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Case Study Sexually Transmitted Altruism By Greg Beato Stanford Social Innovation Review Fall 2012 Copyright 2012 by Leland Stanford Jr. University All Rights Reserved Stanford Social Innovation Review Email: [email protected], www.ssireview.org Action Case Study International. Based in Washington, D.C., Sexually Transmitted Altruism DKT promotes family planning and HIV/ DKT International, founded by one of the largest AIDS prevention in 18 countries in Asia, Africa, and Latin America. Instead of dis- erotica distributors in the United States, provides tributing products free through clinics, contraceptives to approximately 50 million people hospitals, and other settings, it sells them a year in the developing world. through established retail channels. It By GreG Beato also promotes them aggressively through advertising, social media websites, live Picture Guntar, an entirely hypothetical but demo- events, and other consumer-focused efforts. This approach is called graphically plausible college student in Bandung, a city of 7.4 mil- social marketing—the idea is to use the mechanisms of commerce to lion in the Indonesian province of West Java. Guntar is 21 years induce positive social outcomes. (The term predates Facebook, old. He’s driving through the city on a Friday night on his Taurus Twitter, and other social networks by at least three decades.) motorbike, headed toward a dance club. Guntar is eager to get Antismoking commercials and voter registration campaigns are there, but first he makes a stop at Circle K convenience store. forms of social marketing too, but DKT takes things a step further Why? Because he’s pretty sure Adinda’s going to be at the club, by actually selling products. It sets prices that allow it to give the and whenever he and Adinda spend the night drinking and danc- wholesalers and retailers their usual profit margins to distribute its ing they usually end up having sex. products, and in some countries, like Indonesia, it sells some prod- Circle K carries numerous condom brands: Durex, Kingtex, ucts at prices that allow it to cover its own costs and even accrue a Impulse, Freestyle, Fiesta. Fiesta, that’s the brand Guntar likes, the surplus. In most of the countries in which it operates, DKT’s one advertised on MTV. The ad shows a guy in a club, moving expenses exceed its revenues—but it’s still able to recover a sizable smoothly across the floor in a crisp white button-down until a girl amount of its costs. In 2010, it recorded $76.4 million in revenues bumps into him and douses him with a glass of red wine. His shirt’s through contraceptive sales and related services, substantially off- ruined, but the guy doesn’t miss a beat. He rips off his stained but- setting its $114.3 million in expenses. Although contributions from ton-down to reveal another one beneath, equally crisp, equally the public and private sectors play a pivotal role in DKT’s efforts, white. The tagline: “Protect yourself. Be cool and responsible.” they account for only about 30 percent of its annual budget. Fiesta condoms come three to a pack, with the packs costing 40 In the realm of international family planning, social marketing is cents each. When Guntar grabs one and pays for it at the counter, fairly common, but no other major NGO obtains as high a percent- he doesn’t realize it, but he’s engaging in a humanitarian act that age of its funding from social marketing as does DKT, which allows will have ramifications 7,500 miles away, in Ghana. That’s because the nonprofit a unique degree of autonomy. “DKT’s the smallest of the organization that markets Fiesta in Indonesia also markets con- the bunch,” says Margot Fahnestock, a program officer in the doms and other contraceptive products in Ghana. And it uses some William and Flora Hewlett Foundation’s Global Development and of the surplus income generated in Indonesia to make its Ghana Population Program. “But their programming is more exciting. product line super-affordable. In fact, its pricing plan dictates that a They’re risk takers.” year’s supply of contraceptives should equal no more than 1 percent of Ghana’s average gross income per capita. In Ghana, fewer people ne of the reasons I’ve stressed generating revenue over are using contraceptives today than just a few years ago, and mater- the years is that I am such a lousy fundraiser,” says Phil nal mortality is high, with 451 deaths per 100,000 live births. But “OHarvey, the 70-year-old founder and president of DKT. thanks to Guntar’s purchase in Indonesia, a young woman in Ghana “Both PSI [Population Services Inc.] and Marie Stopes International will be able to buy an IUD she otherwise couldn’t afford. And that are much better at raising funds from donors than we are,” he says, IUD might save her life. referring to the other two principal family planning NGOs. The organization orchestrating this global network of sexually But