Governor Cuomo recently signed a new law that will bring benefit corporations to New York. “Benefit corporations will mean New York is open for business in an important new way. Benefit corporations will unlock billions of dollars in new investments in New York while empowering companies to do well and do good,” said State Senator Squadron.
Governor Cuomo’s signature on this historic bill is one more sign that a new sector is being born that blurs the lines between for-profit and not-for-profit worlds.
Today more businesses—led by benefit corporations—are building healthy communities, living wages and sustainable products into their corporate DNA. And more civil society organizations are embracing business values.
New language is needed to define this emerging trend.
The Private Sector Has a Broader Mission
476 companies with $2.27 billion in annual revenue are certified now as B corporations, a designation given to businesses that meet environmental, governance and social criteria by the not-for-profit B Lab.
Certification has been followed by a tidal wave of state legislation giving such businesses legal jurisdiction. In addition to New York, six other states already have legislation, and four more will likely follow in 2012.
This legislation is significant. It supersedes a body of law legally interpreted to mean corporations must consider shareholder value before taking into account other stakeholders—including communities, employees and the planet.
Business networking organizations like the Social Venture Network (SVN), B Lab, Social Enterprise Alliance, Investors’ Circle and the Business Alliance for Local Living Economies (BALLE) are further helping the trend become a global movement.
While the Nonprofit Sector is Adopting Business Principles
Change is also happening within civil society organizations, motivated in part by technology entrepreneurs grounding their philanthropy in business values. The Skoll Foundation funded by eBay mogul Jeffrey Skoll provides grantees funding to develop aggressive engines of growth. Called resource engines, some grantees are using funds to build business principles into their non-profit structures.
Created in 2009, the civil society organization Practice Greenhealth receives over half of its annual budget from membership dues paid by health providers like Kaiser Permanent in exchange for services aimed at greening their hospitals. Founder Gary Cohen built this resource engine after talking to entrepreneurs at the Skoll World Forum.
Language Is Powerful: The Common Good Enterprise
Social enterprise, mission-driven business and for benefit corporations are a few of the descriptors for organizations blending business principles with common good aims.
The authors believe the movement can better communicate the power and purpose of this emerging field.
Searching for better lexicon, Jim came across a phrase that should be brought center stage: “the common good enterprise,” which the authors have defined as follows:
A for-profit or not-for-profit organization whose primary purpose is to promote the well-being of people and/or the planet. The organization generates at least a percentage of its revenue through the sale of goods and services (adapted from Kevin Lynch; Advertising on Higher Ground).
Why “common good enterprise”?
Its power is its clarity.
Common comes from the word “commons,” which describes a relationship to the community as a whole. Common good intuitively includes a regard for the planet, respect for individuals’ human rights, and support of communities.
The word “enterprise” is also self-explanatory—and speaks to revenue generated from the sale of goods and services.
Common good enterprise is clearer than other terms such as the more popular “social enterprise.” Does “social enterprise” exclusively describe businesses? Or non-profits? Does “social” include the planet? Only leaps of the imagination can make the connection.
The labels we use for this new field matter. Easy to grasp language provides a framework to help the public co-create this emerging sector.
Clear terms can translate into financial benefit. Why not pass legislation providing government procurement advantages to common good enterprises—whether companies or civil society organizations? Could such language catalyze new capital pools?
It’s time to embrace “common good enterprise”—a term for organizations using business principles in support of the common good that will help make opportunities this field opens up a reality.
This editorial was originally published on CSRwire’s Talkback blog
Jim is the founder and Chairman of EFO Capital Management Inc., a family investment firm based in Washington D.C. Jim is the developer of Belmont Bay, a mixed-use, pedestrian friendly community on the Occoquan River near Woodbridge, Virginia and is finalizing plans for a village development at the north end of Culpeper County, Virginia. Early in 2011 he founded Blue Ridge Produce, a local food aggregation operation that sources food from Virginia and the eastern seaboard for sale to grocery stores and wholesale and institution buyers in the Washington Metropolitan area. Jim is a member of the Congress of New Urbanism and Social Venture Network. His wide- ranging interests have led him to serve as Chairman of Dance Place and DC Green works, as a Board member at Trickles Foundation, and as an Emeritus member at Pathfinder International.
Alicia Korten –Chief Culture Officer, The Culture Company
Be Your Brand
“Culture Eats Strategy for Breakfast” Peter Drucker
As an award winning author, keynote speaker and culture consultant, Alicia helps build brand culture that unleashes purpose and passion in the workplace. Building values-driven brand culture directly affects the bottom line–helping motivate staff, turn around sagging revenue, keep and attract top performers, build brand loyalty and generate stories that the media loves. Clients include the Ford Foundation, Levis, Kimpton Hotels & Restaurants, Longfellow Sports Club and the United Nations. Her latest book is Change Philanthropy, an Axiom Business Book Award gold medalist, and she authored sections of Wake Me Up When the Data Is Over: How Organizations Use Stories to Drive Results. She is an affiliate of the Social Ventures Network, a Fulbright Scholar and a graduate of Brown University. Three facts about her: she motorcycled across Bali, lived on a garbage dump in the Philippines for a week and traveled by canoe through the Darien Gap.
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