CASE: SI-123 TN
DATE: 08/12/14
TEACHING NOTE FOR
GAP INC. CORPORATE PHILANTHROPY
AND THE GAP INC. P.A.C.E. PROGRAM
In 2014, Bobbi Silten, Senior Vice President, Global Responsibility, Gap Inc. and President of
Gap Foundation, and Dotti Hatcher, Executive Director, P.A.C.E. Global Initiatives, Gap Inc.,
reviewed GAP Inc.’s corporate philanthropy with a specific focus on the P.A.C.E. (Personal
Advancement & Career Enhancement) program for female workers in the garment industry.
Formal evaluation results showed that the program improved life for female garment workers
and their families by developing women’s knowledge, skills, and confidence, and it had a strong
business impact by reducing turnover and absenteeism, improving workers’ managerial skills,
and developing Gap Inc.’s relationships with suppliers.
Over the course of her nine year tenure with Gap, Silten had focused her efforts on building Gap
Inc.’s community investments to harness the company’s corporate strengths—including
relationships, knowledge, skills, people, products, and money—to deliver both social benefits
and business benefits. She was impressed by the positive influence of Gap Inc.’s P.A.C.E.
program on female garment workers’ lives and wanted to see even more women benefit from the
program.
Together, Silten and Hatcher were discussing the possibility of scaling up the program and
sharing it more broadly. They considered the program’s design, implementation, and challenges
as they assessed what would be required to take the program to the next level.
Key Facts
•
Gap Foundation Facts: Established as an independent 501(c)(3) organization in 1977 with
an initial budget contribution of $80,000 from Gap Inc. Beginning in its second year, the
Gap Foundation’s budget is up to 1 percent of the corporation’s profits in a given year.
•
Gap’s Philanthropic Strategy: Prior to 2006, Gap Foundation was supporting a range of
youth programs and some women’s initiatives, but its giving strategy had no central
focus, nor was it based on Gap Inc.’s strengths as a business. Beginning in 2006, Gap Inc.
shifted its philanthropic strategy to be focused on creating “a virtuous cycle,” harnessing
the company’s unique assets—including relationships, knowledge, skills, people,
Copyright © 2014 by the Board of Trustees of the Leland Stanford Junior University. This note was prepared by [Author] and
[Professor] for the sole purpose of aiding classroom instructors in the use of [Case Name], GSB No. [Number]. It provides
analysis and questions that are intended to present alternative approaches to deepening students’ comprehension of the business
issues presented in the case and to energize classroom discussion.
Teaching Note for Gap Corporate Philanthropy and the Gap Inc. P.A.C.E. Program SI-123 TN
p. 2
products, and money—to improve social issues presented in its day-to-day business
operations and in turn, create business benefits as well.
•
P.A.C.E. (Personal Advancement & Career Enhancement) Program: Research revealed
strong evidence that the biggest impact on the global communities where Gap Inc.
produced its products would come from increasing women’s access to education and
improving their career prospects. Along with key partners, ICRW and Swasti, Gap Inc.
designed and developed an educational program to help female garment workers develop
life and technical skills. The program includes 65-80 hours of instruction taught across an
8-10 month timeframe and includes up to nine learning modules: (1) Communication; (2)
Problem Solving and Decision Making; (3) Time and Stress Management; (4) General
and Reproductive Health; (5) Financial Literacy; (6) Legal Literacy and Social
Entitlements; (7) Gender Roles (can be interwoven through each module of learning or
adapted as its own module); (8) Execution Excellence; and (9) Functional Literacy.
•
P.A.C.E. Impact to Date: Gap Inc. launched the program in India in 2007, enrolling 281
female garment workers, over 90 percent of whom completed the training. By March
2014, more than 26,000 female garment workers in seven countries had participated in
the training programs. Evaluation results demonstrate a positive impact on female
garment workers’ self-esteem and ability to set goals, communicate, and build stronger
relationships at work and at home. These social benefits also translated into business
benefits demonstrated by an increase in productivity, efficiency, and retention.
•
Key Players: Bobbi Silten, Senior Vice President, Global Responsibility, Gap Inc. and
President of Gap Foundation; Dotti Hatcher, Executive Director, P.A.C.E. Global
Initiatives; International Center for Research on Women (ICRW), a Washington D.C.based global research institute involved as a strategic and evaluation partner; Swasti
Health Resource Centre (Swasti), a nonprofit that worked to improve health and
wellbeing in marginalized communities, engaged as Gap Inc.’s design and development
partner; Shahi Exports Pvt. Ltd, Gap Inc. P.A.C.E.’s first vendor partner.
