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.

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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!

Suspending a Cooperative From Anou’s Online Store

This month we decided to suspend the account of one of the most well-known cooperatives in Morocco. While the decision was difficult to make, particularly during the holiday rush, it was necessary because we believe that transparency is a cornerstone of Anou’s community.

As we’ve written about many times before, access to limited resources coupled with illiteracy and low-education levels all contribute to the challenging and opaque environments in which artisans frequently work. As a result, many artisans have little awareness of what happens within their own artisans groups, associations or cooperatives. Even when artisans have the awareness to see something wrong, they’re often too afraid to expose the issue so it can be resolved. This makes it frighteningly easy for artisans to be taken advantage of by anyone, including members of their own cooperative.

Sadly, this  was occurring in the cooperative we suspended. We had long suspected that a small group of women within the cooperative were embezzling money, or depending on your perspective, covering the ‘costs’ of operating the cooperative. However, we never had evidence that proved beyond a reasonable doubt that money was in fact being stolen. 

Increasing Transparency

During the last several months, we have continued to tighten up our transparency efforts. This has included actively reaching out via phone calls to artisans tagged as the maker of specific sold products to confirm how much they had received as a result of their sale. In addition, multiple cooperative members became comfortable enough to reach out to Anou artisan leaders and alert them to problems within their cooperative. All of this enabled us to paint an accurate picture of what was happening within the cooperative.

The first thing we found was the true story behind two slightly incorrect custom orders the cooperative had recently made. The president told us that the incorrect designs were the result of having the items handmade. The customer of the rug graciously accepted them as they were.  However, in reality, the president instead bought similar rugs from a local market and pocketed a 400% markup.

We also learned that the members within the cooperative were unaware that they were only being paid 50% of the price listed on their online store on Anou. The officers claimed that the other 50% went to cover the costs of the cooperative. While it is none of our business how a cooperative distributes their revenue, it becomes a problem if none of the members are aware of this information nor agree to it. In this case, the members never knew about this information nor could they, or the officers, clearly explain what the costs were of the cooperative. As the officers fumbled trying to sort out their finances, it was discouragingly obvious that the 50% was exclusively going to three members of the group.

Anou’s Values

These actions not only violated the values of Anou’s community, but threatened the trust the community has built with the thousands of customers who have purchased from Anou’s online store. Anou’s artisan leaders quickly decided to suspend the group.

In preparing to suspend the cooperative, we investigated the situation further to outline what conditions they would have to meet if they wanted to rejoin the community. During our investigation, we found that the cooperative had not held a general assembly in over two years. Annual general assemblies are a legal requirement for Moroccan cooperatives. It is at these meetings where members agree on how payments are distributed within the cooperative. With no general assembly, there was no clarity on where their sales money was going and no one could be held accountable. This makes it incredibly easy for money to disappear.

We decided that if the cooperative wanted to rejoin the Anou community, they would have to hold a general assembly and establish, in writing, what percentage of their sales from their online store would go to cover the cooperative’s expenses. All the members would be required to sign it, and an Anou artisan leader may be present if requested. After a rather intense meeting, the artisans finally agreed to meet these requirements. Once this occurs, we will reopen their store on TheAnou.com and follow up with every artisan after they make a sale to hold them accountable. At the time of writing, the artisans still have not held their meeting but they have told us it will happen soon.

The Deeper Problem

Perhaps the saddest part of this story is that this cooperative is not the only cooperative where similar problems may be occurring. In fact, it is fairly easy to find these groups. We have learned that cooperatives where members are exploited often sell via fair trade businesses where honesty and equality are never measured and enforced down to the member level.

One of the challenges then is how do we continue to grow  transparency across Anou’s community if the cooperatives that have the most connections with fair-trade businesses will be the ones most likely to leave the community rather than to reform how they work. We’ve reached out to some of these fair-trade businesses to discuss having them source their orders through the Anou artisan community where transparency is enforced. Doing so would enable the business to guarantee that their payments were getting where they are supposed to go.  However, a recent fair trade business declined.  They said that by teaching artisans to sell independently instead of through intermediaries, Anou is teaching artisans how to “work outside the system rather than within it.”

When you Google the name of the cooperative we just suspended, you’ll find several articles written by fair trade businesses that canonize its female members. The articles paint the members that were embezzling money from the cooperative as examples of leadership and the steady hands that are working to preserve their craft and heritage. These statements are not false, but they generalize artisans into simple caricatures who need to be saved. This isn’t surprising because when you combine limited on-the-ground knowledge with the primary motivation of driving sales at incredibly marked up prices, these fair-trade businesses tend to gloss over the fact that artisans are no more or less human than the people who purchase their products.

The artisans that contributed to their cooperative’s suspension are not criminals nor saints. Rather, their actions were simply the result of the opaque, challenging environments they work in. Creating transparency in these environments is complicated, so complicated that the only individuals capable of setting the rules to create transparency is the artisan community leaders themselves. This is why having artisans leading the Anou community is so important. Even today, Anou’s  leaders are still sorting out how to create a truly transparent platform that works for all artisans. While it will take the community time to perfect the Anou platform, we couldn’t dream of a better system to create.

