We've created a false division between the marketplace and charitable work. I suppose mostly for tax reasons, we tend to see "doing good" as the role of nonprofits and "profitable business" as the role of everyone in business.
It's actually a pseudo-reality that has been fabricated based upon tax regulations and is fed by the many other fragmented approaches to living and working that we embrace in Western culture. Humans aren't divided into fragmented bits that are classified by their working selves, their home selves, and any other self you might introduce. And the drive for more "work-life" balance is all about people bringing their whole selves to work.
And the nonprofit work of even the best charities is driven by revenue provided by someone. What's hidden in this false dichotomy, is the fact that creating social good cannot occur outside of the ability to attach it to profitable production of goods and services.
Reintegrating the work of helping humans thrive with the creation of goods and services is the future of charity, and holds lots of benefits for business, too.
But how do we reattach these two seemingly different ideas? The truth is, it's already happening. Nonprofits have been bolting on earned revenue for decades. Look at any nonprofit hospital, and you will see a maze of LLC and professional corporations attached to a 501c3, and the same thing is true of universities. The main street version that you might notice is the Lion's Club Christmas Tree lot, or the 4H livestock auctions that fund local programs (and hardworking young farmers).
But the flipside is happening, too. Businesses are integrating charitable or social enterprise activity in a variety of ways that don't align with traditional charitable funding approaches. The traditional channels like United Way, are taking a big hit.
United Way Funding
Integrating Difference Making in Business has a Multiplier Effect
The research is plentiful: customers and employees thrive when the businesses they are loyal to are doing something more than making profit. It's part of what helps employees to thrive, and customers are willing to pay more for a product that does social good.
And the other logical reality is also important: There many things that businesses can do with greater efficiency than charities. While that's not always true, and great charities bring substantial leverage and skill that multiplies donations, the core skills of a business still work when they are applied to the market that is adjacent to their business.
Part of the evidence for that is the long list of social enterprises that were acquired by larger corporations. They include: Stonyfield Farm by Groupe Danone in France, Honest Tea by Coca-Cola, Tom's of Maine by Colgate-Palmolive, Zappos by Amazon, The Body Shop by L'Oreal, Kashi by Kellogg, Iams pet food by Procter & Gamble, and Cascadian Farms by General Mills.
If you're cynical, you might see these as public relations plays, and acquiring a social enterprise isn't that practical for a small to medium-sized business. But looking around the market to see places where their customers and employees are connected and finding adjacent opportunities in which they can put their skills and assets to work is entirely practical.
We call these Impact Ventures.
An impact venture is a venture that is integrated in a for-profit company designed with a social impact in mind. It's intentional, and it harnesses the passion, experience, and relationships that a company already has developed to make a difference.
Some examples of this are
Located in Wheaton, Ill, this company intentionally hires people who are re-entering after incarceration and provides training to produce coffee in the top 1% of all coffee.
Located in a San Francisco neighborhood that has traditionally suffered from economic and social challenges, Dayspring is using it's business savvy to support local businesses that are it's neighbors by providing consulting and low-cost loan fund.
Fred Billing's Houston-based Buds & Blossoms—a vertically integrated landscape design, plant farm, and distribution company—operates as a catalyst for community transformation. The family business practices stewardship by investing in four forms of capital: intellectual, relational, spiritual, and financial. These investments advance regenerative agriculture, improve food security, and nurture meaningful connections between people and creation. In Montana, the company has partnered with Greg DuMontier and The Confederated Salish & Kootenai Tribe to collaboratively restore the tribe's agricultural economy,
The March collective operates multiple businesses in Alabama and consults with small cities and towns to restore the heart of small-town America with an innovative approach to profit-focused small business development that is tailored for the rural environment. It's reach is not only economic, as it also offers services for marriage renewal.
You've heard of impact investing, which refers to type of investing that has goal of generating both financial returns and positive social impact. It sits between traditional investing (focused purely on returns) and philanthropy (focused purely on doing good).
