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Lush Cosmetics is proving that it’s good business – maybe even great business – for retailers to invest in sustainable charitable giving.

Through the sale of a single item, the Charity Pot, the Vancouver-based company has donated more than $11 million to 900 organizations in 42 countries over the past eight years. The Charity Pot is Lush’s best-selling hand and body lotion and its number three selling product overall.

Fully one hundred percent of the sale price of the lotion ($6.95 or $25.95 depending on size, less tax) is donated and contains seven Slush Fund Ingredients. The mechanics of the Slush Fund are straightforward: 2% of the amount Lush spends on raw materials and packaging is donated to the fund. This money is then used to start sustainable farming and community projects from scratch.

Lush concentrates on three categories: animal protection, human rights and environmental conservation. Grassroots organizations can apply for funding the same way that charities apply for grants from dedicated foundations. Sixty percent of Lush grants are distributed in North America, 40% worldwide.

The company, which awards grants to about 40% of applicants, actively seeks out and encourages organizations that meet its funding guidelines to apply.

The Lush program differs greatly from other corporate charitable initiatives, which tend to be marketing or PR driven: Lush donates the entire purchase price of its item to its causes, versus a percentage; the Charity Pot is an ongoing program, versus a temporary or one-off event timed around the holidays; Lush focuses on supporting small grassroots organizations that, as Charitable Giving Manager Tricia Stevens puts it, are “non-sexy causes that may not get funding any other way,” versus the charity-of-the-moment or the latest cause celebre.

“Consumerism can be negative, but we believe that people often don’t want to be sold something. They want to believe in something,” says Stevens.

Indeed, recent research by Cone and Ebiquity found that more than 90% of Internet users worldwide expect companies to do more than focus on their bottom line. And they’re putting their money where their mouth is: 84% said they tried to purchase products and services from socially responsible companies. Moreover, nine in ten survey respondents said they would switch brands to one tied to a social cause, when quality and price were on par.

The lid of each Lush Charity Pot lotion (which are sold in all its 214 stores and online) features a different image and description of one of its supported charities. These currently include Darwin Animal Doctors (see video below), Gifford Pinchot Task Force and Progress for Science among many others.

Launched October 2007, the Charity Pot initiative was driven by Lush founder Mark Constantine, who was inspired by the success of Mac Cosmetics’ Viva Glam program launched in 1994 to support HIV and AIDS patients, and which continues today.

At Lush, what started as a small group of people working part-time on the program quickly grew into a dedicated team of eight people. The CEO/President Mark Wolverton works very closely with the team and has final sign off on the projects the funds support.

Given the success, customers are clearly connecting with the idea of donating to charity through a product purchase.

Most people on the Lush Charitable Giving team are internally developed, although some come from a philanthropic background. The culture of giving back permeates throughout the organization, and Stevens says that the staff genuinely feels connected to the work being done. Charities set up “awareness tables” within Lush stores to engage with staff and customers, and each production room and lush Retail location has a designated “charity star” who is responsible for keeping everybody informed about the developments in this program.

Over the course of these years, Lush has stayed true to helping grassroots community projects, enabling customers and employees to stay connected with the type of work the organization does and the values for which they stand. This also brings benefits in building employee morale with the feeling of connectedness to the individuals who are producing the product to the people who are selling the product.

Another benefit is the collaboration opportunities with like-minded brands that this brings forth – in motivating each other and helping each other reach their respective organizational goals.

Clearly, doing well by doing good is not just a trite tag line, but a clear competitive differentiator, as this brand has demonstrated. Lush Cosmetics is one of several organizations we intend to showcase in this blog series. Coming next: our first B-Corporation certified brand, Dogeared, a small but fast growing handcrafted jewelry maker that’s truly living up to its motto of creating jewelry that’s beautiful and meaningful.

In this series: Socially Conscious Commerce