Give Something Back

Introduction

In 1991 Mike Hannigan cooked a Spaghetti dinner for friends. Until he bought all necessary ingredients Hannigan had no idea that this meal is going to have a significant influence on his future life. The spaghetti tomato sauce he bought was from Newman’s Own which is a company run by the famous actor Paul Newman which donates all its profits to local communities. In the moment Hannigan used this sauce he realized that his sale has philanthropic consequences because he knew that he had given away a part of his money to a local charity somewhere in the United States. This fact obviously motivated him in a way that he got his friend Sean Marx on board and they founded the office supplier Give Something Back on the basis of the same business model used by Newman’s Own.

The Company

Give Something Back is a for-profit organization and was founded in 1991 in Oakland with a seed capital of $40,000. Today the company is one of the biggest office suppliers in the Western United States. It has more than 17000 customers nationwide and offers more than 40000 different products mainly for offices. The product range includes office equipment like printers, shredders, toner, keyboards or faxes. Besides that GSB offers furnitures and a special GSB recycled premium paper. They sell top brands but for 20% less than their main competitors. The company has been profitable since its foundation and until today it donated nearly $4 million to charitable causes which is more than half of the profits made. In average it donated 92 percent of its after-tax profits to charities. In 2007, Give Something Back could generate sales revenues of more than $25 million, from which more than $400,00 were donated.

Business Model and Mission

The idea of Hannigan and Marx was to create a firm that makes money but has an ethical goal. Their main roots are to offer great products at reasonable prices, try to sell many green and environmentally friendly products and finally give the profits-after-taxes to non-profit organizations. Give Something Back competes with big retail chains like Staples or Office Max. But rather than building or renting stores, GSB has a different system to gain a competitive advantage. Customers shop from a catalogue and products are delivered the next day by car or van. As already mentioned prices at Give Something Back are lower than those offered by the big chains. This is a big advantage for smaller local businesses which represent the majority of GSB’s customers. A difference to Newman’s Own is that GSB does not donate all its profits. They use their excess profits so that they have capital to grow and expand. Last year they donated 54% of their profits especially to local Community Based Organizations in fields like public health, human services, arts and culture, environment or education. The list of companies GSB supported with money is long and they can be found everywhere in the Western United States.

Other Ethical Activities

Besides the donations given to non-profits or charities, GSB follows a very advanced Human Resource strategy. They mainly search for employees that can identify with the idea of donating profits and do not enrich themselves as much as possible. GSB offers a lot of activities and events for their workers. These happenings should commit them even more with their company because happy employees result in satisfied customers.
The strategy to use excess profits to donate and still have money left for growth opportunities is very important for GSB. Besides the possibility to extend the distribution system nationwide the money kept can be used for other philanthropic activities as well.

The Future

In the next 10 years GSB has the aim to donate more than $100 million. Furthermore GSB wants to be an example for other entrepreneurs and show that such businesses help to achieve a fairer world. Of course GSB always has to compete against huge chains which will also be their main challenge in the long run. The main improvements GSB can make are already noticeable in the last years. They extended their target market and their distribution a lot since 1991. The number of 17000 customers can definitely be increased especially due to the cheap prices and the ethical and social background of the company.