Archive for December, 2007

For benefit companies

Saturday, December 15th, 2007

Fast Company almost always gives me something interesting to chew on. In its December 2007/January 2008 issue, the magazine presents its 2008 Social Capitalist Awards. In his article covering the awards, Keith Hammonds talks about how promoting social good is no longer the sole province of non-profit organizations. He applauds a number of endeavors attempting to integrate financial returns with social good, calling them “for-benefit” companies. The enterprises he praises yield market returns, but don’t make profit their top priority – instead they put environment and people at the top of the list. Among the recipients of the Social Capitalist Awards are firms that facilitate micro-loans, teams that work with disadvantaged children to distribute books or further their educational opportunities, and organizations that provide housing and other services to homeless and disabled people.

For-profits are also getting in on the action. One of the for-profit organizations identified as having a strong social purpose is Herman Miller, a large manufacturer of office furniture. Herman Miller has a “design for the environment” philosophy aimed at creating no operational environmental impact by 2020. Make no mistake, Herman Miller makes money, and if they can do it environmentally, so can other corporations. Why is this important? With resources dwindling and environmental problems increasing, we’ll eventually run out of raw materials and our fouling of the environment will reach untenable levels. There is clearly a long-term connection between social good and corporate success and the prevailing focus on short-term profit at the expense of long term social issues will ultimately fail. Companies figuring out how to reuse materials and cut their pollution now will be ready.

Used to be only non-profits tackled social issues and they struggled with low funding, lack of clout, and transient leadership, with the result that much of what actually got done was talk. For-profits occasionally launched social initiatives, but mostly they were beholden to their shareholders’ demands for maximum profit at any environmental cost. Things appear to be changing. Now some for-profits are making social good a core value and still profiting. Non-profits appear to be adopting capitalist dynamics in ways that make them more effective in accomplishing their missions. The appearance of a new level of organizations with values falling somewhere in between widens the possibilities and presents terrific new opportunities for creative but achievable solutions. I join Fast Company in applauding these organizations.