A lot of impact can start off with a thoughtful LLC. But social impact is all about intentions, not tax filings.
Prevailing wisdom about social enterprise, broadly championing that entrepreneurial zeal is well-suited for community ills, is that it’s far too complicated to associate nonprofits with shared value and for-profits with narrow benefits. Look at Su Sanni, the young founder of WeDidIt — it’s a crowdfunding platform specializing in nonprofits, though he’s aiming to run a profitable company.
“It’s about what you’re trying to do with it,” said Sanni. He was part of the “Business for Good” panel that was part or Tech Triangle U, the annual event series aiming to connect Brooklyn’s college students with the borough’s growing tech and entrepreneurial community. The panel, which, full disclosure, was moderated by this reporter, defined relatively broadly what makes a social enterprise: making a better community has to be built into the organizational logic.
That’s why corporate social responsibility programs, where a large company hands out an oversized check to a nonprofit, might not quite pass the test, but if the same organization were to have structured its mission from the start to solve a broader community challenge, then it very well might. The definitions can get slippery, but they do serve a point: defining social entrepreneurship makes it possible for like-minded people to find each other, said Brooklyn Law Vice Dean Dana Brakman Reiser. It’s hard to pull in the same direction if that direction is undefined.
So, the real point is that if you’re aiming to start a new organization, think about your impact from the start — the tax status is less a concern. But if you’re hung up on whether you’re trying to start a nonprofit or a for-profit, well, the latter is easier.
— Brynna Tucker (@brynnatucker) March 4, 2015
If you have an idea for a new organization that fills a need not yet being filled, you ought to first explore the community you hope to serve, said Reiser. If you might have a broad base of support from others that might contribute financially for your product or services, then it might make sense to be a for-profit, so you can maximize flexibility and experimentation. If your important value is strictly a community good without much in the way of clear paying customers, then perhaps you’ll become a nonprofit.
“But you can’t go wrong starting with an LLC,” she said.
The go-get-’em spirit is a common theme for Tech Triangle U, which again included a mentor hackathon and several days of programming geared toward advice about starting off and connecting with the resources already here. The event series is organized by Brooklyn Tech Triangle, the economic development consortium that is led by the Downtown Brooklyn Partnership.
Though social enterprise was just a one-hour segment of the series, it was a representative one.
"The biggest drive for change can come from for profit businesses, because they have the reach and resources to enact change." #TechU
— Scott (@fixitinpost42) March 4, 2015
Kristina Drury is a founder of TYTHEdesign, a strategy firm geared toward focusing its clients on community impact. Drury said she doesn’t much care either about what kind of organization you’re running, just that you’re effectively executing on your mission. That’s something we should expect of any organization — corporation, charity or collaboration — but this expectation is still a relatively new one.
That, said Reiser’s Brooklyn Law colleague, professor Steven Dean, might be why there’s still such a messy cross-section of overlapping terms — social enterprise and social entrepreneurship, certifications from B Lab and state benefit-corporation legislation. Brooklyn Law has resources to help walk you through the early stages of building your business — something Sanni did.
Nearly any community challenge that needs addressing is leaping into the social enterprise conversation, just like how efficiencies and transparency in government are being approached by a broad #opengov conversation.
As Andrew Young, an associate research director at NYU’s GovLab, put it, this isn’t about making money or not, it’s about “how you can best improve your community.”