Reporting

November 21, 2014 by John Guenther

VIDEO: Effort to help California social entrepreneurs create more impact grows

There's a growing category of businesses looking to make money while saving the world. Rather, they look to have some sort of social or environmental impact while running a business and providing jobs. They're called for-benefit or part of the "fourth sector." If you're looking to get into the sector, good news: There's an effort underway in California to make it easier to do good while doing business.

Recently in Los Angeles, CA Fwd, via the California Economic Summit, co-hosted an event covering the impact economy, including brainstorming ideas about how to help for-benefit companies startup and grow in California and also discussing the benefits of using the innovative "Pay for Success" model to fund government programs and projects.

Calling it "Growing the Impact Economy in California," the Summit's Capital Action Team co-hosted the event with the White House's Investing in Manufacturing Communities Partnership. Since for-benefit companies don't fit in the same category as a for-profit or nonprofit, there are a number of barriers to starting up and growing through capital investment. 

While barriers still exist, that hasn't stopped growing interest in becoming a social entrepreneur and measuring the impact of doing just that.

"There's a pent-up demand to find meaning in work and what's happened before is work gets rewarded on a monetary level alone," said Matt Bogoshian, senior policy council at the U.S. Environmental Protection Agency. "There's a developing set of metrics that show triple bottom line outcomes that means not just monetary outcomes."

Advocates of the fourth sector say the benefit to society as a whole is that these kinds of entreprises can reduce reliance on government services while tackling challenges--climate change, poverty, the achievement gap--that government or business can solve alone. 

"Growing the economy has always been the solution, but it has also contributed to the problem," said Heerad Sabeti, co-founder of Fourth Sector Network. "Today, solving one problem requires solving all the rest of them."

One of the most well-known for-benefit companies is TOMS Shoes but the fourth sector covers a large swath of businesses and have a growing support network--even co-working spaces dedicated to triple bottom line entrepreneurs. Sabeti told the attendees that the fourth sector is estimated to represent between five and 15 percent of GDP and 10 to 20 percent of jobs in the U.S.

One of those companies is Relan, which manufacturers products made from company billboards, banners and marketing materiel, which normally would have been thrown away. Attending the event--where she discovered the company was part of the fourth sector---Relan's president, Kari Brizius, said the company set out to help other organizations with their efforts to be more sustainable. 

"Our biggest goal is to really help promote people's sustainability," said Brizius. "Granted we offer a product which is nice, but with a goal to really promote what the companies are doing internally and give them another avenue to do it than just simply saying, 'We're green. We're sustainable.'"

To make sure these companies in this special sector can do well while doing some good, advocates say there needs to be a more supportive ecosystem for helping for-benefit companies grow in California and nationwide. Economic development policies and programs are mostly designed for growing for-profit companies.

Those needs include more straightforward tax and investment policies that align better with those structures to help them gain more access to capital, which can be difficult to raise from traditional sources. 

We'll feature more from the event, including strategies for building up the fourth sector, and more on the effort here on the Summit's blog.

Categories: Capital, Innovation, Public-private

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