1. Meeting #6
Philanthropic Models that involve purchasing a product and simultaneously making a contribution to a cause
Or, investing and making a contribution
Example: Fair Trade

2. What is Fair Trade all About?
Origins:
Edna Ruth Byler of the Mennonite Church frequently credited with starting the Fair Trade movement
Returned from a visit to Puerto Rico deeply concerned about the plight of workers

3. Began selling handicrafts out of the trunk of her car
Increased proceeds enabled her to pay handicraft producers higher prices for their products
The Mennonite efforts eventually led to the establishment of Ten Thousand Villages, most common retail example of Fair Trade in the U.S.

4. Intended Message Apparent in Packaging

5. What does Fair Trade Cover?
List of products that are sold through Fair Trade Channels include:
Commodities: Coffee, cocoa, chocolate, tea, honey, beans, seafood, fruits, spices and vegetables
Other: Handicrafts, apparel, wine
List of Products available at Fair Trade USA:

6. How it works Fair Trade products require certification
Largest body is the Fairtrade Labeling Organization (FLO)
Extensive set of criteria, including workers pay, production methods, environmental standards, etc.
Workers form a coop and work with FLO to achieve these standards
Products are then FLO-certified Fair Trade

7. After a cooperative if formed
Coops contact a Fair Trade distributor:
Oxfam, Equal Exchange, Ten Thousand Villages
Distribution takes place through these organizations
Workers receive a higher than market price for their products, frequently with an established “floor” to eliminate the dips in commodity prices
Sometimes greater returns are distributed in-kind (medical, educational services)
Smaller producers may sell online only
Fair Trade is certainly a form of philanthropy - does not fit well as a form of charity

8. Comparisons to other Forms of Giving through Buying
This type of fund-raising is now pervasive in retailing
e.g. Buy X and a $1 will be donated to breast cancer research
Difficult to unravel whether product is bought more often because of the donation
Buyer knows very little about where $ is actually going.

9. More Formalized Approach already Covered
Benefits Corporation model
Or, closely held firms that are SMEs

10. Newman’s Own Premier example of giving through buying
All profits distributed to charity
Run within a Foundation

11. 1982 –> Onwards, $500 million has been given away Parallel Models:
Girl Scout Cookies
Ben and Jerry’s

12. Readings Chapters 26-28 (Herman and Renz, 1997)
26: Multiple Constituencies and Nonprofit Effectiveness
“stakeholders” might be a better term
All parties that the nonprofit should be answerable to, including donors, boards, and recipients of largesse.

13. Authors list 2 different approaches – will focus on multiple constituency model
Social construct model believes organizations function is a result of the belief system of its management (sort of alternative reality)
Developing objective criteria that measure outcomes
Survey may then be used to determine how well different constituencies believe the organization is doing

14. Measuring organizational effectiveness
Ott & Dickie (page 203) note that there are various ways people view “effectiveness”
Authors develop an instrument in an attempt to measure stakeholders views of how effective an organization is judged to be.
Criteria include financial management, fundraising, program delivery, public relations, community collaboration, working with volunteers, human resource management, government relations and board governance
Similar to some of the criteria used by Charity Navigator and Charity Watch

15. Different stakeholders have different ideas of effectiveness and its measurement
e.g. outputs or inputs (corollary to the federal government)
Subjective vs. objective criteria
Authors spend considerable time on this – it is a thread in their own research agendas.
Key Point:
Essential to establishing agreed-upon criteria and ensure management structure exists to evaluate those criteria.
Authors’ assertion is that criteria can be naturally subjective and that may influence whether something is judged a “success”