Position in Course
This case is intended for use in a course on philanthropic innovation, strategic philanthropy,
corporate philanthropy, and business strategy. The teaching objective is to explore a unique
approach to corporate philanthropy strategy, furthering brand equity through social change, the
role of partnerships and integrated evaluation in philanthropy, and the challenge of scaling social
innovations. This case highlights a strategic shift in Gap Inc.’s philanthropy and community
investments and raises questions about how to scale and sustain the program into the future.
Supplementary Readings
Benioff, Marc. “Disrupting Corporate Philanthropy.” Stanford Social Innovation Review.
November 25, 2013. (Web.)
Bianchi, Alessandra. “Rethinking Corporate Philanthropy.” Stanford Social Innovation Review.
Spring 2006. (Web.)
Teaching Note for Gap Corporate Philanthropy and the Gap Inc. P.A.C.E. Program SI-123 TN
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Porter, Michael E. and M. R. Kramer. “The Competitive Advantage of Corporate Philanthropy.”
Harvard Business Review. December 2002. (Web.)
Stursberg, Amy. “Sustainable Corporate Philanthropy.” Stanford Social Innovation Review.
November 12, 2013. (Web.)
Supplementary Gap Inc. P.A.C.E. Resources
Report on Evaluation Findings:
“Advancing Women, Changing Lives: A comprehensive evaluation of the Gap Inc. P.A.C.E.
program,” International Center for Research on Women, September 2013. (Web.)
Videos of Gap Inc. P.A.C.E. Participants:
“One Stitch Closer: Isoh empowers herself to reach her potential,” Gap Inc., YouTube, May 6,
2014. (Web.)
“Gap Inc. P.A.C.E. - Advancing Women to Advance the World,” Gap Inc., YouTube, January
31, 2013. (Web.)
Assignment Questions
1. Outline the key players of the P.A.C.E. program. What challenges do they face in trying to be
effective in their respective roles?
a. Timing for Class: 15 minutes for class discussion
2. Which partnerships are critical to Gap Inc.’s ability to run the P.A.C.E. program and why?
What new partnerships could Gap Inc. create and how would they improve the effectiveness
of the P.A.C.E. program moving forward?
a. Timing for Class: 15 minutes for class brainstorming and discussion
3. What tradeoffs should Gap Inc. consider as they think about expanding the P.A.C.E. program
(both within the company and beyond the factories manufacturing Gap Inc.’s products)?
a. Timing for Class: 10 minutes for class discussion
Analysis
1. Outline the key players of the P.A.C.E. program. What challenges do they face in trying to
be effective in their respective roles?
Key Stakeholders
•
Corporate Board/Shareholders: Boards will be faced with the challenge of balancing their
fiduciary responsibility to maximize shareholder value with the desire to invest in
community citizenship and global social issues. This challenge can be mitigated by
making social investments that also improve business performance or increase brand
equity. The board will have to determine the value that the P.A.C.E. program will bring
Teaching Note for Gap Corporate Philanthropy and the Gap Inc. P.A.C.E. Program SI-123 TN
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to the company. There are multiple dimensions to evaluate—1) reputational (within the
community and as a response to human rights abuses), 2) supply chain/employee
considerations (improve retention and loyalty, increase vertical mobility for employees,
create an appealing work environment) and 3) marketing (how could P.A.C.E. increase
revenue or build brand loyalty). The board must also consider the structure of this
program within their corporate philanthropy model (foundation, business investment
etc.).
•
Customers: Similarly, customers may also have difficulty understanding the value and
impact of these global social programs when these are not issues that they can directly
experience. If Gap Inc.’s prices end up increasing as a result of increased production
costs, customers may choose to go with a less expensive brand if they do not know of or
understand the difference in cost, quality, or supply chain management. Gap Inc. may
overcome this by educating consumers about their social investments and how they result
in a higher quality product and importantly a higher quality of life for those who are
producing the products—a key marketing strategy for Millennials.
•
P.A.C.E. Program Staff: The key non-programmatic challenges for P.A.C.E. program
staff include geographic distance, language barriers and a potential lack of reliable
information (knowing what the truth is on the ground at any point—a function of distance
and trust).
•
Other Gap Inc. Employees: Gap Inc. employees are the consumer’s main point of
interaction. The principal challenge is to keep them apprised of the latest program
developments. The geographic distance and language barriers between Gap Inc.
employees and the P.A.C.E. program participants make it difficult for employees to
participate in global philanthropy programs. This distance may also make it difficult for
employees to fully appreciate and understand the impact of these programs as, for many,
they will never see the impact of this work.