There Used to be Candles on Anou

Earlier this year, an Anou artisan leader trained a group of candle makers on Anou. We were excited to bring an immensely popular request online for the very first time. The group posted a couple of candles online during their initial training and after a month or so they made their first sale.

A couple of days later, the candlemakers had not confirmed the order via text. The leaders reached out, but the president of the candle group said there were no problems and that they’d ship the candle soon. Two weeks later, the candle still hadn’t been shipped nor confirmed.

The leaders grew concerned because if an artisan does not fulfill their product, it doesn’t just reflect poorly on the candlemakers themselves, but on the wider artisan community. The leaders increased the pressure on the group, even suggesting that a leader would travel out to their town to send it for them if it wasn’t sent soon.

Eventually, the president reached out and said they wouldn’t send the candle because business wasn’t very strong. All the president had to do was send the order and they would receive their payment, and likely, they would have received more orders from the same customer. Orders, it seemed, was exactly what they needed. The artisan leaders quickly concluded that the president wasn’t motivated. Yet when situations occur that don’t exactly add up, it is a huge red flag that something behind the scenes is wrong.

The Disintegration of an Artisan Business

The leaders kept pushing and eventually the president shipped the order. Several weeks later, a leader received a call from the president saying she no longer wanted to sell on Anou. Instead, she just wanted to focus on selling to tourists and at craft fairs. We were concerned: Did Anou do something wrong? Was there any confusion about how Anou works?

The leaders called a few of the other members to find out what happened. The leaders quickly learned that all the members had quit the group. When the item sold on Anou, the women knew the final selling price for the first time because Anou sends out SMS messages with the final selling price to each person who made the product. Prior, the president simply sold directly to tourists and at craft fairs and had no incentive to tell the women the final selling price.

The president hesitated in sending the candle that sold on Anou because she’d have to pay them now knowing that the rest of the women actually knew the final selling price on Anou. According to the women, prior to Anou they had always been paid a much lower amount than the price now listed on Anou. Yet even after the women were made aware of the actual selling price on Anou, the president still paid them the lower amount that she had always paid them. Feeling cheated on top of a whole host of other problems, they all quit in protest. As of today, the candle group no longer exists and their account has been shut down.

The Need for Transparency

The story of the candle group illuminates the environment that the vast majority of artisans operate in. Many artisans, if they belong to an association or cooperative, are not even aware of what their own group sells their products for, much less the price it is resold for by a reseller. Sometimes, artisans don’t want to even know because it can complicate the fragile operations of the group. Othertimes, artisans say they simply don’t care to know the price. All this combined with low literacy levels goes to show just how easy it is for artisans to be taken advantage all while creating incredibly unstable working environments.

The importance of transparency, as we’ve written numerous times before, is key for the long-term success of Morocco’s artisan community. This is why we’ve prioritized transparency through tools such as our innovative text messaging system to ensure that every member knows what price their work sold for. When each artisan knows the price, they themselves can hold everyone accountable to ensure that they are paid what they agreed to as a group. This tool has been so effective that many presidents of artisan groups decline to work with Anou because it will likely end their position of power and personal profit. It is why the president of the candle group would rather keep selling at craft fairs, to tourists, fair-trade shops, or wherever else that requires little to no transparency within the group.

Is there ever too much transparency?

Despite the success of this tool, it remains imperfect. For example, does every artisan that receives a text message with the price their product sold for understand what the text message means? Did the text even go to the phone they own? We admittedly haven’t followed up on this after every sale. If we did, we are certain we’d uncover some non transparent practices. In fact, there are two groups currently on the site that we suspect are not paying all their members transparently. Unfortunately, we haven’t gathered enough evidence to intervene and shut down their accounts. The question for us is how far should we go to ensure complete transparency? If we followed up every sale or tightened our transparency tools, would we blow up more groups? Do artisans whose group disintegrates end up worse off as a result of transparency?

As you might have guessed, we are huge advocates of complete transparency. There is much, much more we can do to ensure full transparency of every sale, but we have to act carefully.  Ultimately, our ability to create transparency can only go only as far as the artisans’ customers desire it. Even the most non-transparent groups in Morocco would become more transparent if it resulted in more sales. As long as there are easy ways to sell work with little to no accountability, Anou’s impact across Morocco will be limited. And unfortunately, groups like the candle makers prior to Anou will continue to operate with very little incentive to change.

Living in Morocco and Want to Buy From Anou’s Community? Now You Can!

A question that always comes up when we present Anou is, “Can people within Morocco buy from the site?” Unfortunately, our answer has always been no. But starting today, we’ve changed this. You can now purchase products from the Anou community from within Morocco!

All you have to do is is click on any product page and you will now see the price in US Dollars with shipping to the US and Europe AND the price in Moroccan Dirhams with shipping within Morocco. If you want to purchase a product, just send us an e-mail at hello@theanou.com (English, French, or Arabic), we’ll explain the options of payment, and then the artisan will send your order directly to your address in Morocco.

