Where the bottom line supports the social good
The morning headlines suggest that we are living in an era of unprecedented corporate corruption and greed. As consumers wade through an...
Special to The Times
The morning headlines suggest that we are living in an era of unprecedented corporate corruption and greed. As consumers wade through an alphabet soup of scandal, from Adelphia and Arthur Andersen to Enron, Global Crossing, Tyco and Xerox, we grow weary, feel helpless and assume that most companies are morally, if not literally, bankrupt.
In the midst of this free-market meltdown, however, are promising signs that a new type of company is emerging, where shareholder transparency is high, integrity is assumed and, more distinctly, where product quality and social value are explicitly mixed together. These companies adhere to free-market tenets and are unapologetically focused on the bottom line, yet they integrate a strong social mission and commitment to philanthropy unmatched by most traditional companies.
By taking a "tough-minded and tender-hearted" approach, these companies, including several in the Northwest, are blending elements of both the for-profit and nonprofit worlds, emerging as a potential new force of the economy: the "for-benefit" sector.
"For-benefit," or "B," companies represent a new class of organization, driven by social purpose and yet financially self-sustaining. B companies are more than charity-minded corporations or nonprofit organizations with earned-income strategies. Rather, B companies make far-reaching, explicit commitments to use every aspect of their products, processes and profits for social good.
The best known B company is Newman's Own, the food company founded by actor Paul Newman. By marrying high product quality with a pledge to donate 100 percent of net profits to charity, Newman has attracted legions of happy customers and generated more than $150 million to fund programs for at-risk children.
Lesser known, but longer-standing than even Newman's Own, is Untours, a popular European vacation-rental company founded almost three decades ago by entrepreneur Hal Taussig. Untours provides vacation travelers with personalized, high-touch service and donates all profits to make micro-credit loans to the poor. In this way, Taussig hopes to "provide a hand up, not a handout."
Other companies, from Finnegan's Irish Amber in Minneapolis and TransForms in North Carolina to PeaceKeeper Cosmetics in New York and BetterWorldTelecom in Virginia, are showing the power and growth of the for-benefit sector every day.
As it happens, the Northwest is a hotbed of B company activity. Athena Partners was founded by Trish May, a cancer survivor passionately committed to eliminating women's cancers by advancing research and education. May, a former Microsoft executive, launched Athena bottled water in 2002 and donates 100 percent of profits to help raise awareness and funding for her cause.
My own company, Pura Vida Coffee, provides customers across the country with organic, fair-trade gourmet coffee, using company resources to help at-risk children and their families in coffee-growing regions of the world. Structured as a for-profit business yet controlled and operated by a public charity, Pura Vida is bringing the power and leverage of capitalism as an engine for social change.
All well and good, you may be thinking — but are consumers buying it? Consumers are responding enthusiastically to B companies, generating demand for products and services that satisfy physical needs while nourishing the soul. They are called many things, from LOHAS (lifestyles of health and sustainability) to conscious consumers, to cultural creatives to values-driven shoppers.
But one thing is for sure, whether they are teenagers buying Live Strong rubber bracelets, Gen Yers shopping for fair-trade coffee, boomers waiting for hybrid vehicles or retirees investing in socially responsible mutual funds, these consumers share one thing in common: a desire to spend money on products that align with their values.
Some may still dismiss this movement as nothing more than "lazy benevolence" or "selfish charity," to which one might well ask, "And what's so wrong with that?" If the purchases we make anyway can help make the world a better place, can one really argue that pure consumerism is somehow superior? As a card-carrying capitalist with a Harvard MBA, I am delighted to sell our product to a growing base of customers who are passionate about great coffee and who want their purchases to do good at the same time.
During the past six years, we have found that consumers are not only looking for guilt-free shopping, but also for the opportunity to challenge the status-quo taught by business schools and practiced by most businesses; to replace the venerated caveat emptor — buyer beware — with the enlightened prosum emptor — buyer do good.
By sharing what we have learned with business leaders, MBA students and passionate consumers, we are working to promote a new type of capitalism, one that is driven by good rather than greed.
John Sage is co-founder and president of Pura Vida Coffee, based in Seattle. He is the scheduled guest speaker at the Rotary Club of Seattle's luncheon meeting today.