Jay Parkhill July 23rd, 2008
The New York Times has an article on a Cleveland organization called Jumpstart that helps match entrepreneurs from underserved communities attract financing.
Shifting Careers - Venture Financing With a Mission Beyond Profit - NYTimes.com
The twist in this case is that financing comes from private companies, foundations and government instead of venture investors.
Founder Ray Leach opines that Boston and Silicon Valley don’t need institutions like Jumpstart, but I disagree. Cause-based investing is challenging and requires special commitment from financial backers. The Bay Area has existing funds like this, such as the Omidyar Network and Pacific Community Ventures, but to my mind all communities can benefit from organizations and funds with explicitly double or triple-bottom line ideals.
Jay Parkhill May 18th, 2008
There’s the C corporation that most people are familiar with (what you get if you don’t specify anything else) and the S corporation that is tax free but doesn’t allow preferred stock. Both of these names come from the sections of the IRS tax code that describes them.
Add now the B corporation. The “B” stands for “beneficial”. It doesn’t have special tax rules- instead the intent is to tell people clearly that the company considers benefit to its employees, the general public, the environment etc. along with shareholder profits. The organizers have developed a community of B-corp adopters, and it includes a bunch of “green businesses” but also a couple of big law firms, a skateboard manufacturer and a handful of software companies.
The challenge of socially entrepreneurial companies is that they can do very well, get acquired or obtain outside capital and/or management, and the core principles can get diluted. The B corporation process doesn’t prevent this from happening, but it does make loud and clear that social good is a core element of the business.
So how does one become a B corporation? First, one must fill out a survey. A passing score means that one can take the next step of amending the corporation’s Bylaws and Articles of Incorporation to state the social purpose(s) clearly. I haven’t done it yet, but I am going to take the survey as it applies to my own business. I hope I score well!
There is nothing magical about any of this. It can all be changed or abandoned completely. It is, though, a way to tell the world what your company cares about strongly. That can be good for the company, good for business and- one hopes- good for the world.