of global consumers would switch brands if a different brand of similar price and quality supported a good cause
of millennials surveyed believe business should be in involved in social issues
of people consider social and environmental impact when deciding where to work
Sources: Cone Communications / Echo Global Csr Study 2013; Net Impact, What Workers Want 2012; Raj Sisodia, Firms Of Endearment, 2014; Cone Communications Social Impact Study 2013
A walk through the shared offices of local startups should be sufficient proof that “for-benefit” companies are a particular favorite of millennial entrepreneurs.
Coworking spaces are peppered with twenty-somethings wrapped in ethically sourced clothing and socially conscious bracelets, discussing why their startup will soon change the world.
For-benefit business has many names — social ventures, conscious capitalism, benefit corporations — but the main theme is consistent: a company whose mission it is to deliver positive impact to the world.
For-benefits are not the same as nonprofits, whose growth is often hampered by their legal status. Instead, for-benefit companies generate revenue just like for-profit ventures, while offering the social benefits often associated with nonprofits (think TOMS: you buy a pair of shoes, we’ll donate a pair of shoes to the needy).
The rise of for-benefit entrepreneurship, driven largely by the entrance of millennials to the workforce, has been both swift and significant. But the movement is disorganized. For years, there have been no clear standards as to what defines a “social enterprise,” no way to measure its impact, and no directory to search and read about a company’s efforts to do good.
That is, until now.
Encinitas-based GameChangers 500 has taken on the task. The company, founded in 2011, has created a set of rules for companies that want to claim for-benefit status based on their practices rather than their legal structure, and compiled a directory of vetted companies.
Thanks to the support of a 180-person advisory council focused on legally defining the “for-benefit enterprise,” GameChangers developed a merit system with 12 categories of commonly agreed on best practices (things like being eco-friendly or paying a considerate wage to employees).
GameChangers is using the merit system as a guideline to rank the world’s best companies in terms of how much benefit they can create. Think of it as the Fortune 500 list, but instead of ranking companies strictly by revenue, GameChangers ranks companies by ongoing social, environmental, and economic influence.
Career Path Leading to Depression
Andrew Hewitt is the company’s archetypal millennial founder, a 34-year-old entrepreneur who struck gold early in life when he landed a book deal after college and grew that wealth in real estate.
Speaking of stereotypes, he looks more like a yoga instructor than a real estate tycoon. A leather-and-stone pendant hangs from his neck and a jumble of bracelets wrap his wrists (no doubt ethically-made).
We’re sitting at his kitchen table, a quieter spot than his garage, where GameChangers is currently headquartered.
“I was watching friends graduate from university and then climb the ranks of traditional corporations,” Hewitt said. “They thought climbing the corporate ladder was the definition of success, and so did I. But over the years, they became depressed and disempowered.”
Hewitt said the “profit-at-all-costs” mindset of traditional corporations doesn’t jive with people his age. Market research backs up the idea, showing that 83 percent of millennials believe business should be involved in social issues.
“The internet has allowed us to share information in a way we hadn’t shared before, which ultimately increases empathy,” Hewitt said. “Any time there’s more connection between people and more openness of information, we get more empathy from people.”
Hewitt said breakthroughs in communication technology are allowing people to see the world in a way they previously hadn’t.
“They’re re-evaluating success for themselves, and realizing that having a big house will not make them happy,” Hewitt said. “They want a sense of meaning, and they’re seeing others create that sense of meaning through their job or through the businesses they create.”
But which companies are the performers and which are the pretenders? Hewitt said the GameChangers 500 list will be a resource for people looking for employers that align with their values.
Charging for Assessment, Improvement
GameChangers 500 has been operating for the past five years, but the company has recently refined its ranking system and will launch a brand new platform (chock-full of content) in February 2017.
Hewitt said the company will make money by charging businesses to undergo rigorous assessments across all of their best-practice categories, along with charging for an optional six-month program to help companies improve in those areas.
Why would companies want GameChangers’ stamp of approval? Hewitt said that depends on the size of the company, and the industry they’re working in.
“First, it can be a hiring thing,” Hewitt said.
It’s true that young talent is often drawn to for-benefit companies, said Christian Braemer, founder and CEO of social impact venture Benefunder.
“We’ve been able to attract better talent because of our social impact mission,” Braemer said. “Some of our team members gave up opportunities at Facebook and Google to be with us because they were driven by our cause.”
Braemer said for-benefit companies don’t just have a leg-up in hiring; the company’s bottom line can also get a boost.
“The social concept is a marketing benefit,” Braemer said. “You’ll have an edge on your competitors because you have this mutual drive that people can identify with.”
You can see the concept in action at Vista-based Dr. Bronner’s, which brought in $100 million in 2015 selling organic, Fair Trade soap products. The company lives by six “cosmic principles” — including “treat employees like family” and “treat the Earth like home”— that guide everything it does. A great example of the company’s ethics is its compensation rule, which says that the total compensation of the highest-paid executives is capped at five times that of the lowest-paid employee.
But how do you persuade millennials that you’re a company they can trust? How do you convince the growing pool of conscious consumers that you’re a business they should support?
Getting certified by GameChangers 500 is a good place to start, Hewitt said.
Companies need to get the word out about their impact, posting videos and other content that showcases their work. And that’s another way GameChangers offers value.
“We do the storytelling for them through our platform,” Hewitt said. “We edify them and give them credibility.”
The company’s offering seems to be taking off. Big name corporations like Etsy and Zappos have already undergone the assessments, joining about 25 other “featured members” on GameChanger’s website.
The company has received an undisclosed round of angel funding, and will be moving out of Hewitt’s garage and into a new office in Encinitas in the coming weeks.