You can now have products shipped within Morocco! Now all product pages display prices in USD with shipping to the US/Europe AND prices in Moroccan Dirham with shipping costs within Morocco.

You can now have products shipped within Morocco! Now all product pages display prices in USD with shipping to the US/Europe AND prices in Moroccan Dirham with shipping costs within Morocco.

This is an exciting and necessary change for Anou for many reasons.

One reason is because demand for Moroccan products is highest amongst the expat community. And while expats have access to local medinas, they’ve continually expressed to us the desire to buy through Anou so they could know their money was going straight to the artisan in a transparent manner.

A second reason is that it helps Anou create more trust amongst its customers. When customers see prices on Anou that are much more expensive than in the medina, they incorrectly assume it is Anou marking up the prices rather than the fact that Anou’s prices include shipping to the U.S. and Europe. With this feature, all customers will know just how much it would cost to buy in Morocco and abroad — an important piece of information that is essential for Anou’s transparency.

The third reason is that while we expect to see continued sales from international markets, we believe that the market with the biggest potential is the Moroccan market. While this might surprise some, the demand for artisanal products is growing in Morocco. As more and more Moroccans work to promote the preservation of their valuable culture, the pendulum is beginning to swing back. As a result, we expect that Anou’s artisans will begin to ship the majority of their online sales via Anou to customers in Morocco within 5 to 10 years. If you find this unbelievable, then you might be also surprised to learn that the Moroccan Ministry of Handicraft cites that as of today only 8% of all Moroccan artisan sales are exports.

While we’ve only released this feature in the past 24 hours, a cooperative has already made a sale to Marrakech. So if you’re in Morocco and you want to support artisans directly, what are you waiting for?

 

Creating Transparency In An Environment That Is Anything But

Rabha, an Anou artisan trainer, paid a visit to one of the cooperatives on Anou last week. Her goal was to show the cooperative Anou’s new desktop and mobile platforms. Though she was told all the women would be ready, only half the cooperative was present when she arrived.

Little did Rabha know that shortly after she scheduled her meeting the week before, the members of the cooperative had a huge argument. Apparently, a faction within the cooperative believed that the sales at a recent craft fair didn’t match up with the actual amount of product sold. Two members, tired of feeling that they were being shortchanged, quit working at the cooperative. The remaining members fought over who would attend the next craft fair. They eventually compromised and decided that two different members would attend the craft fair each day – even though cost of such a decision would certainly drain any profits the cooperative made.

If there is anything I’ve learned after several years of working in Morocco it is that a lack of transparency begets rumors and frustration, which then evolves into a distrust that slowly erodes the effectiveness of institutions in Morocco. Small cooperatives, such as the one described above, are not immune to this. Almost every cooperative or association we meet possesses huge amounts of potential, but the members’ distrust in each other always holds the group back.

This is the side of fair-trade that is overlooked. While fair-trade principles stress transparency, they rarely consider the transparency within the groups that fair-trade organizations works with. This is simply because many organizations do not work with artisans closely enough to know what is happening on an individual level. Organizations can transfer over the correct amount of money but after that, there isn’t much an organization can do in terms of transparency. How certain is the organization that their wire transfer will go to all the members of a group, and not just the president? Worse, how can they be sure their wire transfer didn’t just blow up a cooperative already paralyzed with distrust? Existing models of fair trade can’t answer these questions – it isn’t financially feasible for organizations to follow up with such detail.

At Anou, we’ve built a system that creates transparency rather than treating it as just another buzzword. When an item is purchased on Anou and shipped, the artisans’ payment is sent immediately into their local bank account. Anou sends a text message to the artisan group president or confirming the amount that has been deposited, along with the transfer reference number. We also send an e-mail and MMS with a copy of the transfer receipt. If the payment amount in the text is different than what is posted in the artisan’s account, we tell the artisans to call us directly so we can investigate the discrepancy.

However, we quickly realized this wasn’t enough, as it still didn’t address the transparency within the association or cooperative itself. When groups are fighting, they don’t post items on Anou, they neglect the shipment of products, or worse, they stop making products and close up shop.

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Every artisan that is tagged into creating an item will now be notified not only of when their product sells, but also the price.

This past week, we released a new tool that will finally address this. Now when an item sells, not only will the cooperative or association president be notified of the item that sold, but so will any artisan that helped contribute to making the item. In the text message sent to a contributing artisan, it will show the product ID number as well as the price that the item sold for. This way, every member that contributed to a product will know exactly how much it sold for. In line with Mohammed Yunis’ model of micro-finance, artisans will be empowered to hold each other accountable in a space of full transparency.

To bolster the effectiveness of this, Anou will periodically call up artisans to ensure that they were paid the amount that they were owed. If we notice a problem, we can simply decide to suspend an artisan’s account on Anou until the issue is resolved.

At the end of Rabha’s meeting with the fractured cooperative, Rabha reviewed this new exciting tool that would help create transparency within the group. The cooperative’s members were incredibly excited about the idea and couldn’t wait to use it. The most excited member? The embattled president who felt that with Anou she would be able to gain the full trust of her team and reach the cooperative’s full potential.