Three ways to transition your company to a social impact business
More than ever, the world needs entrepreneurs, investors and companies to think about the impact -- good or bad -- that their businesses are having on the world at large.
Every step of the business journey is a choice. Creating a sustainable, income-generating business and brand does not require negatively impacting other people's lives.
It does not require that people -- whether they are employees, consumers, or citizens at large -- suffer lost wages, unemployment, decreased personal privacy, or environmental destruction.
When negative things like that take place, it is because a business and its CEO have decided to engage in those practices.
The growing environmental and political crises of our day require businesses and CEOs to think more about social impact, and moving things in a positive direction.
Here are three things any business can do to focus more on social impact:
(1) Create an affiliated non-profit. It is not at all difficult for a business to sustain and support an affiliated non-profit that acts as a charitable arm of a brand.
This type of "hybrid" for-profit / non-profit model can be an important way to tease out the real power of impact behind the for-profit business, and also highlight some of the values which the business supports.
Investment funds can also work with non-profit investment vehicles in creative ways, to promote social impact. Non-profit investment funds have more freedom to invest in social-impact projects, since there is less pressure to bring a return. A non-profit investment fund might provide super-seed funding, or a longer runway for a social impact company to sprout, paving the way for later, for-profit investments.
(2) Convert a for-profit business to a public benefit corporation. Public benefit corporations are for-profit entities that have recently been enacted by many states, including California and Delaware. The appeal of public benefit corporations is that they permit the Boards of Directors to consider the benefit of the corporation to society at large in making a decision, thus easing some of the requirements that the corporation prioritize profits at all costs.
In a positive future, it's my guess that every for-profit business will resemble and act like a public benefit corporation. But until that day, founders and investors will need to take some risks and will need to be willing to explore this business form, knowing that it is brand new. I highly encourage entrepreneurs and investors to look at the public benefit corporation, and to consider using it.
(3) Work to balance social impact with the board and with company stockholders. Prioritizing social impact as an important part of the business model is not left to executives. There needs to be buy-in from the Board of Directors, and ultimately, the stockholders. It will be stockholders who will hold boards accountable if they do not feel like they are obtaining the right types of returns.
This is an ongoing dialogue, but it needs to start somewhere. Companies should think about social impact from genesis, and continue to think about baking social impact into their corporate DNA as they become more successful.
If you are a technology company, think about prioritizing your users' privacy (as Apple, Inc., is now starting to do). If you are a consumer goods company, think about prioritizing the sustainability of your packaging. If you are a service company, think about mobilizing some of your service resources to good causes or to pro bono work.
Make social impact something that your company just does, in addition to making money.