Fashion and apparel companies are donating new product to help people impacted by the COVID-19 pandemic. Now, we need the rest of the fashion industry ecosystem to step up with the same spirit of generosity and help cover the costs of shipping those donated goods.
Fifteen years ago, with the help of industry colleagues, I pulled together a coalition of manufacturers, banks and other firms that are part of the fashion ecosystem in an effort to get donated products to people in need. Together, we founded an organization that eventually grew into Delivering Good, a nonprofit whose mission is to unite the fashion and retail industry to help people impacted by poverty and tragedy. As founder, I served as Delivering Good’s chair for years and remain a member of the organization’s highly active and committed board today.
Over the years, I’ve seen our industry come together time and again to respond with generosity when communities have been impacted by hurricanes, earthquakes, wildfires and floods. However, no disaster in our lifetime has wrought as much economic destruction as the coronavirus pandemic. Consequently, there has never been a greater need for us to coordinate our efforts to help our fellow Americans, including millions of our fashion industry colleagues who are currently without jobs and facing financial hardship due to COVID-19’s terrible impact on the retail and fashion sector.
This time, we need the help of the entire fashion business—not only manufacturers, retailers and brands, but also the broad range of services firms that work closely with fashion companies to help keep the industry running. The lenders, lawyers, accountants, technology companies, commercial real estate firms and consultancies that are an integral part of the larger fashion and retail sector have an opportunity to step up with monetary donations that will help ensure Delivering Good can quickly get donated products into the hands of the people who need them most.
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The current need
The coronavirus outbreak has disproportionately affected the retail industry, hitting both the supply and demand sides simultaneously and leaving factories unable to deliver orders while forcing the closure of nonessential stores for months in markets across the nation. Tens of thousands of workers who have played crucial roles in the success of fashion and apparel businesses have been furloughed or laid off permanently. Many of them, along with millions of other Americans, are now facing a complete loss of income in their household and some are also dealing with the illness or loss of a loved one due to coronavirus.
In response to the humanitarian and economic crisis, many retailers and brands that have been left with surplus inventory following store closures are donating their excess product to people facing economic hardship. Banana Republic is donating more than $20 million of new apparel to people in need through Delivering Good. The Children’s Place, Ralph Lauren, Carter’s, Gerber, Burlington, and dozens of others are also contributing new products. These generous donations will help our organization meet its goal of getting $1 billion worth of new apparel, footwear, accessories, home goods and personal care products to individuals and families in need in the U.S. over next 12 months.
With product donations pouring in, the challenge Delivering Good now faces is securing the financial support needed to ship those products. Freight costs typically equate to 1 percent of the dollar value of donated products, meaning it can cost roughly a million dollars to ship $100 million worth of donated goods. With retailers, manufacturers and vendors already playing an important role as product donors, there is now an opportunity for the rest of the fashion business ecosystem to band together to help cover shipping costs during this trying time.
What keeps companies from giving?
Some companies have been hesitant to make charitable donations in the past because they’re uncertain where their donated products or dollars will end up. A lack of transparency can erode confidence in a charity and make it harder for other nonprofit organizations to convince businesses that giving generously is worthwhile and will actually benefit the community or cause that is the designated beneficiary.
Additionally, some charities operate inefficiently, with high administrative costs that take up too big a share of donated funds. Headlines about outsized executive compensation packages and high overhead at charitable organizations have also had a negative effect on corporate giving.
What motivates them to give?
The impulse to do good by helping those in need is a strong one, however, and many companies are likely to make corporate social responsibility (CSR) initiatives a greater priority in the wake of the pandemic and the protests against racial injustice that have spread across all 50 states in recent weeks. Hundreds of retailers and brands have spoken out in support of diversity, inclusion and equality. Charitable giving will certainly be a key part of CSR for these businesses going forward.
Although corporate donations of products or money bring tax benefits, donations are not typically tax driven. More often, a company is motivated to give to a specific charity because it clearly benefits the recipients as well as the donor by helping the company fulfill its mission. Donor companies and their employees also feel a sense of gratification and accomplishment when they see the impact of their donations.
Charities that operate with a high degree of transparency, as Delivering Good does, provide donors with confidence in the organization’s ability to distribute donated product or dollars efficiently. Corporations can turn to evaluators such as Charity Navigator for information on charitable operations and see which receive high ratings for financial health, accountability, transparency, executive compensation and other relevant factors.
Uniting the industry once again
Everything we’ve done since we started Delivering Good has prepared us for this moment. We are well positioned to respond to the needs of individual communities across the U.S. in the wake of the pandemic. We have a finely tuned machine and a track record of quickly getting donated products into the hands of people who need them most, thanks to our strong national network of more than 700 community partners, our experienced team and our highly engaged board of directors.
Delivering Good is trusted by the fashion industry, has a four-star rating from Charity Navigator and was ranked 83rd on Forbes’ list of America’s Top Charities in 2019. The organization does not sell or barter donated product, nor does it operate a warehouse; it simply distributes donated products directly from donors’ warehouses to its partner agencies that serve people in need, efficiently and effectively.
I’ve learned a great deal over the years about charitable giving and what drives businesses to take action for the good of humanity. When I started on this journey, I saw a simpler and better way to persuade the fashion industry to unite: give companies the confidence that the products they donate will go directly to the people who need them most, ensuring that every donor knows who is benefiting from their generosity.
With so many retailers and brands once again rallying to meet an enormous need for new product donations, we need all hands on deck. Now is the time for the services firms that are such an important part of the fashion industry to join the effort by donating funds to help cover the costs of shipping these goods quickly to people in need.
Allan Ellinger is a member of the board of directors of Delivering Good, a 501(c)(3) nonprofit organization that unites retailers, manufacturers, foundations and individuals to support people affected by poverty and tragedy. In 2014, the charitable organization he founded, Fashion Delivers, merged with K.I.D.S. to form Delivering Good, whose board he chaired through 2018. Allan is also Co-founder and Senior Managing Partner of MMG Advisors, a boutique investment bank that serves companies across the retail, fashion and consumer sectors.