Analysis: A turbulent end to The Body Shop Foundation

A dispute between the cosmetics firm and its associated foundation led ultimately to the closure of the charity

At the end of last year, The Body Shop Foundation abruptly announced that its next round of funding would be its last and it would be changing its name to Revolution in Kindness before closing down.

A statement on the charity's website made no bones about the reason: the cosmetic store The Body Shop International, its major funder, had withdrawn both its funding and the right to use the Body Shop name. The company and the trustees no longer had "a shared vision for the independent future of the foundation", the statement said.

Lisa Jackson, who had been involved with the charity since its inception and was the charity's final chief executive, put it even more bluntly when Third Sector met her in March as Revolution in Kindness was preparing to hand out its final grants.

"We were being asked to change what we worked on and how we worked, and they wanted control over it," she said. "So we had to make a stand, because we believed that our approach was fundamentally right and the types of organisations we support were still very much in need."

As a result, although the charity has not been officially closed, most of Revolution in Kindness's reserves have now been spent and, to all intents and purposes, it is no longer operating. As Jackson described it, the demise of the organisation holds lessons for other corporate foundations about the importance of maintaining their independence and ensuring that they are more than a simple brand-improvement exercise.

According to its own statistics, The Body Shop Foundation (or Revolution in Kindness) gave more than £23m to a total of 2,932 different groups in more than 100 countries, and had an impact on more than six million people. It supported and gave money to human rights, environmental and animal protection causes, with a focus on impact, innovation and under-publicised issues.

Founders

The foundation was set up by Anita and Gordon Roddick 20 years after The Body Shop opened. It was funded by an annual donation from the company's profits.

But the relationship between the company and its namesake foundation changed when the Roddicks sold the business to the French-owned cosmetics giant L'Oreal in 2006 in a deal worth £652m.

From the first meeting under the new regime there was a mismatch of understanding, according to Jackson. The firm's new owners were confused in particular by the charity's support for human rights campaigns, asking what that had to do with selling shampoo.

"When L'Oreal took over, the pendulum swung massively towards a drive for commercial benefit, which meant that a lot of the organisations we'd worked with in our 27-year history wouldn't get a look-in in future," Jackson said.

The foundation was also expected to become more involved in the business, she said, with TBSI asking the charity to fund organisations that might one day be able to contribute an ingredient or piece of packaging for the shop's products, something Jackson dismissed as commercial benefit rather than philanthropy.

Long before the company was sold to L'Oreal, Jackson said, she had asked whether the donation from the business should be formalised, but was told it was unnecessary: the charity was part of the company's ethos. But four years ago, she said, TBSI stopped its donation to the charity, replacing it with a product sold in-store from which the foundation would receive the profit, in effect passing the cost of the donation from the company to the customer.

This change came with what Jackson described as "crippling restraints" on where the money could be allocated. It was decided that, rather than the charities funding experts, TBSI staff would choose where the money went, with some of the money staying in the market where it was raised and some going elsewhere.

According to Jackson, the resulting funding model was confusing to those who applied for grants. Until that point, money had been strategically awarded around the globe in amounts large enough to have a long-term impact on the organisation or cause it went to.

"Previously, we'd funded ground-breaking projects that addressed issues such as human rights, social rights, vivisection, animal and human conflict, trafficking and prostitution," Jackson said. "Before we knew it the restrictions had us funding hedgehog helplines in Switzerland."

Under the new system, the grants became dramatically smaller and more scattergun, according to Jackson. In many ways, it marked "the beginning of the end", she said, with the business and the charity moving further apart.

"Two years ago, we received a funding agreement from TBSI confirming our concerns that its demands for control would compromise our objects," said Jackson.

'Irreconcilable'

Despite lengthy negotiations, the differences were "irreconcilable", according to Jackson, and the trademark licence was withdrawn with five weeks' notice.

Jackson saw little point in continuing alone under the name Revolution in Kindness, she said, because all it would be doing was "taking the funding from the organisations we'd want to fund and creating competition, and that just doesn't seem right".

Third Sector put Jackson's concerns to The Body Shop. Christopher Davis, the company's international director of corporate social responsibility, said in a statement that the company was proud of the foundation's achievements, but the world had changed since it was established and the company needed to change too.

The company had begun a "period of transformation" in 2016 to fulfil its "new corporate vision of being a truly and scientifically sustainable business", he added.

"Change can be a difficult process and we acknowledge that, in this instance, it proved to be especially so," said Davis.

"Ultimately, the foundation decided it didn't want to work in the way we were striving for and, as an independent charity with an independent board of trustees, exercised its independence and decided not to continue the relationship with the company." He said it was sorry to see it go.

Two months after the final grants were awarded, Third Sector spoke to Jackson again. As expected, the process of dismantling the charity was "painful" but, she said, she'd also gained "some perspective and clarity" on the situation.

The blame cannot wholly be laid at the feet of L'Oreal, she said: "It was more that The Body Shop itself was changing: the business was evolving in an entirely different direction, and that included a change in its commitment to philanthropy."

But she said she hoped that other organisations could learn from its experience. "You should clarify and formalise your arrangement and relationship with your corporate funder early on, agreeing to what the expectation is from both sides and work together with respect, open communication and honesty," she said.

The final round of grants, which were awarded to 16 stand-out organisations the charity had previously funded, provided an opportunity to reflect on the "remarkable journey" of the foundation, said Jackson.

"I'm also really proud that the determination, energy and spirit that was so important in our conception - to not be just another corporate foundation - continued to the very end," she said.

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