4 Social Business Structures and What They Mean

Photo by Commons Studio © 2016

Terms like social enterprise are becoming popular in business vernacular, but what does it really mean? Add in Benefit Corporation, B Corp and Conscious Capitalism and you have a variety of business terms that actually mean very different things.

A recent panel at the second annual Columbus Startup Week demystified the often interchanged terms and discussed examples of local businesses under each umbrella.

Allen Proctor of the Center for Social Enterprise Development began the panel by discussing the evolution of embodying social benefits through business. Proctor says it started about 15 to 20 years ago when mutual funds formed and focused on socially responsible businesses and avoided investing in industries like oil and arms. Investors then became more proactive in supporting businesses in the environmental, social and good governance realms.

“In the last 10 years we started seeing more and more businesses in the for-profit sector who said, ‘Our main purpose is to do good without being dependent upon philanthropy,”” Proctor says. “That’s really what we call social enterprise.”

Some businesses put a legal structure around their socially-focused operations as a Benefit Corporation. Although not recognized in the state of Ohio, several other states across the U.S. offer the entity.

“A benefit corporation is a legal structure that protects the benefit focus of a public company,” Proctor says.

Much like a Good Housekeeping seal, businesses can also seek B Corp Certification. The certification is not a legal entity and is instead determined by meeting stringent requirements as laid out by non-profit B Lab.

“You’re a company that focuses on doing well in the community, doing well with your employees, [and] doing well in the environment,” Proctor says.

Locally, Fulcrum Creatives and Jeni’s Ice Cream are certified B Corps. Charly Bauer, director of special projects at Jeni’s, was also on hand to lend further insights into the company’s decision to seek certification.

The latest social business structure to gain popularity in Columbus is Conscious Capitalism.

“Conscious Capitalism is a national organization that has local chapters where people have businesses who believe a business does better by serving its employees, its mangers and its customers well,” Proctor says.

Improving Columbus President Mark Kovacevich is working on creating a local chapter in Central Ohio.

The panelists discussed that while this terminology exists, it comes with overlaps, isn’t always mutually exclusive and can focus on different types of social benefits.

Social enterprises and B Corps can fall in just about any industry. A business doesn’t have to have a social mission to be a B Corp, and a company doesn’t have to be a certified B Corp to do great things.

For example, Bauer says that social enterprise is not in their lexicon of descriptors, but what they are is a certified B Corp. Seeking the certification was a way for the company to put some official parameters around many of the things they were already doing, and learn even more ways they can become a better company.

Jeni’s isn’t solving any social problems by pursuing their mission of making the world’s best ice cream, but more and more businesses in Columbus are incorporating social purpose into their missions, like panelist and photographer Matt Reese of Commons Studio.

Reese uses his studio to make photography accessible to all through apprenticeships. He’s also implemented a buy-one, get-one model, offering similar services to partner beneficiaries like Dress for Success.

Proctor says the buy-one, get-one model is a popular one with social enterprises. Other social enterprises in Columbus like Double Comfort, Gluvco and soon-to-launch Aunt Flow offer their benefits in such a way.

Still more businesses are consider social enterprises because of who they employ, like Hot Chicken Takeover, Pearl Interactive NetworkCleanTurn International and She Has a Name.

Proctor says the rapid rise of socially-conscious businesses is driven by a younger demographic.

“Particularly consumers under 35 want to give their business to a company that isn’t focused on just making money,” Proctor says “They want to give their business to a company they know is helping their local community.”

When two similar products or services present themselves, a new wave of consumers will always gravitate towards the one that has an impact on the local community.

“It’s good for business,” Proctor says.

And while these businesses are for-profit, “It doesn’t mean that they aren’t focused on doing good, it means they realize that there’s just not enough philanthropy in this world to do all our community needs,” Proctor says.

Photo by Commons Studio © 2016