Benefit Corporations

Benefit corporations (B-Corps) use the power of business to solve social and environmental problems. While B-Corps can be for-profit or non-profit, we will focus on those organizations that are generating profit, which sustains their efforts.

105, Jay Coen Gilbert, B Lab | Business as a Force for Good

What if we could utilize the power of business as a force for good? What would that make possible?

Jay Coen Gilbert knows how to scale a business. As a cofounder of AND1, he grew the company from selling t-shirts out of the back of a car to a global basketball footwear and apparel brand worth over $250 million. When he sold the company in 2005, Jay took the time to think about his experience. He and his friends Bart Houlahan, and Andrew Kassoy met with purpose driven businesses to talk about the potential of business as a force for good.

Based on these conversations, they recognized that, just because a company talked about social and environmental purpose, did not mean that they executed with the same fervor. What was missing was a third-party verifiable assessment to distinguish between those who are “walking the walk, not just talking the talk.”

B Lab is the nonprofit behind the BCorporation movement. BCorps are global business leaders who are using business as a force for good. There are over 1,800 certified BCorps in over 150 industries in more than 50 countries.

A Community Using Business as a Force for Good

Certified B Corporations differentiate themselves in the marketplace by measuring their impact. They make it easier for consumers to find their products and services. You can find a B Corp by industry or location by going here.

By becoming a B Corp, companies can also attract investors who are looking to make an impact with their money. And, certified B Corps can attract talented individuals who want their work to matter.

Also, by becoming a certified B Corp, business leaders join a community of like-minded individuals and companies who want to use the power of business as a force for good.

Measure What Matters

The B Lab allows anyone to measure what matters through their B Impact Assessment. The assessment allows companies to assess themselves in five key areas: governance, workers, community, environment and impact business models. Any company that scores 80 or above can apply to be a certified B Corporation.

Based on thousands of assessments, B Lab also provides comparative data through the B Analytics. This data can be used by investors, supply chain managers, business networks, and governments to help measure and improve their positive impact.

Achieving Mission Alignment

The community of B Corps are making it easier for the next generation of companies to ensure that their impact lasts. They have lobbied for legislation to allow for a new form of business. In the past companies have had an option to create one of several legal entities – LLC, Partnership, S-Corp, C-Corp, etc. One limitation to these types of entities is that courts have ruled that companies have a primary and almost exclusive obligation to shareholders, despite the impact to other stakeholders, such as employees, society and the planet.

By working with legislators, many states and countries now provide for new forms of business, the Benefit Corporation. These businesses bake into their founding documents the intent that they will use their business as a force for good, therefore providing legal protection from activist shareholders.

Not all countries and states allow the Benefit Corporation form of corporation and not all companies need to seek this particular legal form. Still, for those who seek to use their business as a force for good, the Benefit Corporation is a powerful option.

Quotes from Jay Coen Gilbert

“Nonprofits and government are necessary but insufficient to the task to solve our most challenging problems.”

“While there are hundreds of thousands of entrepreneurs, intrapreneurs, and investors who are interested in using their businesses as powerful forces for good, there are a few systemic challenges.”

“There is a lack of credible, transparent standards to distinguish those who are talking about this stuff from those who are walking the talk.”

“They recognize that social change is a team sport.”

“If the first rule of business is that you manage what you measure, then we ought to be making sure we measure what matters, what’s most important, which is the positive impact we can have with our businesses on all our different stakeholders.”

B Corporation Resources:

A Company Powered by Purpose, with Krista Carroll, Latitude

Latitude is a for-profit creative agency, powered by purpose.

Powered by purpose, Krista Carrol of Latitude

Krista Carrol, Latitude

In November 2009, Krista and her husband were in their 30s and, as she told me, “chasing the American dream really hard.” They were being financially successful but lacked a level of meaning and purpose. It was during a trip to Haiti that they witnessed extreme poverty for the first time. In response to this life-changing experience, they decided to form a social enterprise. In order to avoid debt, Krista, her husband, and two small children moved into her parents’ basement.

Their company, Latitude is a for-profit, full-service creative agency. They do amazingly great work in brand design and experience design. What makes Latitude unique is that they donate 50% of their profits to help women and children in the developing world.

They work primarily with three nonprofit partners in 18 countries. They have been able to direct $2.7 million to trusted nonprofits. Through International Justice Mission, they have rescued over 2,600 people from sex trafficking and slavery. They have partnered with Healing Haiti to build a medical and dental clinic. They have built homes and an orphanage. Through their work, over 13 million gallons of clean water has been delivered. They have partnered with Opportunity International to fund several thousand microloans for women entrepreneurs. They also partnered with Opportunity International on an entrepreneurial High School in Nicaragua. Several hundred students have attended. They have provided food through Feed My Starving Children. They partnered with Matter on equipping clinics in Honduras and Mongolia. They have provided desks and supplies to schools for girls in Afghanistan.

