It's an accepted standard of law and culture that the primary mission of a business is to make a profit for its owners or investors. Yet not everyone thinks of business that way.
One example is Impact Makers, a Richmond-based technology consulting firm that wants to become a model in Virginia for the small but growing "social enterprise" movement.
The company was founded in 2006 with the mission of donating its profits to charity.
The information technology and management consulting company earns money through free-market competition, just like any other for-profit venture.
But it is not investors who are benefiting from the company's bottom line. Instead, two local nonprofit groups that provide medical services for the poor receive monthly and annual payments from Impact Makers.
"This is a great model," said Michael Pirron, the company's co-founder and CEO. "It leverages all the power of capitalism — the value proposition to clients and the job creation, and it also has a community impact."
Pirron hopes the business model will inspire other entrepreneurs to start similar ventures. "As a small company we are trying to take a leadership position in this movement in Virginia," he said.
The Virginia General Assembly has given a stamp of approval to the concept. During the recent legislative session, lawmakers overwhelmingly passed a bill sponsored by Del. Jennifer McClellan, D-Richmond, that recognizes in state law the creation of "benefit corporations."
Those corporations would have a social mission beyond maximizing profits for investors or owners. The legislation was awaiting action last week by Gov. Bob McDonnell.
While not a benefit corporation itself, Impact Makers operates by similar principles. The company has no shareholders, and its management and finances are overseen by a nine-member board of directors, eight of whom are volunteers and independent from the company.
Pirron co-founded Impact Makers after a career as a business consultant, including working in Europe, Africa and Israel. The work paid well, but Pirron said he wanted to find a way to meld his love for business with his desire to do philanthropic work, without having to build a fortune first.
The idea eventually came to create a "B corporation," which is not a legal designation but simply a name for a type of firm that has publicly adopted a social mission and adheres to standards set by B Lab, a Pennsylvania-based nonprofit group that promotes the concept and certifies and rates companies labeled as B corporations.
B Lab lists about 381 such firms nationwide, including Impact Makers. The other companies range from small retailers to software developers, food companies and specialty insurance providers. Their total revenues amounted to more than $1.8 billion last year.
According to B Lab's mission statement, its goal is "to create a new sector of the economy which uses the power of business to solve social and environmental problems."
"There is a pent-up consumer demand for these types of businesses," said Erik Trojian, director of policy for B Lab. "When consumers know they are out there, they tend to purchase from them."
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Impact Makers made about $507,000 in revenue and donated its after-tax profit of about $41,000 in its first year in business.
Like many other businesses, Impact Makers struggled during the height of the recent economic recession.
"We had a tough time," Pirron said. "Everything was so low in 2009, we lost essentially our entire book of business."
A new partner, Carl Miller, joined the company as president in 2009 after a career in business consulting and management.
Impact Makers saw a recovery in 2010 and is now growing, Pirron said. He said the company has $1.5 million in contracts for 2011.
"We are hoping to put, at a minimum, $100,000 into the Richmond nonprofit community," he said.
Pirron wants the company to reach $5 million to $6 million in revenue within a few years.
"At $5 million to $6 million, we can put $800,000 to a million a year into the Richmond nonprofit sector, which is as big as some of the nonprofit foundations," he said.
For instance, the United Way of Greater Richmond & Petersburg raised $17.5 million in its most recent annual fundraising drive. About $13 million is either earmarked for specific programs at the request of donors or goes to support 98 programs at 55 area agencies.
"It is a complete game changer," Pirron said of the business model and the company's growth expectations. "It is really kind of revolutionary if we can get to that level."
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Impact Makers is now supporting two local nonprofits with a minimum commitment each of $1,000 per month:
•Rx Partnership, which provides free prescription medication to the poor and uninsured; and
•Children's Health Involving Parents, or CHIP, a program of the Richmond-based human services nonprofit Family Lifeline. CHIP provides health education to families with children below the poverty level.
"Our goal is to ensure that children are healthy and well-cared for, ready for school and for life," said Amy Strite, the chief operating officer of Family Lifeline.
CHIP typically provides preventive health services for families in their homes, but it also sometimes offers services such as a free dental clinic held at its Richmond office on March 4.
In 2010, CHIP provided services for more than 400 families. Support for one family can cost about $4,000 per year, Strite said. Funds donated by Impact Makers are used to support the direct-service programming at CHIP, she said.
"Certainly the financial support is just a great help to us," Strite said. "I really want to stress that I like their philosophy of working in partnership with us."
Impact Makers is not only donating money to the charities it supports but also providing consulting services.
The company has been growing its revenue by providing technology and management consulting to private- and public-sector organizations. The health-care sector has been a particularly fast-growing segment.
"A lot of what we do is project management," and helping businesses manage their processes better, said Rodney Willett, the company's vice president for business strategy and development.
Willett came to Impact Makers after practicing corporate securities law for about 10 years and then working in technology and business consulting. He had worked for a firm that partnered with Impact Makers on several projects, and he became "enamored" with the model.
"I am from the (Richmond) area, and I have a real focus and interest in the local nonprofits and charities," he said. "To be able to do your day job and then support the organizations you believe in is a great situation."
Doug Couvillion, the company's director of project delivery, also joined recently after working as a business consultant.
He admits he was a little skeptical about the Impact Makers business model at first. "You wonder whether it is too good to be true," he said.
"But it is structured in a way that makes it very transparent, and we have a volunteer board of directors that makes sure the profits are distributed back to the community. To me, that was a key part of it."
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Under the legislation passed by the General Assembly, benefit corporations would be required to meet "a general public benefit" as one of their purposes, which could include charitable giving or environmental protection.
They might also have specific purposes such as providing low-income or underserved individuals or communities with beneficial products or services.
The governors of Maryland, Vermont and New Jersey have signed benefit corporation legislation into law. Similar legislation has been introduced in North Carolina, New York, Colorado, Pennsylvania, California, Michigan and Hawaii.
In Maryland, when the law took effect in October, 11 businesses immediately applied to become benefit corporations.
We have had (politicians) much to the right of center and much to the left of center supporting it," Trojian said of the benefit corporation bills nationally. "One side sees it as a free-market thing — allowing business to do what they want to do.
"The more liberal side sees it as a great way for businesses to feel that they are invested in their community, their workers and the environment."
McClellan, the bill's sponsor in Virginia, said the goal of the legislation is to provide flexibility for businesses.
With its emphasis on maximizing returns for shareholders or investors, current law can hamstring companies, she said.
"It does not give you the flexibility to say, 'Maybe I want to take the second-highest bid on something or go with a vendor who is a little more expensive but fits my social mission,'" she said.
"We have seen growth in companies with a social mission in the last 10 years," she said. "The more prominent that becomes, the more frustrated businesspeople become with the existing legal structure."
"I do know there are already about 15 companies in Virginia who have expressed an interest in becoming benefit corporations," she said. "I think it is an idea that will catch on."
jblackwell@timesdispatch.com
(804) 775-8123
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