Making Anou’s Expenses Publicly Accessible

Recently, a fair-trade business owner visited one of the cooperatives Anou serves looking to purchase several “fair trade” rugs. The artisans told the fair-trade business owner that their prices were the same in their workshop as they are on their Anou online store. The fair-trade owner complained that the prices listed online were too expensive and that they expected that prices would be cheaper at the workshop. However, all prices on Anou are set by the artisans that made the products. The difference between purchasing from an artisan workshop in person or via their store page on TheAnou.com is essentially zero minus the shipping costs.

Undeterred, the owner began to increase the pressure, refusing to buy anything if the prices were not reduced to a level the owner deemed acceptable. Since it was only two days before the biggest holiday of the year in Morocco, and a holiday for which everyone saves their money to buy food and gifts (Eid Kabir), the women of the cooperative panicked and gave the owner a 10% discount on their rugs, amounting to about $5 USD discount per rug.

We contacted the owner directly about sourcing products through Anou in the past, but they said,  “the prices listed on Anou are too expensive and I have business costs to meet.” One month later, the $45 rug was listed on their website for $366. A description of the rug stated, “with the purchase of this rug, you directly support [artisan’s name] so she can better support her family.” This begs the question, was discounting the artisans by $5 really necessary? And does an 813% retail mark-up really follow the fair-trade business owners claim that their fabrics are “fair and honest”?

A Lack of Transparency

The challenge of finding an answer to the question of whether a $5 discount was necessary points to the significant and troubling lack of transparency within the fair-trade industry.

Unfortunately, there is no incentive or even a remote expectation for fair-trade businesses to be completely transparent about their costs. Customers must simply trust that a business is fair and practices what it markets. This holds true for established fair-trade organizations as well. Their slick websites display dazzling statistics about their operations, such as impossibly low overhead costs so artisans can get the “fairest” price. But dig a little deeper and you often find that fair-trade marketing focuses far more on evocative photos than on substance.

To glimpse beneath the surface, track down an organization’s 990 report (you can do that on www.guidestar.org). 990 reports are where tax exempt organizations in the US are legally required to publicly list their expenses and revenue. While 990 forms don’t provide that much clarity on an organization’s budget, they’re clear enough to see some pretty big red flags. For example, the two founders of one artisan focused organization collectively earn over $200,000 in salary annually. These two salaries account for nearly 50% of their entire annual budget and is likely greater than the value of all products purchased and sold in the same year. To cover these “overhead” costs, the organization raises funds through charity. Do their donors understand how much of their donation is going towards initiatives that may or may not benefit artisans or follow “fair trade” principles? Do their donors know how much artisans really make working with this organization? Without full transparency we are left to simply trust the information they market.

This lack of transparency always leaves artisans in Morocco with the short end of the stick. Artisans are regularly coerced into giving much more than $5 discounts because of someone else’s business’ costs, fair-trade or not. The worst part? The end customer never even knows. As long as this continues, artisans will remain disenfranchised and poor, which only provides the fuel for the endless parade of organizations trying to save them.

Opening Up Anou’s Expenses

Anou is breaking this monotonous cycle by empowering the community of artisans in Morocco to drive their own growth and development. Naturally, financial transparency has become the backbone of ensuring this community is capable of establishing equal access to the free market on their terms.

IMG_0192

When Anou’s artisan leaders input their expenses, they’re automatically categorized on our public budget.

This is why, starting today, Anou is making its real time data for expenses publically accessible. Next, we will begin building the tools to publicly display the revenue of our community in real time. This way when purchasing from artisans in the Anou community, customers will know exactly where their money is going. No need to take our word for it or believe that “all money goes to the artisan!”, you can simply see it for yourself. This document is what we use internally to record and track our costs, so you see what we see in realtime.

While this decision uncomfortably challenges the status quo, we believe it is absolutely necessary for us to do. We cannot create the trust needed for the artisan community to coalesce if only a select few can view Anou’s expenses — it is the artisan’s money after all. Nor can we create the expectation for artisans within the community to become more transparent if we do not set the example ourselves. Lastly, if we do not do anything, there is no incentive for anyone else in the fair-trade industry to ever change.

At first glance, full transparency might be perceived as naive, idealistic, and/or unrealistic. But is it really? One business in the US, Bufferapp, recently made all of their salaries and sales data open to the public in real time. The move was heralded as ground breaking, signaling a new era in how businesses are run in the 21st century. This company isn’t a social enterprise, nor does it have a traditional altruistic mission. Bufferapp simply develops a software application that enables people to easily manage multiple social media accounts. If a private for-profit company with no direct purpose in helping marginalized populations can execute transparency better than everyone in the fair-trade industry, it is naive and unrealistic to believe that fair-trade should remain the same.

As we continue our push to full transparency, we ask that you join and support Anou to realize a marketplace that works for both artisans and their customers. You can show this support by spreading the word about Anou’s work, purchasing through Anou, or doing something as simple as asking a question about our budget in the comments below so that we can make our budget more understandable. With your help, artisans will no longer settle for $5 discounts and customers around the world can buy with the knowledge that their money is going where it is meant to go. 

View Anou’s Real-Time Expenses:

English & Arabic 2014/2015/2016

Note: We’ll be exploring our budget more in depth in forthcoming blog posts. In the mean time, ask us any questions you have below!

