Impacting investing: trends, issues and capabilities
Cause for Thought
by Vanessa Friedman
Today, no luxury brand can afford to be without a philanthropic arm. But how can an industry based on exclusivity and indulgence demonstrate a credible commitment towards society’s most challenged?
There are many places a rational consumer might expect to find a Gucci label. You would not be surprised, for example, to find it on the inside of a bamboo-handled snakeskin handbag. You would not be surprised to see it on the insole of a gold-buckled and studded leather stiletto bootie, or sewn onto the silken lining of a black python pencil skirt, or a blush-coloured double-breasted ostrich-skin pea coat. You might not even be surprised to come across it on an invitation to the premiere of a film such as Rush, where Gucci provided clothes for Chris Hemsworth’s and Olivia Wilde’s lead characters; or at a competitive event, such as the Gucci Paris Masters, an indoor equestrian competition founded in 2009.
But at the bottom of a web page for a project called Chime for Change that has as features (in no particular order) stories entitled “Women, rape & obnoxious law”, “No more child marriage in Saudi Arabia?” and “Let the breast grow”? Or as the founding sponsor of a hackathon (linked to Chime for Change), held in San Francisco a few days ago, where over 100 programmers from Facebook, TechCrunch, Twitter and Yelp were kept in an office for approximately nine hours and charged with coming up with a startling new app to drive engagement with issues around women’s education, health and equal rights? That’s a startling juxtaposition.
Yet there, next to both of these, are the words “founded by Gucci”. And in the very contrast between brand expectations and cause exhortation lies a new, potentially influential, approach to philanthropy – as well as the contemporary conundrum of how to navigate between an industry based on indulgence, the imperative to demonstrate commitment beyond the creative, and the concerns about profiteering do-goodism that may follow.
Traditionally, the corporate-donor model often involves a company creating a foundation, targeting a charity and then giving a lump sum to an organisation to use as said NGO sees fit. In fashion’s case, this might mean a brand creates products for a cause and donates a percentage of sales to the charity. Consider Emporio Armani’s Red sunglasses and watches. They, along with a variety of products from other brands, support Red, which channels money to the Global Fund’s fight against Aids. Similarly, in the UK 25 per cent of the purchase price (excluding VAT) of Ralph Lauren’s Pink Pony products goes to a chosen charity, currently The Royal Marsden Cancer Charity, while in the US the products support cancer programmes via a Pink Pony Fund. (Though Ralph Lauren also uses other models, as seen in its support for L’Ecole Nationale Supérieure des Beaux-Arts in Paris through directly funding a restoration project and providing patron sponsorship.
However, Gucci decided instead to leverage its brand equity to encourage public involvement in a panoply of causes focused on girls and women, falling under the catch-all title of Chime for Change, which bills itself as “a new global campaign to raise funds and awareness for girls’ and women’s empowerment” in three areas: education, health and justice. In turn, it acts as a superhighway, directing consumers to an online crowdfunding platform called Catapult, which vets many NGO programmes and holds them accountable. Put another way: Gucci makes the noise, and people make the donations. And it all happens in a highly branded forum.
The result is a very public gamble in an area where luxury has always been very private – and understandably so. As Margot Brandenburg, a fellow at the Nathan Cummings Foundation, who is currently co-authoring a book on impact investing, points out, “The truth is, for the price of one luxury handbag, you can easily give food and water to a family in a challenged area for a year. A ‘branded’ movement makes facing that reality unavoidable – which can create a lot of discomfort for a consumer. On the other hand, it also lays bare the contradictions we all live with every day.” To be specific: is a brand better off starting a movement as opposed to simply giving away meaningful sums? Is a grass-roots movement something that can even be created from the top down? Does “branding” a charity raise red flags about its motivations? And how much, exactly, has Gucci bitten off with this project? The answers are far from simple, as even Gucci will admit.
“There’s no textbook for what we are doing,” says Gucci CEO Patrizio di Marco. “And whenever you expose yourself, you run the risk of people misunderstanding you. But I think we have a moral and ethical obligation to act. Over 50 per cent of my management team is female, and we had a choice: we could either do this under the radar, or embrace our public profile and use that.”
