A couple of weeks ago, I was asked to give testimony at a Minnesota State Senate Committee hearing on legislation that would create a new type of for-profit corporation, a Public Benefit Corporation. As one of 3 Certified B-Corporations in Minnesota, authors of this bill turned to thedatabank as an example of a small business that can be both profitable and operate with a social mission.
The vision behind a Benefit Corporation (B-Corporation) is pretty simple: Instead of focusing entirely on how a company can increase “shareholder value”, a Benefit Corporation is focused on increasing “stakeholder value”. Stakeholders include owners, employees, clients, vendors and the larger community. This is not some wacko socialist idea. In fact, here in Minnesota, the proposed legislation has bi-partisan support.
When we started thedatabank in 1998, we had a vision for a company that could provide a product that would benefit our clients and communities, and at the same time provide a workplace that creates equitable, sustainable employment. Back then, when I would talk to the larger business community about our vision, I would get blank stares from people unable to grasp the concept.
Today, there are over 500 certified B-Corporations in the U.S. and the number is rapidly growing. Seven states have already passed Benefit Corporation legislation and several more, including Minnesota, are in the process.
While the creation of Benefit Corporations is relatively new, we’re already seeing some of the effects, direct and indirect, of their work. In addition to the almost $3 billion in revenues that Certified B-Corporations generated in revenue in 2011, hundreds of support vendors such as banks, lawyers, and accountants have developed offerings specific to B-Corporations.
Just like any emerging business sector, the key to Benefit Corporation growth will be access to capital to start and grow the businesses. Unlike 1998, when we went out into the funding community and were met with blank stares, today there is a growing list of funders focused on providing capital to Benefit Corporations.
One question that is often asked is: Why would someone invest in a B-Corporation when they could probably get a better return on their investment with a traditional corporation? The main reason is that, while an investment in a B-Corporation might yield a little lower financial return than buying stock in Facebook or Google, the return will still be better than many other types of investments like Bonds or Treasury Notes, and at the same time the investment will return significant social benefit.
In the 2012 B-Corporation Annual Report, which was just published today, thedatabank is recognized as one of the “Best for the World” for both worker and community impact. As co-founder and CEO of thedatabank, I’m proud that our company has been honored this way, but the real honor goes to our clients and employees that make it all happen.
Starting and growing a B-Corporation has been a real learning experience for me. In some ways, it’s been harder than the previous 5 companies I co-founded, but the net return for our clients, for our community, and for our employees has been beyond what we could have imagined in 1998.
The Fortunate Technologist & CEO of thedatabank, inc.