OUR COMMITMENT TO TRANPARENCY
Social and environmental responsibility and philanthropy are foundational to our work. We strive to improve the quality of life for our customers, communities, partners, vendors, employees and other workers, and all living creatures. Many of our product lines, especially in our Conservation division, are launched with a commitment to donate the profits to a non-profit or community organization.
How are donations verified? As a privately held company, we have no board of directors, shareholder calls, or annual reports. Joe, the company owner, reports our business income, expenses, and philanthropic donations with his personal taxes.
Integrity, however, is one of our core values. With that, we are committed to transparency.
How are profits calculated? Pretty normally.
Most of our Conservation projects are physical products. It is fairly straight-forward for us to calculate the Cost of Goods Sold (COGS). This includes manufacturing, payment processing fees, shipping materials, postage, and direct labor costs. In our current operating model, direct labor costs are limited to preparing shipments. The owner, Joe, manages our store, inventory, customer support, and takes orders to the post office without “billing” the product line for his time. If Joe steps in to help prepare shipments, he gets paid the same wage as anyone else.
We also have expenses not calculated in the Cost of Goods Sold, including advertising, marketing, and some equipment. Many of these expenses can be directly assigned to the product line or division that incurred them.
Next, like every other business, we have overhead expenses that are shared across the company. We allocate a share of our overhead expenses to each product line based on its share of our total revenue. For example, if our Management Analysis services bring in 50% of our revenue, 50% of our overhead expenses will be allocated to Management Analysis.
For our internal projects (e.g. Feed The Rangers)
“Profit” = Sales - COGS - Other Expenses - Overhead%
With startup costs, inventory, and advertising, it can take some time for a project to turn a profit. For that reason, we are committed to donating a portion of each sale, regardless of whether or not the project is profitable yet.
Typically, that is $3/clothing item (shirts, hoodies, etc…), and $1 for smaller items (stickers, magnets, etc…).
For our collaborative projects (e.g. “Jolly Ranger”)
“Profit” = % of Net Sales
“Net Sales” = Sales - (COGS - labor)
Our licensing agreements with our partner artists modify COGS to exclude labor costs. A percentage of net sales is held in reserve for marketing and advertising. The artist is paid a percentage of net sales as a licensing fee. We keep a percentage of net sales to cover our labor, expenses, and overhead. And a percentage of net sales is donated to a non-profit or community organization agreed upon between us and the artist.
Each artist receives a sales report with their licensing payments, showing a breakdown of each sale of their products, and the associated payment processing fees, manufacturing, and shipping and postage costs.
Share the Wealth
We are members of 1% For The Planet, but we see our membership in 1% For The Planet to be a bare minimum. The minimum donation thresholds for our internal projects and donation commitments written into our licensing agreements should well exceed those numbers. Sometimes, however, our performance exceeds our expectations and modeling. In those cases, we are committed to increasing our charitable giving by up to 20% of our profits.