until very recently finding funds for family planning was not transmitted altruism is a 23-year-old nonprofit called DKT easy. According to Population Action International, the US govern- ment’s funding for international family planning dropped by about Greg Beato is a contributing editor and columnist for Reason magazine. His work has appeared in The New York Times, The Washington Post, The Week, and more than 25 percent from 1995 to 2010. And the US government isn’t the only 100 other publications worldwide. donor whose commitment has waned. “Birth control has almost of dkt international courtesy photograph 66 STANFORD SOCIAL INNOVATION REVIEW • Fall 2012 Every other year since 2004, 12 executive A DKT salesman displays directors from Boston Prudence condoms in his shop in Mozambique, nonprofits have become where condom prices Barr Fellows, affording are subsidized through them a sabbatical and Prudence sales in Brazil. entree into a powerful photograph courtesy of dkt international courtesy photograph social change network. Fall 2012 • STANFORD SOCIAL INNOVATION REVIEW 67 action case study completely and totally disappeared from the global health agenda,” fact: No matter how much more food he and his colleagues man- philanthropist Melinda Gates said in an April 2012 TEDxChange aged to obtain for the program each year, the number of children to presentation. In July 2012, the Bill & Melinda Gates Foundation, feed increased faster. Eventually, Harvey concluded that family Bloomberg Philanthropies, and 15 other entities committed $2.6 planning offered a better way to address India’s nutrition chal- billion for family planning programs. lenges and widespread poverty. One reason for this long funding gap is a shift in priorities In India, Harvey was exposed to work being conducted by among the donor community. “The data I’ve seen have shown rap- Peter King, an MIT professor who was in Calcutta as a visiting idly rising commitments to HIV/AIDS and gradually falling off scholar at the Indian Institute of Management. King was inter- commitments to family planning,” Harvey explains. Another factor ested in how to distribute condoms more effectively in India. is the culture wars that family planning efforts spawn. They aren’t What struck him was that although there were relatively few doc- confined to the United States; they play out internationally. Some tors and medical clinics in the country, especially in non-urban- family planning nonprofits, including DKT, offer abortion services ized areas, a developed retail infrastructure existed. In fact, in the in countries where abortion is legal. All help improve access to a mid-1960s a few hundred retailers were already selling condoms— wide range of contraceptive products in developing nations, a fact but the condoms were high priced, targeted at urban elites, and that sometimes gets characterized as a coercive attempt to limit not particularly accessible to the majority of Indians. To sell at the reproductive choices of poor people. prices the average Indian could afford Such factors can make the world of would be impossible for a commercial international family planning complex terri- manufacturer looking for a profit. But, tory to navigate. Donors are wary of poten- at Care, Harvey supervised a King reasoned, a nonprofit whose primary tial backlash from pro-life groups, preschool nutrition program, a job goal was to increase contraceptive usage abstinence advocates, and other advocates. that exposed him to a daunting could sell condoms at subsidized prices Nonprofits and other actors in the sector fact: No matter how much food he and still take advantage of already existing sometimes circumscribe their program- managed to obtain, the number of retail distribution networks. ming efforts in the name of political expedi- children to feed increased faster. It took King four years to get the neces- ence. But Harvey’s lousy fundraising sary commitments for a trial project, but in skills—along with his sharp commercial instincts—have helped 1968 the US Agency for International Development (USAID) and insulate DKT from much of the strategic capitulation and general the Swedish International Development Cooperation Agency pro- uncertainty about funding that often characterize nonprofits. vided 400 million condoms to the Indian Ministry of Family Indeed, even as donor interest in family planning waned, DKT has Planning for the experiment. Meanwhile, King had enlisted the thrived, increasing its annual budget from $39 million in 2002 to an support of six commercial distributors that were already supplying estimated $145 million in 2012 and broadening its footprint from thousands of Indian retailers with tea, cigarettes, and batteries. The eight countries to 18. condoms were sold at one-fifth the price that condoms typically In the family planning sector, organizations like DKT measure fetched in India.

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