“There’s no question that anonymous giving is perceived as the most selfless form of donating,” says Professor Peter Singer, a bioethicist at Princeton University and author of The Life You Can Save: Acting Now to End World Poverty. “However, I tend to think in the current setting people are more likely to give when they know who else is giving.” Certainly, when it comes to who is involved, Chime reads like a female Who’s Who. Launched at Ted in California in February, its co-founders are Beyoncé, Frida Giannini and Salma Hayek Pinault, and advisory board members include Sarah Brown, Waris Dirie, Arianna Huffington, Madonna, Jada Pinkett Smith, Julia Roberts and Desmond Tutu. It was introduced to the world via a huge concert in Twickenham in June, entirely underwritten by Gucci, where everybody from Florence Welch to J Lo sang, and Jessica Chastain, Ryan Reynolds and Gloria Steinem spoke. All attendees could donate the price of their ticket (minus handling fees and VAT) to an NGO of their choice through Catapult.
“The problem in charity is often you get people in the same circles talking to each other,” says Yasmeen Hassan, global director of Equality Now – a human-rights organisation dedicated to ending violence against women – and a Chime board member. “The challenge is to reach the people outside. And that is what Gucci has enabled.” Di Marco agrees: “We didn’t want this to be a ‘Gucci saves the world’ thing. We wanted Gucci to be the vehicle to help other people to act.”
Certainly, thus far there are ongoing, quantifiable achievements. Almost $4m was raised from the concert alone, with another $500,000 obtained through related donations since, and 272 programmes have been fully funded, including $25,150 for Syrian refugees needing healthcare from Doctors of the World, and $57,750 to build a floor of a school in Pakistan. Chime has around 300,000 Facebook fans, and 22,000 people have signed up for its newsletter. In total, 42 per cent of concertgoers went on Catapult to allot their ticket money, and now receive quarterly updates on the progress of the programme they funded, forging an ongoing relationship. (This may not sound like much, but, according to Hassan, the response rate for Equality Now online member surveys is about 10-13 per cent.)
However, the difficulty of sorting through the issues that fall under the Chime umbrella (there are 28 sections on the “Find a Project” part of Catapult, ranging from “Arts” to “Child brides” to “War & crisis”) was also brought home at the June concert, where so many causes were discussed that some attendees did not seem to know where they should focus their attention. Even Hassan says, “I would have wanted a bigger unifying message: I felt it was too confused, because there were so many strands. We need to work on that, but you can’t get everything right immediately.”
At the same time, the complications inherent in mixing celebrity and philanthropy were thrust to the fore by a Twitter debate after Madonna’s speech at the concert – not about the fact she had pledged to double any contribution to building a school in a village in Pakistan, but over the state of her face – as well as criticism, again on social media, of Beyoncé’s and Jennifer Lopez’s body-baring stage outfits, which some saw as demeaning to women. A few days later, di Marco was apoplectic about the discussion: “They’re idiots if they think that is the point,” he said at the FT Business of Luxury Summit in Vienna – though he later became philosophic, noting, “I find it a bit ridiculous, but if that’s what they want to take away, it’s their choice.” Hassan, too, reflects that “there’s a fine line between celebrity amplifying the message and overwhelming it. But I casually asked some attendees afterwards – most of whom, let’s be honest, came for the stars, not the issues – and they did feel more pulled in.”
Pointedly, thus far the celebrity involvement seems to have been more of a stumbling block than the luxury side of things. This may be because, as Sarah Brown points out, fashion has a tradition of publicly supporting causes such as Aids and breast cancer. “I have more pictures of me with supermodels at various fundraising events than I’d ever have imagined,” she says, adding, “I wouldn’t want to think for a second that a luxury brand shouldn’t be part of a big corporate social responsibility initiative by definition of being luxury.” Gucci itself has a track record of working with groups such as Unicef. Indeed, it has been a Unicef “partner” for eight years, contributing over $18m to schools in Africa and other projects. “I don’t think the way to solve poverty is for people to beat themselves up,” says Caryl M Stern, president and CEO of the US Fund for Unicef.
Yet, while groups from Unicef to Equality Now to A World at School (a digital campaigning organisation co-founded by Sarah Brown) are unanimous in their support for the idea of Chime, it’s hard not to wonder whether involving so many powerful individuals and organisations will ultimately complicate the project. On the one hand, it helps to insulate Gucci from charges of dilettantism and gold-washing (as Brandenburg says, “I don’t think Sarah Brown or Melinda Gates would get involved with anything that wasn’t completely vetted and serious”), but it’s also unclear whether, within the wider goal of “empowering women”, everyone’s priorities are the same. Frida Giannini, Gucci’s creative director, puts it slightly more circumspectly. “We had incredible enthusiasm from so many partners, artists and other friends of the house – we had to find a way to harness that positive energy and momentum.”
