This presentation is part of the 2015 RCE Conference of the Americas, 9-12 August 2015, Grand Rapids, USA

1. Using the Benefit Corporation
Model to Develop a More
Sustainable Region
RCE Conference of the Americas Presentation
Grand Rapids, MI
August 9, 2015

2. • Haque (2011) argues that business as usual is a flawed approach since in the last
decade they have been unable to create sufficient:
• Value
• Returns
• Jobs
• Fulfillment
• Income
• Net worth
• Trust
Business as Usual

3. • Widening financial disparity gap
• 147 Super Entities accounted for 40% total network wealth
• 80 people hold the same wealth as the bottom half of the world population of 3.5 billion people ($941 billion)
• US government debt
• 18+ trillion and growing every day
• Environmental Issues
• Great Pacific Garbage Patch – 7 million square miles
• 80% of world fish population fully or over exploited
• Climate change
• Extinction of animals
Business as Usual Results

4. Business as Usual by Brute Force
http://earthjustice.org/slideshow/images-of-mountaintop-removal-
mining
http://www.soci.org/News/BioResources/Biores
ources-agrisciences3

5. Business Solutions to These Issues?
• Given the performance of the US government versus corporations, in
particular these 147 super entities, who do you want to help solve the world
problems?
• Corporations?
• Governments?
• Nonprofits?

6. Viable Solution
• “Social enterprise is likely to continue its evolution away from forms that
focus on broad frame-breaking and innovation to [a narrower focus] on
market-based solutions and businesslike models” (Dart, 2004, p. 412)
• Benefit Corporations
• Business profits can help solve social and environmental challenges
• Enforces corporate accountability
• Gives nonprofits a greater chance to carry out their mission

7. B-Corps vs. Benefit Corporations
• B-Corps
• Certification conferred by the nonprofit B Lab
• Have access to a portfolio of services given by B Lab
• Certification available to businesses in all 50 states and around the globe
• Benefit Corporations
• Legal status administered by the state
• Legally recognized by 26 states
• No report is required to be verified, certified or audited

8. Material Positive Impact
• Have one or more “specific public benefit” purposes
• Economic opportunity for individuals or communities beyond the creation of jobs in
the ordinary course of business;
• Preserving the environment;
• Increasing the flow of capital to entities with a public benefit purpose; or
• The accomplishment of any other particular benefit for society or the environment”

9. B Impact Assessment Elements
• The governance element looks at the overall transparency and accountability of the
company as it relates to their practices and policies in carrying out the mission and
stakeholder engagement (B Lab)
• The worker element assesses the overall work environment to include worker compensation,
benefits, training, ownership opportunities, communication, job flexibility, corporate culture,
and health and safety practices
• The community element investigates supplier relationships, diversity, local community
engagement, charitable giving, and access to basic human services
• The environment element evaluates the overall performance of the company facility,
materials and resource use, energy use, and emissions, as well as the company ability to solve
environmental issues

10. To Money as
the Root of
Doing Good
http://www.2people1vision.com/money-is-the-root-of-all-evil/
“You must be the
“change” you wish
to see in the world.”
Mahatma Gandhi

11. Impact Makers
• Who - Impact Makers
• What – Certified B Corp & benefit corporation providing healthcare IT and
management consulting
• When - Founded in October 2006
• Where - Headquartered in Richmond, VA
• Why - Profits & some significant consulting services go to charitable community
partners
• How - Provides professional services at market prices while paying market salaries
to their employees

12. Community Partners
• Rx Partnerships
• Increasing access to medication for Virginia’s vulnerable populations
• Family Lifeline
• Delivers family and individual home-based services
• Peter Paul Development Center
• Children educators
• FlipM
• Provides project management training to the youth

13. Research Questions
• How can business be used as a force for good?
• How can business maximize value through a stakeholder corporation model?
• How will stakeholders benefit from this good?

14. Case Study
• Defining a good case study involves (Yin, 2009):
• Something unusual and of general public interest
• Of national importance in practical terms
• A purposeful sampling of Impact Makers as an “information rich” organization
• B Impact Assessment score of 164 out of 200 (B Lab, 2015)
• Twenty-three in-depth open interviews
• Six board of director members
• Eight executive committee members
• One staff level member
• Four nonprofit community partners
• Four government clients
• Audio-recorded and transcribed interviews

15. Interview Questions – Mission & Pro Bono
Work
• What comes to mind for you when you hear the content in this (Impact Makers)
vision?
• What benefits do you feel are realized for your stakeholder group because Impact
Makers allows their employees to do this (pro bono) work? What benefits do you
feel are realized by other stakeholder groups? In particular how do(es):
• Clients win?
• Employees win?
• Community partners win?
• Society win?

16. Interview Questions – Virginia Benefit
Corporation Legislation
• Since Impact Makers has no shareholders what benefits and/or challenges
do you feel this situation creates for the organization?
• Can you share examples of how you believe the board of directors considers
the effects Impact Makers has on their various stakeholder groups?
• Since Impact Makers’ “profits, by corporate charter” go directly to its
nonprofit community partners how does this approach impact or benefit the
customer when they consider which consulting firm to whom they will award
a contract?

17. Interview Questions – Virginia Benefit
Corporation Legislation
• What does Impact Makers consider regarding the community and/or social sectors
in the Richmond, VA area?
• What does the organization consider regarding the effects they make on the local
and global environment? Is there more that could be done to lessen the
organization’s effect on the environment?
• What do you see as the board of directors considerations regarding the short-term
interests of Impact Makers? The long-term interests?
• What is your evaluation of the ability of Impact Makers to accomplish the specific
benefit purpose?

