On Wednesday October 17, 2018, the Charlottesville Business Innovation Council (“CBIC”), along with co-host Presidential Precinct, held the Tech Night Takeover (“TNT”) series event titled: “Social Good Means Good Business”.
For those unfamiliar, CBIC holds periodic TNT events throughout the year covering emerging and pressing issues affecting its member base, including various issues concerning investment, founders, IT, software, biotechnology, life sciences and more. New CBIC board member, PJ Harris, moderated the subject TNT, styled as a fireside chat with subject matter experts in the for-profit “social impact” space. The experts consisted of (i) Aneesh Dhawan, Founder and CEO at PurPics, (ii) Beth Johnson, Program Director at Blue Morning, (iii) Peter McFarren, President & CEO at Global eHealth Solutions LLC and (iv) Brynne Potter, CEO & Co-Founder at Maternity Neighborhood.
Prior to the start of the fireside chat, PJ Harris provided a brief PowerPoint primer presentation that examined certain definitions and commentary related to the for-profit “social impact” space. The primer proved useful as much of the TNT focused on defining exactly what the space is and what it is not. The space is not the same as traditional for-profit companies or traditional non-profit companies, which then begs the question: why operate as a for-profit “social impact” company instead of those alternatives?
Why operate as a for-profit “social impact” company instead of a traditional non-profit company? While both business types may have similar missions, the panelists described the added benefits of having investors. Simply put, for-profit “social impact” companies have the ability to scale their operations more quickly. Traditional non-profits in comparison need to rely on donations, grants or traditional loans to scale their operations.
Why operate as a for-profit “social impact” company instead of a traditional for-profit company? Private enterprise combined with public social mission tends to create enhanced brand value, especially with younger consumers. As a result, for-profit “social impact” companies may garner greater consumer support than similar traditional for-profit companies, especially as younger consumers continue to enter the marketplace.
Despite its advantages, operating as a for-profit “social impact” company comes with its own set of challenges. Striving to reach a social ideal, while admirable, may not be economically justifiable or commercially reasonable. Investors want a respectable return on their investment. Founders and company employees need to make a living. Thus, those desiring to start a for-profit “social-impact” venture need to ensure that their ambitions and goals are tied to rational profitability forecasts, and that their investors understand the inherent risks and challenges associated with their operations and missions.