Cultivating Social Enterprise Sheltowee Business Network Alex Day Aug 30 2019 Cultivating Social Enterprise in Louisville By Delene Taylor, CPA, CGMA Social entrepreneurship resonates for many Louisville startups looking to “do good” in our backyard. By way of definition, let’s look at the buzz out there. Social enterprise, corporate social responsibility (CSR), conscious capitalism – these are all terms which refer to an evolving business practice that incorporates social impact into a for-profit company's business model and brand. Measurable impact on social, environmental and economic factors (people, planet, profit – also known as Triple Bottom Line) is a key component. Louisville entrepreneurs now have a helpful resource: local startup Canopy (CanopyKy.org) is a nonprofit organization with a vision of Making Kentucky First in Good Business. Canopy will provide support to for-profit companies with a social or environmental mission, working with entrepreneurs and business leaders to create the Canopy Certified Program, which will guide businesses along the path to greater impact and recognize successful outcomes. As a founding director of the Canopy Board, I see how important it is to grow awareness and culture around the good business movement through educational outreach. Research by Cone Communications found that 63% of Americans hope businesses will drive social and environmental change in the absence of government regulation. 78% want companies to address important social justice issues. 87% of consumers surveyed said they would purchase a product because a company supports an issue they care about, and 76% would refuse to buy from a company that supports something contrary to their own beliefs. A Nielsen survey showed that 90% of millennials will pay more for products that contain environmentally friendly or sustainable ingredients, and 80% will pay more for products that have social responsibility claims. This passion for corporate social responsibility exists across genders and generations. Millennials, Gen Z and Gen X are the most supportive, but their older counterparts aren’t far behind. According to a 2014 NetImpact study, 83% of respondents were willing to earn a salary that was 15% lower than they might otherwise make in order to get a job that seeks to make a social/environmental difference. Demand continues to grow for a corporate form that meets the expectations of socially and environmentally conscious consumers, investors, entrepreneurs and employees. Enter the Benefit Corporation - a legal corporate entity structure. Currently, 36 states have passed Benefit Corp legislation, including Kentucky. Don’t confuse this with the term ‘B Corp,’ which is a globally recognized certification developed by B Lab. To learn more, visit benefitcorp.net. There are currently close to 3,000 certified B Corps in over 60 countries. Investors are paying attention. From 2016 to 2018, impact investing in the U.S. grew more than 38% - to 26% of the $46.6 trillion in total assets under management. Where do you fit in? With consumers, employees, and stakeholders placing increasing importance on supporting and working for businesses that are effecting social change with their beliefs, practices and profits, how can you as an entrepreneur use your business as a force for good? Here are four key areas to focus on: 1) Workplace practices and culture 2) Environmental footprint 3) Philanthropy 4) Community service Be vocal about what you are doing and why - people want to align with others who share their values. Choose causes that have some relevance to your core business focus or values. Be authentic and build your program(s) intentionally and in a way that is sustainable as an ongoing business practice. Measure your impact! While there are many challenges when it comes to “standardizing” social impact, the Impact Genome Project (www.impactgenome.org) has done some great work in this area. A Case Study: Louisville’s Scott Koloms Social enterprise is not just the responsible or trendy thing to do – it is also good for business, as this story illustrates: Louisville CEO Scott Koloms took over a small janitorial company losing $100,000 a year with over $750,000 in long-term debt after his father unexpectedly passed away in 2001. With a business model focused on caring for people and communities, Scott led FMS to become one of the region’s most successful janitorial services, growing from 30 employees to over 800, with 10%+ revenue growth every year for 17 years, and a turnover rate that is a fraction of the industry average. FMS became the first janitorial B Corporation in the world in 2016 and the first Public Benefit Corporation in Kentucky when PBC legislation passed in 2017. What do we want Louisville known for? Louisville frequently ranks high on lists such as the Top 100 Best Places to Live, Top Cities to Visit, etc., and our Kentucky is well known worldwide for bourbon, basketball and horses. Unfortunately, we rank at the bottom of the pack in some of the most critical areas: 44th in economic opportunity, 47th in health care quality, 43rd in educational attainment, and 40th overall (U.S. News and World Report). It doesn’t have to continue this way. By working together to provide diversified funding, talent resources, and innovative solutions - in collaboration with nonprofits and government – entrepreneurs can tackle our most pressing social challenges. Let’s make Louisville, Kentucky the best place in the country for socially conscious, impact driven businesses and in the process, create jobs, attract/retain talent, and improve lives! Delene Taylor, CPA, CGMA is the Marketing Director for DMLO CPAs and a member of the Sheltowee Business Network. She is devoted to promoting entrepreneurship and social enterprise in Louisville.