Hi Cesar, I think the answer is to advertisement 100% of profits to charity, and then have a performance-based compensation structure for yourself with a cap. Splitting revenue in the way is effectively not just putting charity in the equity position, you’re essentially donating portions of your salary until you hit a profit threshold. Make this transparent, like you were planning to do anyway.
Bottom line is that I think 100% profits to charities with a performance based compensation model that caps you at a certain point is both a more accurate description of what you’re doing and more compelling to customers. And if you frame it that way, we can recruit you to join the Charitable Profits Alliance 😊.
Hi Brad, could you elaborate a bit more on this performance-based compensation. I kind of understand it overall but I am not sure what would be the formula to execute it in the real scenario.
Also, please talk a bit more about how this Charitable Profits Alliance works and how would my project fit in there.
Thanks for your analysis and constructive comments.
So you could frame what you are currently doing as 100% profit to charities and simply tie your compensation as an employee of your business to the revenue you generate. You would obtain 50% of gross revenue as an employee of the business up to revenue point X, at which 100% of net profits would go to charities. That way you can say 100% profits go to charities (your compensation being part of the cost) and also say that every purchase helps effective charities. I know you are very interested in transparency, and for good reason, so you could have the information about your compensation, and the reason you structure that way, on your site.
The Charitable Profits Alliance is a trade group that is being started by the Consumer Power Initiative. We are looking to connect Profit for Good Companies (companies where charities get 90-100% of the profit) with each other, influencers, streamers, celebrities, and anyone else who wants to use what they have to help people all around the world do good by buying goods and services. We are also going to do a joint marketing strategy so that people all around the world know who to buy from if they wish to help charities while buying goods.
Hi Brad, I am just not certain about how the lay public will react to this formula...
If I advertise that my shop will be donating 100% to charity, a lay person will very likely get the notion that the owner is not receiving any money. It may seem naive for us who are familiar with philanthropy, but I try to put myself in the shoes of the lay public.
In this case, I think they would be quite disappointed to find out that I will be actually getting a “lot of money” and it is not really a 100% which goes to charity and they react “Wow, I didn’t expect that”. Putting myself as operational cost is not going to help, I think… Any reasonable person will catch the trick and be disappointed.
So, what I want with the Effective Drawing project is a shop that uses not potential misleading words or numbers that may confuse the public. I want things to be very simple and truthful.
I believe that advertising a donation of 51% is not a bad strategy as the lay public will know upfront that I am indeed receiving some money and they can’t form wrong expectations. Moreover, they can easily find and understand the ceiling (which will be announced everywhere) and with that in mind they can easily see that after a certain point, 100% of profits will be donated to charity, everything verifiable in the deep transparency page.
Though I am hesitant to re-frame how I advertise donations, I would still be happy to participate in one of your projects somehow. I think one way to advertise how I donate which is closer to what you suggest while still being truthful to the reality behind my shop, would be to say that “This shop donates 51% (up to 100%) to human causes”. That would not run the risk of being misleading because that is exactly what is going to happen in reality.
Please tell me your thoughts about this, Brad… and thanks for your engagement.
I understand your concern for transparency, but I think you are not giving the public enough credit. I think your concerns would be addressed by a page that laid out your compensation model and the reason for it fully.
Hi Brad, I am reading some of your posts that talk about Consumer Economy so I can familiarize myself with the concepts… this will take a while since yours writings are a bit loooooooooong.
The pith of it is that economic actors such as consumers would rather charities benefit from their activity than private shareholders. If we create the means for them to do so, we can transform the world for the better.
Because if he advertises this fact to prospective customers, this will give him an advantage. So he IS trying to earn more money… But for effective charities. And if prospective customers know this, they will be more likely to buy and/or buy more.
For instance, I am going to look for artwork and buy something because I want to support him and the charities he supports.
If he does not advertise the destination of the profit, he is leaving money on the table because buyers like the fact that charities benefit from their purchases.
Hmm I guess that goes into a broader discussion, but I don’t think that the EA community profits itself by not including artists and those with skills that aren’t squarely in the conventional Earning to Give purview.
In any case, I think more efforts like this to further impact within the art commerce space is an important contribution. Oftentimes, people will not be able to radically change their vocation and its important to look for opportunities for impact within a framework that someone is able to do in a given time.
Further, I don’t buy the premise that this is not high EV through a combination of direct impact and promoting a model that is potentially high EV.
I don’t think that the EA community profits itself by not including artists and those with skills that aren’t squarely in the conventional Earning to Give purview.
I certainly wouldn’t claim this. Obviously art, in general, is ex ante a very unpromising earning to give path. My suggestion is that we should encourage artists to use their skills in high impact ways.
I don’t buy the premise that this is not high EV through a combination of direct impact and promoting a model that is potentially high EV.
This implies a very weird model. Why would you think this is high EV? Presumably things are neutral to low EV unless proven otherwise via research? Nothing about “a combination of direct impact (??) and promoting a model” innately suggest high EV-which recall is a very high bar for career paths.
I’m really glad OP is excited to help out, but we should encourage them to consider whether they could do more good given their skill set. That is, after all, the point of EA. Many EA orgs need help with brand and aesthetics for example. Maybe their skills would be a good fit.
Just wanted to point out your art is beautiful!
Thanks Agustín!
Why not just give yourself a salary and give 100% of profits?
I think you could achieve your goals while making a mire compelling message to the public.
If you do this, we definitely would be interested in talking to you here at the Consumer Power Initiative.
Feel free to reach out to Brad@consumerpowerinitiative.org
Thanks for doing your awesome charitable endeavor!
