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May 31, 2017

What makes a company good?

I welcome the number of efforts to recognize and encourage companies to do good in the community.  Many labels are being created, yet it would be a mistake to make qualifying for a particular label the criterion for being considered a good company.

I recently presented a workshop at Columbus’ Start-Up Week that covered all these terms:  socially responsible business, B-corp certified, ESG company, conscious capitalist, Benefit Corporation, social enterprise, and nonprofit.  For some in the audience, the label social enterprise was the only acceptable label; all other companies were not “good.”  Imagine the reaction of some companies who thought they were doing good but were told they weren’t social enterprises and by implication were not good!  Continuum of goodContinuum of good

Recently, I ran across three approaches to thinking about what a “good” company is.  In this video , Haley Boehning of Storyforge reminds us that being a good company can be very good for business, but the goodness must be in the culture; skin deep doesn’t convince anyone.  The company is perceived through its culture, as a “who” not as a “what” that produces goods and services.

In April, the Better Business Bureau presented the 2017 Spark Awards for millennial entrepreneurs who demonstrate a high level of character, a culture that is authentic about its mission, and connection with the community.    The awardees were Bottoms Up Coffee Co-Op, Spotted Cow Coffeehouse, and Traxler Printing.  All three were recognized by the judges (full disclosure: I was one of the judges) as standing out from the crowd in their focus on doing good in the community.  They are good companies whether or not they are also social enterprises.

Does a company’s “goodness” have to be integral or altruistic, or can it be a response to financial incentives?  I just learned about an emerging approach in China to use tax-exemption as a way to incentivize employment of people with disabilities and to incentivize business charitable contributions.  As I understand it, when a company commits to filling at least 21 percent of its jobs with people with disabilities and to giving away to charitable organizations at least 30 percent of its profits, it qualifies as a “social enterprise” and it is completely exempt from taxation.  An interesting way to define a tax-exempt company and very different from our 501c3 nonprofit approach.   As a new concept, there are many implementation questions including whether a “bad” company can game the system and still get this favorable treatment.  Nonetheless, is such a company “good” or does it fall short of the bar because we assume they are only doing this to obtain this remarkable tax treatment?

I am reluctant to judge any approaches to encouraging actions that create good.  While I personally am focused on helping companies that meet the very high, and courageous, bar of integrating social impact as a non-negotiable component of their business model — my definition of social enterprise — I think we should welcome any effort by a business to create any degree of positive impact on the community.

Want some ideas on how social enterprises create good?  Go look at the social impact profiles in our social enterprise directory.  Want to attend some more events featuring entrepreneurship in Central Ohio?  Check in regularly with our event listing.  Want to learn more about social enterprise and how it uses business to create positive change in our community?  Follow our blogtweetsFacebook, and webpage.

Allen Proctor, President & CEO

Center for Social Enterprise Development