Social Impact Retail vs. Non-Profit Retail: What sets them apart, and where do they overlap?

 

 

Ever thought about what "social impact retail" and "non-profit retail" really mean? Let me introduce you to these concepts without getting too fancy.

In today's world, where inequality is a big issue, it's fantastic to find businesses that do good things for society. But how they do it can be confusing.  We're at a point where it feels like almost every business is bragging about making a social impact. But what exactly does that claim mean in plain terms?

 

First, let's clear up a couple of terms:

Social Impact:

This means making a positive change to help a social problem. When we talk about Social Impact Retail, it means selling or making products in a way that helps fix a social issue. It's a broad term, and it covers all sorts of projects that aim to make things better. These projects can do lots of different things, like creating jobs, protecting the environment, or donating to non-profits. The possibilities are endless because there are so many ways to make positive changes.

Non-profit:

This is a type of organization that isn't primarily focused on making money. Instead, its main goal is to make a positive impact on society. Non-profits get special benefits from the government because of their social mission, and they have to meet certain standards set by the government. In simple terms, non-profits are in it to make a difference, not to make piles of cash. There are many types of non-profits, and they often rely on donations to keep going. They can also do business, but any profits they make have to be used for the social causes they're dedicated to. The government also keeps an eye on their finances to make sure the money goes where it should. All non-profit retailers fall under the category of social impact retailers, but it's important to note that not all social impact retailers operate as non-profit entities.

Now, with these explanations in mind, let's explore the key differences between Social Impact Retail and Non-Profit Retail in a way that's easy to understand and engaging.

 

 

The Ultimate Objective:

In the realm of social impact retail, there exists a broad spectrum of motivations. Among the most commendable are those social impact retailers who ardently champion the cause of positive change as their core mission. They are purpose-driven, shaping their entire business model around the pursuit of societal betterment. On the flip side, some entities within the domain of social impact retail merely employ it as a superficial veneer to enhance their public image, a practice often referred to as "greenwashing." For these businesses, financial gain and profits are their goal, with the promotion of positive social change downgraded to a smaller role. It's important to note that there's nothing inherently wrong with a business aiming to turn a profit – after all, that's the essence of good business. This discussion centers not on ethical judgments but on the underlying purpose that truly is the driving force behind the business.

On the flip side, non-profit retail has a clear mission: it exists to bring about positive social change. By definition, non-profits are required to put the betterment of society at the forefront of their goals. While many rely on donations as their primary funding source, some also venture into business activities to gather the necessary resources for fostering social improvement. In essence, the core objective for all non-profits is to advance positive social change. It's important to acknowledge that not every non-profit may perfectly align with this objective in practice, but they are obligated to report on and oversee their progress toward it.

 

 

Impact Assessment and Money Allocation:

When it comes to social impact retail, there isn't a specific set of rules mandated by the government regarding how they measure their impact or distribute their revenue. This doesn't imply they aren't doing the right thing; rather, they are largely accountable to themselves and the organizations they collaborate with. The degree to which they prioritize impact measurement and transparency in revenue distribution can vary significantly from one business to another. Furthermore, some of these businesses may willingly share their results, while others may not.

In contrast, non-profit retailers are subject to government regulations that demand both impact measurement and transparency in revenue distribution. They are obliged to ensure that their results align with their predefined goals, and beyond a certain threshold, they are required to disclose compensation details to ensure that funds are directed toward their social impact objectives. Notably, non-profits must not only share this information with the government but also make it accessible to the public.

 

 

Summary

Ultimately, supporting social causes is a noble endeavor. When deciding which retailers to patronize, it's worthwhile to explore how closely their core mission aligns with your chosen social cause. Equally important is their transparency in sharing their impact results and revenue distribution practices. Happy shopping, and may your choices make a positive difference!

 

  

Transparency Clause:

This blog post is written by Nick Manderfield, the CEO of Reincorporated NFP, a non-profit retailer. Nick is a passionate supporter of all  social impact… yes he loves non-profit retail, but has various for profit favs also.

As a non-profit retailer, at Reincorporated NFP we are dedicated to a wide range of social impact areas, including children's education, programs for new mothers, children's nutrition initiatives, adult personal development, fair wage trade workshops, sanitation projects, medical assistance, and much more. Explore the diverse ways we're making a difference in communities and lives here.