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Kate Spade New York’s Social Enterprise Initiative

Vanessa Childers July 16, 2019
Photos by Jeremy Stanley

Nestled in the foothills of Masoro, Rwanda — about a 45-minute drive from the capital, Kigali — sits Abahizi Rwanda, a handbag manufacturing facility that Kate Spade New York helped local artisans establish in 2012.

The for-profit company was created to serve as the first handbag supplier for Kate Spade’s then-budding social enterprise initiative, on purpose. Its mission? To create long-term sustainability and help transform the community by empowering and employing its primary agents of change: women.

Abahizi employs over 250 people full time, 90 percent of whom are women, and provides them with benefits including health insurance for their whole families, paid maternity leave, sick days, vacation days, and bonuses. Seventy-two percent of artisans are parents, and 20 percent are single parents. Last year alone, Abahizi produced 32,000 on purpose handbags in both the company’s mainline and outlet business.

Built into each handbag’s production cost is a fee that covers a suite of life-skills training programs offered to all employees, who have shown a consistent increase in workplace, economic, psychological, and community empowerment, year over year.

While on purpose is one initiative inside the Kate Spade New York business, it has had an organization-wide impact — especially since the fashion brand’s acquisition by Tapestry, Inc in July 2017 — further transforming the lives of the families of Masoro and other Kate Spade New York communities.

We sat down with Kate Spade New York’s Executive Vice President and Chief Marketing Officer Mary Beech and Director of Social Impact Taryn Bird to learn more about the impetus for on purpose, the program’s blended finance model, the ripple effect it has created within the community of Masoro, and what the future holds for Abahizi Rwanda.

What was the impetus for Kate Spade’s on purpose initiative?

Mary Beech: From the early days, our company wanted to do something involving our product that could also do good for the world. We initially worked through a traditional public-private partnership with the organization Women for Women International. We sourced products from local female artisans from Afghanistan, Bosnia, and Rwanda. Our executives traveled to those regions, met the women who were working there, and began to see not only the impact we were having on these women and their lives but also the way that both our customers and our employees were responding — it was all positive. We saw what is now researched and proven: employees feel better about working in a company that’s positively impacting society and the world.

We determined that we wanted to create an initiative that was part of our supply chain, that was financially sustainable, and that incorporated products that were fully integrated — designed to look like the rest of Kate Spade New York’s seasonal collections, but done in a way that created positive impact. That’s when we set up the social enterprise on purpose model in 2012 and Abahizi Rwanda was the pilot.

How did the company decide on women’s empowerment as its area of impact — and how does this weave into or support Kate Spade’s purpose as a company?

MB: Empowering women was an easy place for us to lean in. We were founded by a woman, the vast majority of our customers are women, and 85 percent of our company is women. That is not just within our retail workforce, which is fairly common within a fashion organization, but all the way up to our senior leadership team. We’re one of the only fashion companies with a female CEO and a female creative director. Empowering women comes very naturally.

On purpose has had a tremendous impact on our initiatives overall as an organization. We evolved from a traditional CSR partnership to a social enterprise model, which then influenced the evolution and re-launch of the Kate Spade New York Foundation in 2015 — a more traditional CSR initiative, with a mission linked to what we were already doing with On Purpose: empowering women to transform their communities.

Our mission as a company — and our brand’s promise — is “to inspire women to be the heroines of their own story.” We believe in the power of women to be storytellers and to feel confident about moving forward in the world. It was also inspired by the work we were doing with on purpose.

Tell us about the on purpose business model and Kate Spade New York’s role within Abahizi Rwanda.

Taryn Bird: We at Kate Spade New York act as Abahizi Rwanda’s social impact investor and their client. There are over 250 women from the local community working at Abahizi Rwanda. The company is a locally run, employee-owned, for-profit social enterprise. We at Kate Spade do not own it. We have a unique relationship with Abahizi, a true partnership built on years of trust and that has led to pretty significant impact.

MB: At Abahizi Rwanda, built into the cost of every product is a social impact fee that allows the factory to offer empowerment classes to the women and men working there, during the work day. We have learned firsthand that economic empowerment is important, but it must be coupled with psychological and emotional empowerment to have the greatest impact.

