When Melissa Howard and Jeff Zearfoss decided to go into business together in 2011, their goal was to start a company that could have a positive social impact while also meeting a local demand.
The result was Common Cause Catering, a catering business that works with Partners in Housing and Catholic Charities to employ and train people trying to work their way out of homelessness, addiction and domestic violence.
“Most of our social impact comes in trying to help individuals move from a situation of needing or receiving benefits administered through the government into actually paying in to that tax system so that they’re gainfully employed and not as dependent on that system,” Howard said.
For Howard and Zearfoss, who left careers in health care and the food industry to pursue the venture, the concept of social enterprise was a refreshing way to help the community without relying on grants and donors.
“People aren’t really writing $100,000 checks for charities anymore,” Howard said. “So this is a good way for people to give to a good cause while also receiving a quality product or service.”
The business partners have since started Local Relic brewery, another social enterprise, and are currently working to turn the historic Payne Chapel in downtown Colorado Springs into a food and beverage concept that will incorporate social impact into its business model.
“The beauty of being a social enterprise is that you’re a business that runs a for-profit model with a conscience, with a heart,” Howard said.
The two entrepreneurs are exploring an increasingly popular model — a new breed of business designed to meet a social need instead of merely earning a profit.
BBB, SBDC STEP IN
While the concept of “social enterprise” — defined loosely as an organization that applies commercial tactics to maximize a positive effect on people — has been around for decades, it’s one that the Colorado Springs business community has only recently begun to adopt as a viable model.
Jonathan Liebert, CEO and executive director of the Better Business Bureau of Southern Colorado, says the organization would like to see 100 social enterprises operating in the city employing roughly 1,000 people and having an estimated $100 million local economic impact. Liebert added that there is currently no way of quantifying just how many social enterprises currently operate in the city.
After seeing interest in the trend growing in Colorado Springs, Liebert and his counterpart Aikta Marcoulier at the Pikes Peak Small Business Development Center spearheaded an organization designed to educate the community about social impact businesses and to help entrepreneurs start similar enterprises of their own.
Liebert said people interested in opening a social enterprise had nowhere to turn: The model they were chasing after wasn’t exactly a small business, so the SBDC wouldn’t quite do the trick; the BBB had previously only served traditional companies and some nonprofits.
The resulting entity, formed in May, is the Colorado Coalition for Social Impact, which Liebert calls “a starting point for people wanting to do these sorts of things.”
“People are really jumping in and getting excited about the possibility of making a social impact through their business,” he said.
CCSI aims to make social enterprises a routine part of the Colorado Springs business community — using a series of educational programs and cross-industry involvement.
The organization is currently addressing the field’s most basic questions about how a social enterprise works and how people can go about starting one.
Although the vocabulary is relatively new, Liebert said there are organizations locally — the YMCA of the Pikes Peak Region is an example — that very easily could be considered and marketed as a social enterprise.
“There are people in this community who have been [involved with] a social enterprise for a long time and don’t even know it,” he said. “We want to make sure we’re out there measuring the impact and getting to know the people who are doing this.”
DEFINING SOCIAL ENTERPRISE
Part of educating people and helping them pursue their dreams involves answering very fundamental questions about what exactly a social enterprise is and how it functions.
Social enterprises are often sustained by their own revenue streams (unlike nonprofit organizations, which are often supported by donations, fundraising or government grants) and are typically more focused on a “social return on investment” versus solely on a bottom line.
But there are no true parameters that dictate what is and isn’t considered a social enterprise. It’s hard to define, say entrepreneurs who are exploring the concept.
Quad Innovation Partnership Executive Director Jacob Eichengreen, who has experience with traditional startups as well as social enterprises, said that he thinks of a social enterprise as a business with a focus that is on a demographic which is often entirely removed from the marketplace.
“In social enterprises, the people affected by the problem you’re trying to solve are not necessarily your customers,” he said. “But the hardest part about it is that it is so broad. If you really tried, you could attach it to anything.”
Eichengreen said the lack of a separate legal status could create both positive and negative challenges for those interested in making a social impact through their business.
“It’s a very convoluted field right now, which is kind of what makes it so fun,” he said. “I find it more satisfying than operating in something that is already proven.”
Eichengreen funded a social enterprise in Uganda through academic research grants rather than taking money from investors, because he said there is still very little protection for such organizations against being sued by investors who would rather make money than social impact.
“That’s why organizations like [B-Lab] are so valuable,” he said of the organization that provides certification for social enterprise businesses. “They provide legal protection for companies trying to make a social impact.”
The fact that there is currently very little accountability in the world of social enterprise has driven the BBB to work on an accreditation model specific to the field. But Eichengreen said he wouldn’t be surprised if more was done at the state and national levels to encourage companies to responsibly make social impacts.
“I think we will see additional legal forms arise that will probably be pretty simple,” he said. “The field will become more densely populated and there will be a greater and greater need for accountability. … Nobody really wants to be running a sweatshop.”
To take part in the social enterprise training classes or to learn more about opening a business, go to pikespeaksbdc.org.