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Consumers increasingly buy from companies and charities that return proceeds to less fortunate communities

A necklace, stuffed toy and pair of shoes make great gifts, bring joy to the recipient and can cost less than $100. But what if buying those same items could also benefit people in needy communities?

This is increasingly possible through a movement called compassionate consumerism – in which customers choose to spend their money with socially conscious companies or buy items through charities that return proceeds to their grassroots manufacturers.

The trend's beginning is credited to Blake Mycoskiew, the founder of Toms shoes, the company that donates a pair of shoes (and now glasses) for every pair bought. He was the first but more companies and charities such as Me to We are offering consumers the opportunity to buy something to wear and help those less fortunate.

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"Consumers want to use their spending power for the greater good," says Saul Klein, dean of the Peter B. Gustavson School of Business at the University of Victoria. The school released its first Gustavson Brand Trust Index this past June, looking at how consumers relate to and trust brands. While the study looked at for-profit businesses, consumer trust is also part of how they relate to charities.

There are multiple charitable offerings. There is the one-for-one model like Toms. Or you can buy a gift that goes to the community such as a goat, a mosquito net or a tree, or you can buy a gift for yourself or a friend with the proceeds going to the community.

"Consumers want to make an impact on society but they're also looking for something that might give a more tangible, direct sense of connection," says Dr. Klein. "With charitable giving, while there's emotional and intellectual appeal, it's harder to create that direct linkage between what they're providing in terms of financial support and an individual on the ground getting the benefit."

So a product attached to the benefit, says Dr. Klein, makes the contribution more impactful, especially if it's an item you can wear or give as a gift.

Jack Daniel Harding, digital manager at a Toronto public relations agency, likes to buy gifts and appreciates the compassionate consumer model. "Deep down it fulfills a need to consume. I've talked to a lot of other people and the model works well for them because it doesn't look like a cash grab, it looks like a good return on your donation investment. It also combats those nasty pieces that come out that say only 3 per cent of donation dollars go to people in need."

Me to We uses the compassionate consumerism model as part of its fundraising. Its website features necklaces, earrings and bracelets made by Kenyan women, known as "mamas." The money returns to the community and they use it to start small businesses and send their children to school.

The compassionate consumer model is dear to Roxanne Joyal's heart. The chief executive officer of Me to We has spent time in Kenya and has seen the difference that it's made to the women who create the jewellery.

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"The gift is threefold," says Ms. Joyal. "The first is to have meaningful work that provides them with an incredible sense of self-confidence and integrity."

She says the women often tell her that opportunity to have full-time employment makes them feel "counted in their families and communities." The second is the Track Your Impact tool, which lets Canadians see how their purchase affects the communities. Me to We also provides financial literacy training so the women can launch their own businesses.

The Track Your Impact tool lets Canadians enter a unique number (provided with each purchase) and track where the proceeds of their purchase is distributed and its impact. This transparency builds trust between the Me to We charity and the consumer. This is part of a successful compassionate consumer strategy.

Sometimes compassionate consumerism can go wrong, though. Toms, the originator of the trend, found itself in trouble a few years ago. The one-for-one model came under scrutiny for potentially disrupting local producers and the local economies with the influx of free items. Dr. Klein thinks that such situations are unintentional but says it can lead to a loss of trust from consumers, which leads to a drop in donations. Still, charities continue to offer items for sale.

Ms. Joyal looks at compassionate consumerism as another way to give, not a replacement for giving. "We're providing people with multiple options on how they would like to make a difference and impact in the world."

The option of compassionate consumerism is a growing trend, especially with younger Canadians who want that direct connection between their purchase and its effect. "Maybe it's generation shift but writing a cheque seems too easy," says Dr. Klein. "You're seeing that shift away from simply giving, you want to be part of the decision-making on how the funds are used."

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Read the full Report on We Day here

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