Doing "Good" by doing "Business"
It’s just business”
When people want to ‘do something good’ they often relate it to volunteer work or charitable donations, but there are other options we should consider. We can do more than ‘good’ for a short period of time and create continuous change?—?empowering communities into the future by creating sustainable businesses.
Over 60 million people volunteer 3 billion hours of time every year in the U.S. along and this work is impactful. Volunteers feed hungry families by collecting, preparing, distributing, and serving food. They spend over 600,000,000 person hours per year just on fundraising, tutoring and teaching. (Source: BLS) This work is needed and it enriches the lives of millions of people including the volunteers themselves, but there are other ways to serve. We can also give by providing communities in need jobs that enhance their way of life continuously.
The government has programs in place to incentivize companies to create jobs in low-income and high-unemployment neighborhoods?—?historically underutilized business (HUB) zones. They do provide an economic boost to those communities, but they have limited impact. Looking at the historical impact of the program, $6 billion was rewarded to HUB qualified contracts over an 8-year period while the total contract spending was about $2.6 trillion over that same period, less than 0.3% of total contract spend by the government (Source: Small Business Administration).
Non-profits focused on workforce development also provide a great service. For example, the organization Courageous Womenin Oakland, CA prepares women fighting poverty, violence, drugs, and homelessness to re-enter the workforce and Opportunities for a Better Tomorrow(OBT) in Brooklyn, NY trains disadvantaged youth and adults to enter the workforce. I have volunteered at OBT and it is truly a program that provides youth a path to employment. On an individual basis non-profits provide a wealth of services to help those in need.
When it comes to scale, non-profits are a fraction of over all economic activity. Historically over the past 40 years more than 200,000 nonprofits have opened in the U.S., but only 144 of them have reached $50 million in annual revenue. In addition they only represented about 5.5% of Gross Domestic Product (GDP) in 2012. In Dan Pallotta’s TED talk, The way we think about charity is dead wrong, he sites charitable giving represents about only 2% of GDP in the U.S. (Source: Stanford Social Innovation Review, National Center for Charitable Statistics)
No, I don’t believe that the ‘total % of GDP’ is the true measure of impact, but it is the indicator for where money is going in our economy. If we believe only ‘non-profits’ can ‘do good’ that means only about 5.5% of our economic activity is going toward ‘doing good’, and this just can’t be the case, we can do better.
We are, and have been, dealing with massive issues on a global scale, I would even say injustices from access to water and food to electricity.
My point is not to say the government can do better or that we need more non-profits, because we have been saying this since the moment these entities existed. My point is that we have to look at the other 94.5% of the pie, not by putting regulation in place, not waiting for the government to start another program (or give an existing one more funding), but by doing ‘good’ business.
It is possible. Companies like Revolution Foods are providing healthy meals to low-income youth at a profit and using that to scale and bring healthy food to more children across the U.S.Change.org is the largest petition platform that empowers people everywhere to create create online petitions for change.
For the first time in history there is a legal distinction for this type of business called a ‘B-Corp’ or Public Benefit Corporation. Previously there were two primary types of corporations, non-profit and for-profit. In a for-profit you have access to investors (more money) to grow and scale quickly. Non-profits save money by not paying taxes, but don’t have access to as much capital and because of this, can’t grow as quickly. Also people in a for-profit are legally bound to make the best decision on behalf of shareholders. This means that if a company makes an investment that may be better for the community, but may negatively impact the bottom line, they can legally sue you for not upholding your duty to shareholders. For a B-Corp you are still liable to shareholders, but also now also to stakeholders (the community you impact).
https://www.youtube.com/watch?v=V-VFZUFJwt4
With the creation of a B-Corp as a legal entity for the first time companies have to be profitable and be good for the world. It is complex. Leaders have to consider how to make a profit to fund growing and scaling, but also make an impact. It is new. The legal distinction has only existed since 2010 and there are only about 1,100 around the world. But, it is the future. The world needs it. Imagine a a world where all organizations had to create great products and services as well as a positively impact in the community it is apart of.
Currently I am starting a project to bring work to the community I live in. I am making wallets out of cork (which is natural and sustainably sourced) that are handmade in a low-income community in the lower-west side of Chicago, IL. Check it out.
So what can you do? Next time you buy something, consider what type of organization they are and what they represent. Next time you volunteer consider creating a project that is profitable for a community and sustainable. Next time you change jobs, consider starting working for or starting a B-Corp. We can have a future where everyone has access to food, clean water, healthcare, shelter, medicine, electricity, education, and the internet, but we need every mind in the game to figure out how to make it happen.
Will you join me?