primary models of social enterprise: Opportunity employment, transformative products or services and donating back. The later, donating back, describes organizations that contribute a portion of their profits to nonprofits that address basic unmet needs. Humanity Wine Co. sits in good company with Bombas, Warby Parker and Toms, who all share the donate-back model as a key component of their mission.

Corporate Social Responsibility

According to Investopedia, corporate social responsibility (CSR) is “a self-regulating business model that helps a company be socially accountable — to itself, its stakeholders and the public.” For companies to be socially responsible, they first need to be accountable to themselves and their shareholders. Thus, CSR is primarily a strategy of large corporations such as Salesforce’s 1-1-1 Model and Starbucks’ Global Social Impact Report. Also, the more visible and successful a corporation is, the more responsibility it has to set standards of ethical behavior for its peers, competition and industry.

Social Investing

Socially responsible investing or social investment has roots that extend as far back as the Quakers. During the Civil Rights movement in the U.S., the term was reportedly used to refer to the practice of considering investment practices in a thoughtful manner. Today the practice involves considering both financial return and social or environmental good to bring about positive social change. In its most narrow definition, it refers to investment decisions asset managers and their clients make to invest only in companies they deem socially conscious, such as socially conscious mutual funds and ETFs.

Strategic Philanthropy

Strategic philanthropy is the practice by which companies target their respective charitable and philanthropic activities around a specific issue or cause that will in turn support their own business objectives. In other words, these companies use philanthropy as a means to simultaneously benefit their business interests and a beneficiary organization. For example, according to one blogger, Chrysler drastically altered its giving priorities from the general field of education to specific training for its prospective employees. Not only were they giving training to workers who needed skills to enter into the automotive industry, but they were also ensuring more efficient employees would be available for hire and reducing the need and cost of in-house training.

Selling The Dance

Each type of blended value offers new challenges and requires new opportunities for marketing strategies and sales funnels. Social and cause marketing, issue empathy and authentic triangular relationships between the customer, cause and product are just a few of the frontiers for business development leaders to explore. Harvard Business School professor Gerald Zaltman studied buying behavior, estimating 95% of consumer decisions were subconscious. This seems increasingly true for millennial and Gen Z consumers. In his book How Customers Think: Essential Insights into the Mind of the Market, Zaltman advises companies to connect with consumers through their emotions and senses — precisely what authentic blended value provides. The comingling of profit and social good may still be budding, but the movement seems to be growing, and the impact is undeniable. If you get all tangled up, just Tango on.

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