Innovation

The innovation highlighted in this story is the unique business model of Impact Makers. Impact Makers is a for-profit company whose equity is fully held by two public charities: Virginia Community Capital (VCC), a non-profit bank, and The Community Foundation (TCF). This is different than philanthropy where companies give away some or all of their profits to charities. Impact Makers, on the other hand, has gifted its complete equity to two community foundations. As the value of the company grows, VCC and TCF grow too.

To get an idea of how different this is from philanthropy, consider the following three ways in which the company contributes towards community development:

1. Impact Makers' equity is held by VCC and TCF, which are involved in impact investing with the principle. These foundations invest in B Corporations and other organizations with a social mission in Richmond and central Virginia with a mindset of exiting at some future date when the business that is being supported is strong enough to stand on its own. They also invest in various other sustainable businesses or initiatives in the areas.
2. Philanthropy with earning: 30% of the profits of the company generated from the consulting business goes to charity partners.
3. Pro-bono consulting to non-profits in the area.

This story highlights the equity that has been given away to VCC and TCF. It was in April 2015 when Impact Makers gifted its equity ownership to VCC and TCF to preserve and grow its social impact. This unique social impact business model enables the middle-class professionals of the company to collectively make an impact equivalent to most of the large foundations in Richmond while essentially doing the same work they have always done. The unique business model makes it possible for VCC to partner and invest in social enterprises like B Corporations, giving well needed and well deserved support to such organizations.

Inspiration

Back in graduate school, Michael Pirron, the CEO and founder of Impact Makers, had written a paper on Newman’s Own’s business model. He was impressed by the company’s model where it gave away 100% of the profit to charity. Post graduation, he started working for a consulting firm as a senior consultant. While being good at the job, after a few years, he felt he needed to do more for the community. With a vision to do good for society, he started his own venture. “I started Impact Makers with $50, a laptop, and one contract with the idea of living my values through my work," said Pirron. At the start, he thought the company could potentially become a $2 to $3 million company. However, it turned out to be a great success. It motivated him and other employees to keep going and work harder, for the harder they work and the more the company grows, the the more community benefits.

Overall impact

The sole purpose of starting Impact Makers was to help the community grow with the help of businesses in which the company is involved. One example of this is the criterion used to select a board of directors. Typically, for start-ups, the board of directors is selected to bring in expertise and enhance industry knowledge. However, Impact Makers chose to select board members who could help distribute the company’s resources most effectively to the community so that the impact can be maximized. In 2014, the company contributed more than $312,000 in direct, unrestricted financial support and pro-bono business and IT consulting to their partners and other charities. This has enabled these organizations to support and empower tens of thousands of individuals in the community.

Business benefit

Anika Horn, Impact Makers' B Keeper for Central Virginia, coordinates the local community of B and Benefit Corporations. When discussing the impact of the business model and of being a B Corporation on the business value created and revenues generated, Horn said “The model does not directly impact the revenues. Clients don’t buy our services because of our model. They buy our services because we give them the quality of work that they expect.” However, she mentioned various benefits that help the business in multiple ways and help the business grow:

1. Due to the unique model, candidates want to come and work for Impact Makers. The company is able to attract highly passionate and talented professionals who are motivated by the firm’s mission. In the past 10 years, only 12 employees have left the company.
2. Mission aligned teams outperform teams that aren’t mission aligned. This helps increase the productivity of everyone involved and increases the overall delivery capacity of the company.
3. Being a B Corporation gives access to the strong network of B Corporations which are eager to help each other grow. It is a rare advantage B Corporations have in this competitive world.

It becomes evident that potential employees are looking to work for companies that are not only about performance but also about what impact their work will have on the community and the world. Also, a growing community of socially responsible businesses is thoughtful towards other businesses, giving rise to a positive, motivating environment in which to work.

For five consecutive years, Impact Makers has made it to the Inc. 5000 List of Fastest Growing Private Companies in America. It was ranked at number 1067, 1549 and 463 in years 2016, 2015 and 2014 respectively. In 2016, it was listed with a three-year sales growth of 366%.

Social and environmental benefit

Impact Makers is a founding B Corporation and was re-certified in 2014. Its long-term social goal is to make $100 million in cumulative impact by 2024, which will be held by VCC and TCF, according to the model. These funds will be used to make responsible investments in socially responsible organizations, preferably B Corporations, with the principle. This can be tied to Goal 8 of UN Sustainable Goals, which focuses on strengthening domestic financial institutions. VCC which holds 30% of Impact Makers' equity, grows when the company grows and consequently helps more social enterprises financially. The social mission of Impact Makers is to help organizations help people help themselves.

Impact Makers helped achieve the goals that its partner organizations had set for themselves. Some of these are:

1. With RxPartners, provided services for more than 6,500 uninsured patients and gave more than 65,000 prescriptions with a retail value of $15.8 million.
2. With Peter Paul Development Center, provided education and enrichment to 146 students in grades 2-12 in Richmond’s East End.
3. With FLiPM, funded instructions in three high schools in Virginia and the first program in Western Michigan.

Apart from these, the company has various other partnerships and is adding new partners every year. Impact Makers is working towards getting more involved in impact investing and would like to support as many socially responsible and/or B Corporations with financial support and pro-bono consulting. These partnerships help it achieve Goal 17 of the UN Sustainable Goals which is 'Partnerships for the Goals'.

In addition, Impact Makers employees are given 20 hours per year to devote to direct, hands-on work with the non-profit partners. Employees are welcome to do more hours on their own as some projects take more time and are covered by Impact Makers. This helps deepen the partnerships and gives employees an opportunity to strengthen relationships and make a personal impact on the community.

Interview

Anika Horn, B Keeper