Is It Unethical to Start a For-Purpose Company?
I have been debating this with myself recently as I am in the process of starting a for-profit company that has a purpose-driven mission.
My company is essentially selling hats with several American-themed designs with a portion of the proceeds going to a select few causes that support military members and their families.
I thought it was a great idea. Pursue entrepreneurial ambitions (make money) and provide assistance to causes that are near and dear to me (coming from a military family).
Then someone raised an issue to me.
“This is unethical. Profiting off of others desires to help vets.”- Someone on Reddit
My Initial Thoughts:
I thought I was doing something ethical by giving a portion to charitable causes.
After all, other for-profit companies profit on marketing schemes that take advantage of sex appeal, status appeal, or get-rich appeal. Often times they market on lies. Sorry but washing your hair with Axe will not suddenly make you a chick magnet.
How do these companies get away with such falsifications? Yet if a for-purpose company markets that they are supporting good causes it is unethical?
I am not trying to lie to or take advantage of anyone. I was simply trying to start a business to make some money and do some good at the same time.
I am not hiding that I am for-profit and I am not hiding that I will donate a portion of the proceeds to specific causes.
When I figure out the numbers I will even make clear how much profit I make per hat and how much I will give per hat.
Certainly if you do not want a hat you can simply donate directly to the organizations I promote. I will not force a purchase. So hopefully I can increase these organizations’ donations even if people do not purchase hats.
After all what companies are not profitable? Non-profits have to make money to operate too…
On the Other Hand…
At first I was clearly taken aback but after thinking clearly I realized the person raised a good point.
Yes, my intentions may be good, but if a person is only purchasing the hat because they want to help service members then why should I profit?
Are my efforts to promote these causes enough to deserve a profit?
Is this unethical?
How do you ethically market this?
“Buy our high quality hat and oh by the way a portion will go to these causes…”
“Hey support these causes, buy our hat!!”
These two are widely different in their messages.
So I guess the true difference between non-profits and for-profits is not if they make money but if they are seeking to maximize profits or maximize impact.
But do these two things mix?
Many for-profit companies have certainly promoted for-purpose messages. Patagonia and Toms are the two to come to my mind first.
However is it ethical to maximize profits and impact?
Should companies focus on only one or the other?
Obviously I have a lot of questions…would love to hear any of your thoughts!
Also feel free to check out my current hat designs and help me narrow my vision here: