You can't donate profits you don't have

What small shops get wrong about giving back, and one way to reframe it

Mrs. Albers in front of her unprofitable shop in Colorado, in July, 1973, holding a photo of the same shop in 1900. Source: wikimedia commons

Last month I received a flurry of emails and saw at least a dozen Instagram posts from tiny shops pledging to donate anywhere from 5-100% of their profits to an immigrant rights or civil liberties organization during the No Kings protests.

It’s such a wonderful sentiment! I’m totally in favor of supporting these causes! I love to know that the people behind the businesses I shop at have values that align with mine.

However, knowing what I know about how most small businesses are performing financially right now, I think pledging profits is misguided.

I understand why shop owners do this. I’ve done it myself! We don’t want to feel powerless in the face of gross injustice, we want to be of service. We want to use our businesses as a force for good, or at least to put the brakes on evil.

Unfortunately pledging a percentage of a weekend’s sales is, for most businesses, not sustainable. Its benefit to organizations is minimal (individuals can probably donate more than a small business raising money through a weekend’s profits), but its impact on a business that doesn’t have the funds to donate makes the whole practice a net negative.

Because this behavior is so common, and questioning it feels a little taboo, it rarely gets examined. So I thought I might as well put myself out there to break down why donating profits, for small shops, is ineffective. My hope is that by reframing it, small business owners can let themselves off the hook for pledging direct support during every crisis, and instead focus on more meaningful, long-term strategies for resistance and solidarity—ones that are often less visible, but far more sustainable.

The constant pressure to give

Thank you for thinking of us—it sounds like a meaningful cause, and one we’d be glad to support if we were in a position to do so.

We set our giving budget at the start of each fiscal year based on the prior year’s profits, and this year, like many small businesses, we’re facing a tough financial climate. Unfortunately, that means we’re not able to commit to additional giving right now.

We appreciate the work you’re doing, and we’d be happy to stay on your list for future opportunities. Wishing you all the best with your event!

— Fernseed boilerplate response to donation request outreach

Most visible retail shops in a community get anywhere from 1 to a dozen donation requests from organizations every month. They want us to donate to their schools, their churches, their golf outings, sometimes even for-profit ventures. We get so many requests, shop owners make TikTok videos devoted to picking apart what it feels like to get asked all the time and how to respond. Most of us have figured out a way to politely decline to donate because we don’t have the money. But suddenly when the zeitgeist shifts and we’re in a crisis moment, shop owners go from pockets-out broke to Richard Branson dropping fist fulls of cash out of a hot air balloon.

Tiny shop owners responding to a social justice crisis

We can help with this! We have so many candles we were going to put on sale anyway! We can sell those candles to raise money for [Googles organization]! We are part of the solution, not evil capitalists!

Is the impulse to help a bad thing? No. As I said, I’ve done it!

Just… after you’ve been in business for six years like I have [strokes white beard], you recognize it as a knee-jerk reaction with no sustainable follow up that happens literally every time there’s a thing. Six weeks later is that same shop reporting on how much was collected, and that it was actually donated? Sometimes yes. Is that same shop circling back to the issue once it’s no longer the cause du jour? Probably not.

Here’s where I take issue. I’m fairly certain most of us don’t actually have the money to donate, and yet we’re publicly pledging profits. That gives the impression that we have profits, which limits the community’s understanding of the financial precariousness of the small businesses in their town. It also puts pressure, albeit indirect, on other businesses to do the same. It sets up the expectation that we should help when we can’t actually help.

You don’t have profits to pledge

“But I make a profit on every sale!” I hear you saying.

Wrong.

Let’s say most of the products you sell have a 50% margin, so when you sell a $100 item, you’re “profiting” $50. But we don’t measure profits on a per-item basis because we have other expenses involved in running a business.

Technically, yes, you can donate from your margins. But until you reach your break-even point, that margin isn’t profit—it’s just what helps you stay afloat. You have to cover your fixed expenses first. The margin on each sale pays for those fixed expenses. Then, when you hit your break even, you have profits.

Do you know YOUR contribution margin ratio? I do.

Say your fixed expenses are $10,000 per month between rent, salaries, software, etc. How many $100 products with a 50% margin do you need to sell to pay for those expenses?

$10,000 ÷ $50 = 200

Until you sell at least 200 units at $100 each, you haven’t made a profit to donate.

Watch Caroline, a shop owner in New York City and creator of the Locavore Guide, explain break even (way better than I can) in an Instagram Reel:

Caroline from the Locavore explains break-even way better than I can.

If you’re not past break even, any money you give away is sacrificed from your own stability. Even after you reach your break even, a percentage of each sale must still be retained to cover cost of goods, credit card fees, and all other costs associated with processing that sale, plus developing a cash buffer and covering debt.

If you’re paying back debt or startup costs, you actually don’t have any room to give until you reach your break even and all outstanding short-term debts are at a $0 balance.

So… who here actually has profits to give away?

Not me!

Fernseed’s break even is around $36,000 per month, and for 5 months out of the year, we don’t hit that. We stay afloat because in the other 7 months we exceed it, but not by much. We use the excess profit in the good months to create a cash buffer to get us through the lean ones. It took me six years to learn this, during which I racked up a considerable amount of debt. That debt needs to be paid back before I can ever consider donating to anything. That’s not selfish, that’s just reality.

If you aren’t micromanaging your cash flow to that degree, if you’re not sure where you’re at for the month, or last quarter, or if you’re on track yet for this year, I guarantee you do not have money to give to anything. That doesn’t make you a bad person! It makes you a regular member of your community out here just trying to get by like everyone else.

So why does it feel different when you’re in business?

Giving back started with excess profit

The idea of giving back was born of a problem that started with too much profit. When companies were doing really well, they had more money than they knew what to do with. Corporate billionaires used these funds (still do!) to enrich themselves, often at the expense of their employees and their communities. Then companies like Patagonia, Burt’s Bees, Bob’s Red Mill, and Dr. Bronner’s changed the narrative. Rather than use profits to enrich their CEOs and shareholders, they reinvested excess capital in their employees and communities.

With the advent of companies like TOMS Shoes, which popularized the idea of donating one unit with every unit sale, and the growth of the B Corp movement, which gave us the triple bottom line, we’ve all been exposed to the idea that giving away profits is one responsible way to run a company. What small business owners are doing, however, when they donate a “percentage of sales,” is mimicking the marketing end of giving back without baking in a business strategy. The difference between you and Bob’s Red Mill is that Bob’s Red Mill had a boatload of extra cash at the end of the fiscal year, year after year, and you don’t.

If you’re like the shop owners who responded to the latest Main Street survey, you’re probably doing some combination of relying on free labor, not paying yourself a living wage, and servicing debt, all while not building equity in real estate. Let me be the first to tell you that in that scenario, you’re not in the position to donate.

In our personal lives we might make exceptions, donating $50 to a fundraiser even if we’re cutting it close between rent and groceries. But in business, baking in a giving-back scenario, even one that spans only a weekend, before we have enough to give back is endangering your ability to build something that can more sustainably give back in the future.

How to actually make a difference

When you own a visible small business in your community, you’ll probably at some point get pressure to speak out on a social issue, or pushback from people who think you should be doing more. I’ve been there! It’s rough. I’ve even let the discomfort push me into donating money I didn’t have, or making statements that centered my own experience during a social movement that wasn’t about me. This doesn’t help anything.

Sometimes in the face of pressure to do something I need to remind myself, “Is the world really asking for the owner of a plant shop in Tacoma, Washington to speak on this issue today?” It’s only in very rare cases (like this one) where I’m in a reasonable position to be that day’s mouthpiece on an issue. Otherwise, I let those who have been leading activist work keep leading it. Meanwhile, I dedicate myself to advocacy I can contribute—a lot!—to, such as small business anti-displacement.

As I grow my company and develop more resources to reinvest, I’d like to be more like Ben & Jerry’s, a “social justice company that makes ice cream.” But the difference between you and me and Ben & Jerry’s is that Ben & Jerry’s generates $750 million in revenue with a 10% profit margin, meaning there is $75 million left over after everyone gets paid, which includes full-time employees working solely on corporate advocacy. We may have access to Canva and an Instagram feed, but we can’t all create the type of original content Ben & Jerry’s does, though we may agree with it.

This doesn’t mean you stay silent! Not at all. Here’s an incomplete list of things you can do that have an impact but don’t drain resources you don’t have:

• Put a poster in the window

• Share other people’s posts to your Instagram Stories

• Distribute supplies to protestors

• Host a collection point for donations (toiletries, food, supplies, etc.)

• Carry work by marginalized artists, or products made by companies that give back

• Offer a place for organizations to post bills and flyers

It’s okay to sit in the discomfort of not knowing what to do, or of feeling powerless—because without actual profits, you kind of are. That’s not a moral failure, it’s just the truth of running a small business in this economy.

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»»» In a total aside here, one of my most recent favorite examples of how even when we think we have power we are ultimately pretty powerless under capitalism is this New York Times article about Robert Smith from The Cure trying to go up against Live Nation and Ticketmaster. Robert Smith thought, because he’s literally Robert Smith of The Cure, that the ticketing giants would listen to him, but they didn’t. The real kicker is that other big artists didn’t speak out either—which would have been almost the only way to really go up against these guys. At the end of the day, capital protects capital. Good for you, though, Robert Smith!

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Where the real work begins

The real ways you show up for your community as a small business owner will probably be mostly invisible, because the moment you start making that support a part of your marketing, you’re centering yourself in a conversation that should be about the core issue, not you raising money by selling cocktail shakers or whatever.

Giving back, especially as a small business, doesn’t mean telling your community what you’re doing to support them. It means listening to your community tell you what they need, then using the resources you actually do have to provide it, quietly, day after day. This is about the only thing you can do, and it might feel like not a lot until you read stories about how simple acts like centering queer music and books has a huge impact on teens from conservative places, for example. Never forget you curate a tiny corner of the world that anyone can walk into, and how they do or don’t feel welcome in that space has a lasting impact, especially on young people.

In a separate post on Storefront Revolt, I wrote about what real power can look like for small business owners during a time of crisis. Real impact comes from staying in business long enough to build power—financial, social, and political—and then using that power collectively. That means understanding where your obligations are first (to your team, your vendors, your own sustainability), and then finding more grounded, long-term ways to contribute. Whether that’s joining your local business district association, supporting a cause over time, or simply staying solvent so you can keep showing up, you don’t have to give away money you don’t have to prove you care.

Being a small business owner trying to survive in a brutal economy is hard enough, so the goal should be to build strength first, and support each other in that. Then let’s give back—not out of confusion over what else to do, but from abundance.

If you want to talk with me on the internet about issues like this before I publish, I’ve been using BlueSky more to post half-thought-out theories, posts-in-progress, and to collect links to articles and books I’m reading. Follow me on BlueSky for more real-time cities/business conversations. Let’s get into it!