Quotes from Krista Carroll on Being Powered by Purpose

“You need to know how to set people up for success.” Click to Tweet

“We looked at these children who were so similar to our own children. The only difference was that they were born in a different latitude and longitude in which opportunity was scarce.”

“We have to win our business on being excellent providers.” Click to Tweet

“We have had virtually zero turnover with our clients.”

“There’s no room for anything less than excellence and sustainability.”

“The partnership between a for-profit and a nonprofit challenges each of us to think holistically.”

“It’s a constant process of poking holes in your own plans.” Click to Tweet

“As a CEO, I’ve come to terms with being misunderstood at times.” Click to Tweet

“One unexpected benefit of being a company that is powered by purpose has been the incredible talent that we have attracted.”

“Limit your debt and limit the complexity.” Click to Tweet

“Use the gifts you’ve been given to empower those who have not been given as much.”

Social Entrepreneurship Resources:

069, Michael Pirron, Impact Makers | How to Scale a Social Enterprise

If you want to know how to scale a social enterprise, Michael Pirron of Impact Makers might be someone to ask. Not only is his company recognized as a “Best for the World” B Corporation, they are also on the Inc. list of Fastest Growing Companies for five years in a row. And, they have been listed as a Best Places to Work. That’s a combination that piques my interest.

Impact Makers is a for-profit Virginia benefit corporation that is owned by two non-profits. In 2015, Impact Makers gifted ownership of the company to two organizations that support philanthropy and community development: Virginia Community Capital and The Community Foundation Serving Richmond and Central Virginia.

Quotes from Michael Pirron on How to Scale a Social Enterprise:

“The typical path is the Warren Buffet or Bill Gates model: work really hard, be an Attila the Hun egregious business man. To make a lot of money is the focus, so that you can have an exit, cash out and then do philanthropy at some point.”

“I’m not a trust fund kid. I’m not independently wealthy and I had to pay the mortgage.”

“I created a model, selfishly, thinking how can I do well and do good at the same time?”

[spp-tweet tweet=”‘I started Impact Makers, with me, a laptop and $50 in the bank.’ Michael Pirron of @Impact_Makers”]

[spp-tweet tweet=”‘We didn’t grow despite our model. I think we grew because of it.’ Michael Pirron of @Impact_Makers“]

“The true secret is our ability to attract and retain talent, because of the model and because people have this desire to find meaning.”

“In ten years we’ve had eleven people leave, which is off the charts for an industry that has 15% to 20% annual turnover.”

[spp-tweet tweet=”‘Mission-aligned teams outperform teams that aren’t.’ Michael Pirron of @Impact_Makers“]

“Even in our performance reviews with our staff, we start with our values and everything derives from there.”

“Our clients are able to hire us and double leverage their already-existing IT consulting expenditure budgets, not just to get quality consulting services, but they can also make community impact.”

Mentoring Giveaway:

Throughout the month of April, you can win one of ten one-on-one mentoring calls to help you launch or scale a social enterprise. We’ll be drawing each week. To enter, go to http://tonyloyd.com/coaching

Resources to Scale a Social Enterprise:

069, Michael Pirron, Impact Makers | How to Scale a Social Enterprise

046, Laurie Lane-Zucker, Impact Entrepreneur | Public Benefit Enterprise Zones

Public Benefit Enterprise Zones is a new idea with old roots.

Laurie Lane-Zucker has had a long and interesting path to Impact Entrepreneur. He was the Executive Director at the Orion Society, a highly respected environmental organization and publisher of Orion magazine. In 2007 he launched Hotfrog, a Founding B Corporation, a GIIRS Pioneer Company, a Founding Member of Mission Markets.

Laurie is also the founder and manager of the LinkedIn group, Impact Entrepreneur, with nearly 10,000 members from more than 150 countries. (If you join right away, you could be the 10,000th person!). Impact Entrepreneur was recently recognized as one of the “Best LinkedIn Groups for Small Business.”

Recently, Laurie has started a company, also called Impact Entrepreneur that is focused on, among other things, the creating of Public Benefit Enterprise Zones.

Public Benefit Enterprise Zone Resources:

Fair Anita Giveaway:

On today’s episode of Social Entrepreneur, you’ll hear us announce the winner of the Fair Anita Giveaway. Listen to find out who will receive the earrings.

046, Laurie Lane-Zucker, Impact Entrepreneur | Public Benefit Enterprise Zones

034, Russ Stoddard, Oliver Russell | How to Build a Purpose-Driven Company

Russ Stoddard of Oliver Russell has been building purpose-driven brands for 25 years.