TB: On purpose is a blended finance model, so we use commercial capital and philanthropic capital to invest in the community of Masoro. All of our commercial capital is invested in Abahizi Rwanda, and our philanthropic capital is invested in the community. The philanthropic part of the model is funded through an employee fundraiser and also a sale with our customers called Shop With Purpose. We offer 30 percent off product in-stores and online over a four-day period and then donate 2 percent of net sales to a donor-advised fund that sits within the Tides Foundation. We call this fund the on purpose Fund. The on purpose Fund then distributes those funds to nonprofits that are working in the communities where we build our on purpose suppliers. With this, we’re not only investing in the empowerment of each woman working in the factory but also in the empowerment of the community where the factory is located.

To ensure responsible and sustainable investment into the community we deploy our philanthropic capital toward physical infrastructure and local capacity development. We work with the government of Rwanda and community development experts to identify and select nonprofits with track records in Rwanda in innovative program design, effective capacity development, and rigorous impact measurement. In this approach, we follow our commercial investment strategy by building a foundation of infrastructure and human capacity that the community owns, sustains, grows, and uses to better their future.

Why did the company choose not to start a traditional corporate social responsibility program?

TB: Both on purpose and the Kate Spade New York Foundation are committed to empowering women to transform communities. On purpose is the social enterprise extension of our women’s empowerment portfolio. Over the last five years with on purpose and embedding our social impact work into our core business, we have been able to set up longer-term partnerships between our brand and our partners. In addition, we are able to engage more of our corporate teams, customers, and corporate field teams in bringing our social impact work to life.

How do you measure the success of on purpose, and what are your goals moving forward?

TB: We bring in a third-party company called Laterite to conduct an annual survey. Each individual who works at Abahizi Rwanda participates in a 60-minute survey with a little over 100 questions — so we’re getting a very accurate snapshot of the socioeconomic status and the empowerment that’s taking place. Along with the Abahizi Rwanda Leadership team we evaluate where there are areas of opportunity for increased education and investment. We’re focused on efficiency and growing our business there, and so with that also comes hiring new individuals. There are 250 full-time jobs created at Abahizi Rwanda with 93 percent being women from the local community who have access to full-time employment. When we started on purpose there were a little over 100, so as the business has grown so has the number of individuals employed.

We have a full social impact report. If you look at the self-empowerment scores, you’ll see that these women are ranking themselves higher year over year in terms of how they view their life today and what they’re hopeful for in the future. The self-empowerment score is a metric that was developed by Georgetown University in 2017. Georgetown has been a measurement partner of ours measuring not only our social impact but the business viability of what we set out to do.

Something that’s really important to us is that the business itself has a retention rate of over 97 percent. Women are not only coming to work , they’re also staying there. With that comes not only an improved livelihood for themselves but also for their families; 93 percent of the children of the women who work at Abahizi Rwanda are currently in school. That means that are actually making decisions on the home front. We’re also looking at the number of businesses that are starting to populate in the community as a result of their employment. One in three women who work at Abahizi Rwanda owns a business outside of their job, so they not only have access to full-time employment at Abahizi but they’re starting new businesses and then hiring individuals from the community to work in those businesses. We’re seeing not only self-empowerment and improved family livelihood but also this ripple effect into the community, consistently, year over year.

What gives you hope for the future?

MB: I’m particularly excited right now. Tapestry recently announced 2025 Corporate Responsibility goals. One of the goals is around Worker Dignity, and is an extension of Kate Spade New York’s empowerment work in Rwanda. Our production at Abahizi Rwanda is a small portion of what we do as a company, so Tapestry will look at the rest of its supply chain across all three of its brands (Coach, Kate Spade New York, and Stuart Weitzman) and focus on bringing empowerment programs to 50,000 people crafting products in our factories by 2025. That really gives me hope that we can take these lessons from Masoro and roll them out to other factories around the world.

There are many good things that happened through our acquisition by Tapestry, and one of the most exciting for the on purpose initiative is that we brought in Coach as a second client for Abahizi Rwanda. We had no idea when we launched in 2012 that we’d have sister brands, so that’s been a wonderful aspect of our acquisition. Our focus now is to help other companies replicate this model around the world. We have learned a great deal over the last six years building on purpose and through our partnership with Abahizi. We want to share those learnings and inspire other companies to take similar approaches by investing in local communities and using their own supply chains to create impact.

Equity and Inclusion / Stakeholder Capitalism
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