3 thoughts on “Making Anou’s Expenses Publicly Accessible

  1. This is a great initiative and distributor should be compulsory made to make their accounts accessible. it is already part of the Weltladen (One World Shop) organisation in Germany http://www.weltladen.de/

    I have been thinking about this issue for a long time – what is really fair. How do you calculate the price for the endconsumer (in USA or Europe), for the distributor, the wages for the artesan. then there is the issue with giving permanent employment versus paid by item. Especially when paid by item. how do you determine a fair price? I dont know how this can be measurable archived…

    About Fair Trade distributors. your example is horrible. If the distributor is a non-for-profit business, this would be fair. there should be a salary cap too, from my view, as it has happened in Europe with CEO’S of multinational companies. I think this issue with the fair price needs much more attention and new solutuons that are accountable and measureable….

    About your excelsheet, I think I would like to have more transparency about the issue with payment to the artesans, living costs, earning per hour? (is this possible at all)… but i see the mayor problem to be honest at the distribution side. However, you mention this high mark up. You also have to consider that fair trade products do not sell fast as standard products (however, if this mark up creates a horrible salary of the owner, then this is out of question). But how can this situation slow sale versus high mark up vs potentialle high income for the distributor be solved? for me, only a limit to the income and salary cap for the owner. Any accesses should be donated..

    I wish you lots of new customers 🙂

    • This is a great comment. Thanks for writing it!

      It’s exciting to see that One World Shop has already taken ideas like this on.

      You’re right, the example we cite in this post is pretty atrocious but we only reference it because it is more common than most would believe.

      We don’t necessarily advocate for capping wages/salaries, even for those in the non profit sector. They should be able to set wages at what they see fit and be able to be accountable to their donors. That said, the same should apply to artisans. Artisans should be able to set prices at what they want and be accountable to what their direct customers are willing to buy their work at that price. It is only when we get to reselling, that these ideas of living wages and fair wages come into play. When we frame artisan pay in the poorly defined boxes of fair wages or living wages, it is demeaning for artisans. A different (and perhaps simplistic) way of looking is to consider how would someone in the US/Europe respond in a job interview or salary negotiations where the employer told them that they would determine their pay based on how much they spent on food and other basic necessities? Or worse, have the employer determine how much is suitable for an employee to spend on basic necessities?

      The only solution is to ensure that all artisans can properly price their products at what they see fit for themselves. The role then for distributors or retailers beyond that is that they have to innovate create added value on top of the prices artisans decide on. In the 20th century, providing market access was the added value fair trade companies brought to the table. Market access isn’t much of a value add any more in Morocco so fair trade here must evolve. If a company or fair trade group can develop innovative ways to bring added value to a product on top of the price an artisan selects, the company should be able to sell the products for whatever they want. St Frank’s framed textiles seems to be a good example of this from what we know of them.

      We’ve given thought to making living costs and earning per hour transparent, but more along the lines of having artisans input hours artisans worked on a product when they post it online. We will likely implement online tools like this for artisans in the future to help them develop/think about their prices. But at this moment, I think it would be very unlikely Anou’s artisan leaders would decide to make this information accessible to the public.

      Thanks for all your comments and thoughts!

      • thanks for your reply 🙂 i am really hanging on that issue at the moment, to really develop something fair. I am a friend of the Social Organic developed by Witzenhausen (Sozialorganik in german). this theory speaks about that the company/producer is the extension of the wishes of the customer. Only this enables democracy and fairness in the consumption process. there are two really big companies here in Germany who are based on that model (alnatura.de and dm.de). It also says only fair and low prices (without huge margins) are democratic. And, the company (DM or Alnatura) is also extension of the wishes of the producers. I am currently involved in a fair trade project and i find the prices are horrible high. sorry to say that. e.g. the national average salary is 100$, the volume they can produce in a month has a value (at their current unit price) at around 6000$!!!!! and i calculated already the double time someone would take here in Germany. This is the same example you gave, but the other way round. What do you think about this? is this fair? But you have you say, that they could not sell (at the start) 6000$ worth of money every months.
        As a result, with this high prices, their wholesales price (selling to me) is as high as top at the end products in this sector. But 50% of people who have been asked how much more they would pay for fair trade, say 10% above market level. I really think this product would ,over a period of 3 years, really develop into a “mass product”, regular sales, regular employment for the artesans. But at the moment, the artesans view is not realistic. I personally, from experience in that country think, that they (Europeans) has enough money, so they have to pay for it. I fully understand that, but as i said before, this is not fair either?!? Fair Trade is for me, not extremes, it is income above average, perhaps even double. Taking the example of having a job interview, the company would only pay me double, if its financially viable.

        Then there is the point, taking your carpet makers. is it better to sell more carpets at a cheaper price or perhaps 1 at a higher price?

        issue with distributors. I am also a fan of direct sales and i really liek your project. I even have thought about something similar, out of finanical problems i have. A distributor buys products at a cheaper price, but it also buys larger quantities. The difficult work of marking and getting sales, is out of the responsibility of the artesans. especially with smaller products (value less than 10$ each) a distributor is a valuable helping hand dont you think so?

        How would your projekt work with products each value of 10$?

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