Gucci itself has taken a resolutely non-ideological position, such that the Chime website offers the opportunity to help produce a girl-centred storybook in Sri Lanka in the same way that it recently addressed female sexual mutilation in Mali. It can seem disjointed to see so many issues presented in an equivalent manner. Sometimes donors want guidance in understanding what may be the most pressing or crucial cause, but here the guidance lies merely in the transparency of the amount needed to fund each project, the amount donated thus far and the number of people who have donated. Beyond that, the judgement is left to the individual.
Indeed, this refusal to take a stance is reflected in the involvement of Facebook, another Chime partner, where Carolyn Everson, of VP Global Marketing Solutions, explains its participation as being motivated more by a desire to “support causes that are important to our marketing partners” than by any political conviction. It makes sense from a brand point of view (why alienate potential givers or customers by taking a controversial stand?), but can lead to a lack of clarity about the goal. Sometimes, democracy feels more like cacophony.
And it is all exacerbated by the issue of how, having created the sort of expectations that the Twickenham concert did, such enthusiasm can be sustained over time – both in terms of the brand’s commitment and of public attention, which famously waxes and wanes. A taskforce of 3,000 people was employed on the day, and the total commitment was on a similar level, insiders say, to the largest kind of fashion expense (eg, holding a show on the Great Wall of China). Though $5m is a drop in Gucci’s 2012 $1.26bn profits, and it made much of that money back through sponsorships and selling broadcast rights, Gucci was not able to deduct the expenses from its tax bill, as a US company might. “We just accept a slightly smaller margin,” explains di Marco.
Whether Gucci will maintain this level of investment, especially when the executives change (di Marco said in Vienna that he couldn’t predict where Chime would be in 10 years, because he could predict he would no longer be at Gucci), is a question that hovers over all corporate philanthropy. However, François-Henri Pinault, the chief executive and largest shareholder of Kering, Gucci’s parent group, is on the Chime advisory board, and his wife, Salma, is a co-founder, so a long-term commitment can probably be assumed.
Currently, Chime for Change is wrestling with the problem of follow-up, since having a mega-concert every year is not practical, and it is working on a range of activities for 2014 that will complement its internet presence. Gucci started off opposed to linking product to project. “There will never be a Chime for Change collection,” says di Marco, “in large part because we do not want to open ourselves up to accusations that we are using this for commercial gain” (though clearly the brand must profit from emotional connectivity). However, it is now planning to create a campaign around Mother’s Day 2014 (supported by licensing partner P&G Prestige) that will involve all the Gucci fragrances and provide anybody buying one with a virtual €3 donation that can be directed to a project via the Chime website.
“One of the issues is that these are very long-term goals, and the problems are not easily ‘solved’,” says Hassan. “So you give your money, the report does not come back all hunky-dory immediately, and then people can get frustrated and drop out.” Indeed, this touches on a larger ongoing debate in the philanthropic community about the most effective type of giving. Is it better to take a world-changing amount of money and fix one problem with it, so you concentrate on a single issue, or drip-drop many, many little bits of money on many, many issues that individuals of all income levels decide for themselves are important, as Chime is doing via Catapult?
The latter reflects two movements in philanthropy at the moment: the drive toward the “democratisation of giving”, wherein donors are able to decide for themselves where their money goes in a very granular fashion, and the need for “effective philanthropy”, wherein the charities are also responsible for updates on their own progress and how they spent the money. “This has the benefit of being a relatively transparent approach,” Singer says. “Certainly more so than a foundation” – though, as Hassan points out, it can also “become less about getting money to projects than getting people involved”.
“Look, change has to happen at all levels,” says Unicef’s Stern, “and the truth is, none of us has a comprehensive solution for how to fight poverty. No one has the silver bullet. So why not try this? Why not take a big idea and break it down?”
“The irony is,” says Professor Singer, “that if it this is really successful, if a consumer really finds the stories inspiring and becomes fully engaged, they may take the money they would have spent on a Gucci product and give it to a Chime programme. Which may not necessarily be good for Gucci, but would be good for women.”
It’s a risk di Marco is prepared to take. “Someone has to be first,” he says. The implication being, who’s next?
Chime for Change: www.chimeforchange.org
Emporio Armani www.armani.com
Jonathan Adler: www.jonathanadler.com
Ralph Lauren: www.ralphlauren.com