NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Today’s discussion on development is a Marxist nightmare. With patient capital, philanthrocapitalism, and venture capital models becoming ever more popular ways to fill the voids of the base of the pyramid (BoP), the power of the market is emerging as increasingly vibrant. Vestergaard Frandsen, a European manufacturer of emergency relief and disease control products (previously covered here), and an Acumen Fund working partner, is harnessing that very power.

In 1992, Vestergaard Frandsen underwent a mission makeover from producing hotel uniforms to delivering textiles such as anti-malaria bed nets, plastic sheeting, and water filters to the awaiting developing world. Although the company exchanged its old input materials for new ones, and altered its ambitions from clothing production to solving global threats such as malaria and impure drinking water, it never abandoned its basic ambition to succeed as a for-profit business.

However, at the core of its new self, VF was dedicated to helping the BoP. The plan was to “do well by doing good,” and thereby enact a truly self-sustaining solution to global poverty and health issues. Professionalism, with a dose of ethics, was to thread together the company’s otherwise unlikely transition.

VF sells its products, PermaNet, ZeroFly and LifeStraw directly to low-income customers and to aid organizations such as the Red Cross and Save the Children at affordable- yet undeniably-high impact prices. Some critics disparage the company for imposing costs on an already burdened population, while other opponents propose that aid dollars invested in sustainable infrastructure are dollars better spent. However, the company sees things another way, and one does not have to look far to be convinced. In fact, just check out their most recent press release.

The day after Haiti’s tragic quake, VF pledged to donate LifeStraw and ZeroFly products to the ailing region. Mikkel Vestergaard Frandsen, the company’s CEO, commented: “We are working at full speed to supply our partners with tools they need to contain the spread of disease that often follows natural disasters. We encourage those interested in joining our efforts to donate to one of the many organizations providing relief for the people of Haiti.”

Rewind to months earlier for another demonstration of the compassion that supplements VF’s financial aptitude. More impressive than their decision to travel to Africa and donate their products in celebration of their 50^th anniversary, was the care with which they executed this plan. Since HIV testing carries a weighty stigma in many regions of Africa, and is hence often neglected, VF constructed a salient strategy: any African to visit a communal clinic for HIV testing would receive a CarePack filled with the company’s lauded products. This incentive battled what has been a longstanding deterrent to HIV testing and succeeded in testing 80% of the population of Lurambi.

You can be sure that VF’s social accomplishments are very much due to their financial prosperity. VF’s use of capitalism does not perpetuate inequalities, rather enables their aid and bolsters their efforts. VF continues to exhibit that one can give while getting, and that a business model can be as lucrative as it is altruistic. To quote Fast Company, VF is “[g]ood indeed: The life-saving textiles business is now 10 times the size the old uniform business was just a decade ago”.