Hi @Brad West.
Hi Cesar, I think the answer is to advertisement 100% of profits to charity, and then have a performance-based compensation structure for yourself with a cap. Splitting revenue in the way is effectively not just putting charity in the equity position, you’re essentially donating portions of your salary until you hit a profit threshold. Make this transparent, like you were planning to do anyway.
Bottom line is that I think 100% profits to charities with a performance based compensation model that caps you at a certain point is both a more accurate description of what you’re doing and more compelling to customers. And if you frame it that way, we can recruit you to join the Charitable Profits Alliance 😊.
Hi Brad, could you elaborate a bit more on this performance-based compensation. I kind of understand it overall but I am not sure what would be the formula to execute it in the real scenario.
Also, please talk a bit more about how this Charitable Profits Alliance works and how would my project fit in there.
Thanks for your analysis and constructive comments.
So you could frame what you are currently doing as 100% profit to charities and simply tie your compensation as an employee of your business to the revenue you generate. You would obtain 50% of gross revenue as an employee of the business up to revenue point X, at which 100% of net profits would go to charities. That way you can say 100% profits go to charities (your compensation being part of the cost) and also say that every purchase helps effective charities. I know you are very interested in transparency, and for good reason, so you could have the information about your compensation, and the reason you structure that way, on your site.
The Charitable Profits Alliance is a trade group that is being started by the Consumer Power Initiative. We are looking to connect Profit for Good Companies (companies where charities get 90-100% of the profit) with each other, influencers, streamers, celebrities, and anyone else who wants to use what they have to help people all around the world do good by buying goods and services. We are also going to do a joint marketing strategy so that people all around the world know who to buy from if they wish to help charities while buying goods.
Please reach out to me at brad@consumerpowerinitiative.org Thanks
Hi Brad, I am just not certain about how the lay public will react to this formula...
If I advertise that my shop will be donating 100% to charity, a lay person will very likely get the notion that the owner is not receiving any money. It may seem naive for us who are familiar with philanthropy, but I try to put myself in the shoes of the lay public.
In this case, I think they would be quite disappointed to find out that I will be actually getting a “lot of money” and it is not really a 100% which goes to charity and they react “Wow, I didn’t expect that”. Putting myself as operational cost is not going to help, I think… Any reasonable person will catch the trick and be disappointed.
So, what I want with the Effective Drawing project is a shop that uses not potential misleading words or numbers that may confuse the public. I want things to be very simple and truthful.
I believe that advertising a donation of 51% is not a bad strategy as the lay public will know upfront that I am indeed receiving some money and they can’t form wrong expectations. Moreover, they can easily find and understand the ceiling (which will be announced everywhere) and with that in mind they can easily see that after a certain point, 100% of profits will be donated to charity, everything verifiable in the deep transparency page.
Though I am hesitant to re-frame how I advertise donations, I would still be happy to participate in one of your projects somehow. I think one way to advertise how I donate which is closer to what you suggest while still being truthful to the reality behind my shop, would be to say that “This shop donates 51% (up to 100%) to human causes”. That would not run the risk of being misleading because that is exactly what is going to happen in reality.
Please tell me your thoughts about this, Brad… and thanks for your engagement.
Cheers!
Hi Cesar,
I understand your concern for transparency, but I think you are not giving the public enough credit. I think your concerns would be addressed by a page that laid out your compensation model and the reason for it fully.
If you’d like to discuss further, please email me at Brad@consumerpowerinitiative.org
Hi Brad, I am reading some of your posts that talk about Consumer Economy so I can familiarize myself with the concepts… this will take a while since yours writings are a bit loooooooooong.
I will get back to you soon...
Thanks Cesar,
The pith of it is that economic actors such as consumers would rather charities benefit from their activity than private shareholders. If we create the means for them to do so, we can transform the world for the better.
I don’t get it. Why don’t you try to earn more money if you are going to give it away?
Because if he advertises this fact to prospective customers, this will give him an advantage. So he IS trying to earn more money… But for effective charities. And if prospective customers know this, they will be more likely to buy and/or buy more.
For instance, I am going to look for artwork and buy something because I want to support him and the charities he supports.
If he does not advertise the destination of the profit, he is leaving money on the table because buyers like the fact that charities benefit from their purchases.
I’m not suggesting he shouldn’t advertise that he will donate profits. I’m suggesting he could do something more lucrative.
Hmm I guess that goes into a broader discussion, but I don’t think that the EA community profits itself by not including artists and those with skills that aren’t squarely in the conventional Earning to Give purview.
In any case, I think more efforts like this to further impact within the art commerce space is an important contribution. Oftentimes, people will not be able to radically change their vocation and its important to look for opportunities for impact within a framework that someone is able to do in a given time.
Further, I don’t buy the premise that this is not high EV through a combination of direct impact and promoting a model that is potentially high EV.
I certainly wouldn’t claim this. Obviously art, in general, is ex ante a very unpromising earning to give path. My suggestion is that we should encourage artists to use their skills in high impact ways.
This implies a very weird model. Why would you think this is high EV? Presumably things are neutral to low EV unless proven otherwise via research? Nothing about “a combination of direct impact (??) and promoting a model” innately suggest high EV-which recall is a very high bar for career paths.
I’m really glad OP is excited to help out, but we should encourage them to consider whether they could do more good given their skill set. That is, after all, the point of EA. Many EA orgs need help with brand and aesthetics for example. Maybe their skills would be a good fit.
I was going to answer, burner, but Brad West pretty much explained it very well...
Advertising to prospective buyers that the shop will donate 51% of profits is in fact one strategy to earn more money.