•
Gap Inc.’s Competitors: Regarding the P.A.C.E. program, Gap Inc.’s competitors must
decide if they are going to coordinate or compete with Gap Inc. Should they develop a
program that can compete with P.A.C.E.? Should they continue to derive some of the
benefits of the system (where there is overlap in the factories), but take no credit for
generating these benefits? Will they have to convince factories, at some point, to continue
to supply them (if/when the factories begin to prefer Gap Inc. because of the P.A.C.E.
program)?
•
NGO Partners: Key challenges for Gap Inc.’s NGO partners center on power dynamics
and goals for the partnership. How does an NGO balance its own agenda with Gap Inc.’s
goals, influence, and money? The NGO partner may feel like the subject-matter expert,
but they may have to follow Gap Inc.’s direction. While generally aligned, the
organizations might have different priorities. For example, CARE wants to see improved
health in factories, whereas Gap Inc.’s primary goal is reduced absenteeism. Geography
creates challenges as well. Some of the NGO partners are used to working in
communities rather than factories. There might also be difficulties coordinating between
Teaching Note for Gap Corporate Philanthropy and the Gap Inc. P.A.C.E. Program SI-123 TN
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Gap’s offices and the NGO’s office because of distance or organizational timelines
(different reporting standards, board meeting schedules etc.). Finally, there is always the
risk of getting embroiled in controversies surrounding garment factories (or factory labor
in general).
•
Factory Owners: As factory workers become more educated, they might choose to stop
working at their current factory (if a better opportunity is available) or demand more pay.
There may be challenges regarding balancing overall productivity/output and providing
the P.A.C.E. program to employees in the factory. How does a factory owner perceive the
value of an educational program that might not yield direct productivity benefits? There
may be a cultural disconnect with a program created in San Francisco, but implemented
in factory countries.
•
Factory Managers: Managers may not be invested in the big picture—any time the
employees are taking off of work, it may lower productivity. There could be tensions
between managers and employees as the employees become more empowered through
the P.A.C.E. program. There might be gender challenges as well—a lot of the managers
in the factories are likely men, and supporting their employees (who are mostly women)
might be uncomfortable or unfamiliar.
•
Factory Workers: Factory workers must determine the opportunity cost of a program like
P.A.C.E.—it takes time and they already have busy lives. How valuable is this program
relative to what they may give up? Similarly, there might be family tension if the
program takes them away from the household or destabilizes the patriarchy of the
household. There are logistical challenges—locating a program, signing up for it,
negotiating the time to complete the program with your manager—which may limit who
can participate. Once the program is complete, there are questions around what to do
next. What does this new sense of skills or empowerment mean? Does one try to find a
new job or stay in a current role?
•
Human Rights Advocates: There may be an ideological challenge around working with a
company still engaging in controversial labor management practices. There could be a
disconnect with the distance (San Francisco-based programs designed for women in
factories abroad). There is also the risk that a program like P.A.C.E. may reinforce the
factory labor system by removing pressure from the urgency around this problem.
•
Communities That Workers Return to: The communities that workers return to may
struggle to integrate empowered women from the P.A.C.E. program with their traditional
cultural values. The program makes women more job-oriented, and thus may remove
them from the house. There is also an imperialistic component to how the program
originated from outside of the community—is it creating a divide between factory
workers and other people in the community?
•
Local or National Governments: The P.A.C.E program may affect local or national
governments by making factory employees, and thus, citizens, more aware of their rights.
Will governments be forced to change policy with more public attention on factories? Is
Teaching Note for Gap Corporate Philanthropy and the Gap Inc. P.A.C.E. Program SI-123 TN
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this creating a new standard that they need to keep up with? Will companies begin to take
work elsewhere as it become less economically-viable to operate in their current
countries? There are numerous potential challenges with balancing the different policies
and interests between NGOs, companies and local/national governments.
2. Which partnerships are critical to Gap Inc.’s ability to run the P.A.C.E. program and why?
What new partnerships could Gap Inc. create and how would they improve the effectiveness of
the P.A.C.E. program moving forward?
Key Partnerships
•
International Center for Research on Women (ICRW): Provided expertise and
reputational credibility during program creation and evaluation design. ICRW
implemented the P.A.C.E. program’s first evaluation in 2007 and 2008.
•
CARE: Partner who helped implement the P.A.C.E. program in Bangladesh, Cambodia,
Indonesia, and Vietnam.