Purpose matters. 90% of U.S. consumers say they would switch brands to one associated with a cause, given comparable price and quality, according to a study conducted by Cone Communications. In another study conducted by World Federation of Advertisers and Edelman, 60% of people said that they are actively seeking brands with a sense of purpose. And, according to Deloitte’s 2015 Millennial Survey, six out of 10 Millennials said a sense of purpose is part of the reason they chose to work for their current employer.

Russ Stoddard of Oliver Russell builds brands for purpose-driven companies. He’s been at this for 25 years and so he’s learned quite a bit about the intersection of purpose and branding. And his understanding continues to evolve. Oliver Russell is a certified BCorporation and the first public benefit corporation in Idaho.

Russ came to my attention in 2015 when he published three very useful white papers on “How to Build a Purpose-Driven Company.” You can find them here: http://bit.ly/PurposeWP

Resources:

034, Russ Stoddard, Oliver Russell | How to Build a Purpose-Driven Company

025, David Reiling, Sunrise Banks | Empowering Underserved Communities

According to Sunrise Banks’ CEO David Reiling, “The culture of Sunrise Banks is all about mission and innovation.” If you pull his statement apart, you’ll notice three components: culture, mission and innovation. These are the magic ingredients that have allowed Sunrise Banks to be recognized as a “Best for the World” company.

Sunrise Banks has been recognized on many levels for their purpose-driven innovation. They are a certified Benefit Corporation (BCorp). Their parent company was one of the first Minnesota Public Benefit Corporations. And, they are a certified Community Development Financial Institution (CDFI), one of only 100 banks in the US.

They focus on underserved communities. More than 60% of Sunrise Banks’ loans are in low to moderate income communities every year. On the other side of the equation, they provide a socially responsible deposit fund. They also have innovative programs for the unbanked and for people who traditionally would be trapped by predatory loan practices.

Resources:

Also Mentioned in this Episode:

025, David Reiling, Sunrise Banks | Empowering Underserved Communities

013, Jim Smith, MadiDrop | From Academic Researcher to Founder

When I say “early stage entrepreneur,” whom do you picture? A hungry young person in a hoodie, eating Raman noodles and cranking out code? While this might be the prototype, more and more social entrepreneurs are looking more like Jim Smith. Jim is an academic and a scientist. He spends most days in deep research and in the classroom at the University of Virginia. However, thorough a series of synchronous events, Jim was jarred into the world of hands-on entrepreneurship in some of the most underserved communities of the world.

Jim Smith is an advisor and serves on the board of PureMadi, where they developed a sustainable, ceramic water filter. They built a factory in South Africa where they engage local women potters. Therefore, not only are the water filters effective, but they create a revenue stream for women.

Today Jim is the Cofounder and Chief Scientist at MadiDrop PBC (Public Benefit Corporation), bringing a safe drinking water solution to communities throughout the world.

Growing up on Long Island, Jim enjoyed the typical suburban life. His father got up early in the morning and rode the Long Island Railroad into the city. However, when Jim was around 10 years old, his father lost his job. This incident drove Jim to look for a discipline that seemed to produce steady employment and security. His older brother was an engineer, and influenced his decision to focus on environmental and water resources engineering.

Jim admits that his world views was primarily focused on the US and he was not really fully aware of the global challenges with clean water security. He became interested in remediating polluted water systems using natural soil microorganisms. He was primarily working on remediating industrial pollutants in groundwater and doing academic research when he received a call from Robert Marquez who was interested in using ceramics to purify water in developing countries. This work opened Jim’s eyes to difficulties with clean drinking water around the world.

Around this same time, Jim began to develop a course for Princeton University on water supplies in refugee camps. This led to a course that is still taught by Jim today at the University of Virginia called “Water for the World.”

It was from this course that PureMadi was born. Eventually, Jim saw that while PureMadi is a very good solution, one he continues to support, a second solution was required, one that was light weight, inexpensive and easily transported.

The MadiDrop is a small ceramic tablet embedded with silver. It is inexpensive, small and durable. It can be easily shipped anywhere in the world. When placed in a household storage container and filled with water, the MadiDrop releases silver ions, disinfecting the water and making it safe to drink. Unlike the PureMadi water filter, the MadiDrop is produced in Charlottesville, Virginia.

In this episode of the Social Entrepreneur podcast, we discuss:

  • What is a public benefit company?
  • Jim’s story of how he became a water resource engineer.
  • How a set of serendipitous encounters changed the course of Jim’s life.
  • What a trip to Guatemala taught him about how most of the world consumes water.
  • PureMadi and how they empower women in rural villages to create water filtration systems and produce an income.
  • How Jim ended up launching MadiDrop, a Public Benefit Corporation.

Resources:

013, Jim Smith, MadiDrop | From Academic Researcher to Founder