18. Thematic Analysis
• Theory-Driven Code (Boyatzis, 1998)
• One of the forms of this code is to use the framework of another
• B Impact Assessment is a framework developed to measure a company’s impact
• The sections of the assessment include:
• Community – Community Practices
• Customers – Customer Products & Services
• Environment – Environmental Products & Services and Environmental Practices
• Governance – Accountability and Transparency
• Worker – Compensation, Benefits & Training; Worker Environment; and Worker Ownership

19. Governance Results
• “We are doing thing that is the way you build long-term relationships”
• “Mission aligned teams outperform ones that aren’t”
• “We’ve got cultural alignment, we’ve got mission alignment”
• “I think our mission calls us to a higher standard of delivery and excellence”
• “We answer to our board, but really we answer to the community”
• “Try to think long-term and what is going to let Impact Makers preserve mission,
maximize return to the community, retain employees, all these balancing things”
• “I think of them as very mission driven”

20. Worker Results
• “I’m here for more than just a paycheck”
• “Some employees get a chance to hone their skills (pro bono work)”
• “The rule is that they (employees) have found us as opposed to we found
them”
• “I have the coolest job ever…to be able to work with the kind of people I
work with and actually really solve problems, I mean I love”
• I like the fact that we compete like a for-profit company, and then act like a
not-for-profit when it’s time to give away the money”

21. Community Results
• “It is not just the vision of making a community impact, but it is having a
ripple effect that is exciting me”
• “Well it kind of goes back to our roots”
• “At the end of the day, 100% of the business goes to the community”
• “We give a monthly guarantee of unrestricted funds”
• Created a “valid software…other entities needed the same type of
tracking…the outcome is a nonprofit, that created a for-profit benefit
corporation to help create a sustaining funding line”

22. Environment Results
• “We are in a building with solar…we try to be paperless…we try to use recycled
paper”
• “From an environment standpoint, I think it’s (cloud based web services) a great
idea because it’s a consolidated service”
• “If a customer comes to me and says, look I’m looking to reduce my datacenter
costs by X%, I put computers in there that are going to consume less energy”
• “They tend to allow people to work from home”
• “Our biggest environmental impact is our travel”

23. Win-Win-Win-Win
• Community partners win?
• Monetary support without strings attached
• Access to the high level of IT management and consulting
• Working in partnership with an organization
• Support allowed for a sounding board by Executive Director to the Impact Makers
consultant
• Able to set up a for profit firm based on the software developed to solve a need that is
common to other similar nonprofits
• Impact Makers taking on FlipM where most would not have done so

24. Win-Win-Win-Win
• Clients win?
• Impact Makers employees in some cases are able to develop skills at the nonprofit that
then lead to better skilled employees working on their projects
• The clients get highly skilled Impact Makers employees working on their projects that
are mission aligned
• In at least one case an additional service offering was mentioned as having been
developed while doing work for the nonprofit partner

25. Win-Win-Win-Win
• Employees win?
• The primary benefit is that their job is supporting the needs of those needing help in
the community
• They do not need to do this work evenings and weekends
• They develop additional skills in a protected setting
• One drawback to growth has been that some consultants are unable to do this work
because of their client workload

26. Win-Win-Win-Win
• Society win?
• A move back to the time when people took care of their own in the community.

27. Challenge 1
• Intent to distribute 100% of the net profits to charitable partners
• Internal Revenue Service limits tax-free charitable contributions to 10% of net profits (IRS, 2012)
• Income tax on the other 90%
• Developed licensing agreements with their non-profit partners
• Charitable partners agree to:
• Allow Impact Makers to use their logo and name in their marketing materials
• To make introductions and provide leads to Impact Makers
• Charitable partners receive up to 20% of their budget each month
• Additional undistributed net income at year end is further distributed

28. Challenge 2
• Federal Acquisition Regulation Subchapter D – Socioeconomic Programs
allows set-asides for (Acquisition Central, n.d.):
• Small businesses
• Historically underutilized business zones
• Service-disabled veteran-owned small businesses
• Women-owned small businesses
• Given social and/or environmental public good recommend set-aside for
benefit corporations

29. Awards & Recognition
• April 2015 reached $1 million milestone in its cumulative community impact of
financial contributions and pro bono support
• Gifted company to Community Foundation now owns 70% of Impact Makers and
Virginia Community Capital has a 30% interest
• Inc. 500 for the 3rd Year (2012 #360, 2013 #514, 2014 #463)
• 3 year sales growth of 1,024%
• In 2013 was named ‘Best for the World’ and ‘Best for the Community’ by scoring in
top 10% of B corporations
• In 2013 & 2014 Richmond’s Top Workplaces List for Small Employers

30. • 2007
• Revenue $570k
• $41k in partner contributions
• 2013
• Revenue exceeded $10 million (171% increase over 2012)
• $247K in partner contributions
• $34k in pro bono services
• Recently gifted ownership of company to The Community Foundation Serving
Richmond (70%) and Central Virginia and Virginia Community Capital (30%)
Impact Makers Results

31. Ten Benefits of Becoming a B Corp
1. Being part of a community of leaders with shared values
2. Attracting talent and engaging employees
3. Increasing credibility and building trust
4. Generating press
5. Benchmarking and improving performance
6. Attracting investors
7. Protecting the company’s mission for the long-term
8. Building collective voice
9. Saving money
10.Leading a global movement (Honeyman, 2014, pp. 21-40)

32. • Impact Makers is making money the root
of the change they want to see in the world
• Michael Pirron is indeed living his charge
from Gandhi
• I encourage each of you to find
organizations that can adopt this business
model to help your own local communities
Closing Remarks
http://blog.ennovent.com/2012/11/5-social-
entrepreneurship-startups-with-a-global-
focus/#sthash.aIhuJtd9.dpbs