•
Factories Who Produce Gap’s Clothing: Key implementation partners responsible for
providing the garment workers who went through the P.A.C.E. program and supplying
the in-house factory trainers who delivered the P.A.C.E. program modules. Factory
owner buy-in was critical to ensuring that the P.A.C.E. program was fully integrated into
the business operations of the factory.
•
Partners in Media: Organizations like Forbes, GOOD, and The Daily Beast published
articles on the program and its impact. Critical for improvement of Gap Inc.’s reputation
as well as demonstrating value to Gap Inc.’s stakeholders of the value of a program like
P.A.C.E. Furthermore, at events like the Clinton Global Initiative and the APEC Woman
and the Economy Forum, Gap Inc. was able to introduce numerous individuals interested
in the space to the P.A.C.E. program.
•
Labor Initiatives: By partnering or affiliating with the International Labour Organization
(ILO), Social Accountability International, and the Ethical Trading Initiative, Gap Inc.
was able to develop a strong Vendor Code of Conduct, ensuring that subcontractors and
factory workers were aware of their rights, and that the P.A.C.E. program had a strong
foundation from which to further worker empowerment.
•
Matha Tilaar Group: A health and beauty company based in Southeast Asia. They were
Gap Inc.’s first expansion of the P.A.C.E. program outside of the factory setting and laid
the groundwork for potential future scale.
Potential New Partnerships
•
Area of Expansion: Other companies, both factory-based and otherwise, could partner to
expand, adapt and/or scale the P.A.C.E. program beyond Gap Inc.’s current plans.
Teaching Note for Gap Corporate Philanthropy and the Gap Inc. P.A.C.E. Program SI-123 TN
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Transnational bodies such as UN Women, ILO or UNICEF could support the program as
it expands to new regions or targets new industries.
•
Existing Communities: Local chambers of commerce, industrial associations, local town
councils, or religious organizations could support the factory workers and, specifically,
women who have completed the P.A.C.E. program to expand their new training to
outside of the factory walls.
3. What tradeoffs should Gap Inc. consider as they think about expanding the P.A.C.E.
program (both within the company and beyond the factories manufacturing Gap Inc.’s
products)?
Within the Company
•
Business Returns: Are the business returns of the P.A.C.E. program for the company
scalable—are there diminishing returns or economies of scale at play? This includes
marketing effects, such as thinking through employee and consumer behavior. Will a
consumer shop at Gap Inc. stores more frequently or does employee retention increase
depending upon the number of women reached through the P.A.C.E. program? Or if after
a certain point the reputational effect is negligible.
•
Resource Investment: There are also considerations around investing additional resources
into expanding the existing P.A.C.E. program versus launching a new initiative. Is it
more beneficial to the company’s bottom line to continue with the P.A.C.E. program in
its current form, evolve it, or start a completely new program? Now that a formal
evaluation has been completed, it removes some of the expansion risk (they may only
need to evaluate to confirm that the quality of the program is still high), but there could
still be more evidence to support the conclusion that this program is beneficial to Gap
Inc.’s supply chain. With a new program, however, the “payoff” of the program may be
even more difficult to quantify.
Beyond the Factories
•
Program Propriety: There is a tradeoff between keeping the P.A.C.E. program proprietary
or making it open-source. If Gap Inc. keeps control of the program they maintain a
competitive advantage over other factories and consumers and have more control over the
quality and effectiveness of the program. By ceding control (e.g. making the curriculum
for the program freely available online), it may have a positive reputational effect for Gap
Inc. and allow others to iterate on the program faster, but the effectiveness of the program
may change (especially as Gap Inc. loses control of it).
•
Program Replication: Another key consideration is the transferability of the program—
outside of the factory setting and across borders. Each expansion requires new
relationships, marketing, context-based adaptation of the program, and support from the
local factory or business. There are numerous tradeoffs as one considers adapting the
program to different regions or industries.
Teaching Note for Gap Corporate Philanthropy and the Gap Inc. P.A.C.E. Program SI-123 TN
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Teaching Approach
The Gap Corporate Philanthropy and the Gap Inc. P.A.C.E. Program case is appropriate for a
forty-five minute teaching module including both a lecture and a discussion.
Key themes for discussion include:
• Corporate philanthropy
• Corporate social responsibility (CSR)
• Corporate strategy
• Brand management
• Philanthropic partnerships
• Evaluation of social impact
• Global social investing
• Supply chain management
• Global human rights and gender equity
Please see the LAAF website (laaf.org) for Stanford Graduate School of Business Lecturer Laura
Arrillaga-Andreessen’s complete portfolio of philanthropy Stanford Graduate School of Business
case studies, teaching notes, and learning resources that she has created since 2000.