Business Models That Go Beyond the Bottom Line
Kenny Sipes was a youth pastor when he decided he wanted to start something that would "connect the community to impacting the world," he says. He arrived first at the injustices he wanted to fight: hunger, human trafficking and unclean water. The how of his plan came second.
"We wanted to use a social enterprise," he says. Sipes and his wife, Lori, landed on the concept of a coffee shop. The Roosevelt Coffeehouse started as a pop-up in 2013; each time they opened, they'd donate money collected in a tip jar to specific causes, like buying a water filter for a family in Africa. This spring, they'll open a brick-and-mortar location Downtown and donate their profits to charitable local, national and international organizations that work to end Sipes' target injustices. Their goal is to be self-sustaining so they won't need to rely on donations and grant money to operate like typical nonprofits do.
The Roosevelt is in league with a growing number of businesses with similar models: Sell a product or service to earn the money it costs to run the business and funnel profits to benefit a good cause. They can be for-profit or nonprofit businesses. They can directly benefit charities, or they can support social services like workforce development. As long as the profits are being used for the greater good rather than lining the pockets of owners, it's considered a social enterprise. And you'll find more of them in Columbus now than ever before.
John Rush remembers how few social enterprises there were when he moved here from Chicago in 2012. "I could count on one hand the people who were involved in social entrepreneurship," says Rush, an entrepreneur who serves on the boards of multiple social enterprises in town and co-founded one of his own. Now, he counts 30 social enterprises in Columbus.
He attributes the uptick to the economy-charitable spending is often the first line item cut from a budget when money is tight. But while the number of nonprofits increases, the amount of available grant dollars often remains the same. "The nonprofit pie has grown, but the share for any particular nonprofit isn't going anywhere," says nonprofit financial consultant Allen Proctor, who founded the Center for Social Enterprise Development last year to educate entrepreneurs on ways to give back while operating a sustainable business. "So that leads to creativity and exploration of earned-income strategies that can diversify their revenue streams," Rush says.
Strategies vary from business to business. The Arena District's Double Comfort donates its proceeds to local food banks. Owner Mary Lyski says the southern fare restaurant has donated the equivalent of more than 8,800 meals since opening last July. Clean Turn, a construction and janitorial business Rush co-founded, employs convicted felons, who typically struggle to find work. Similarly, catering company Freedom a la Cart provides employment and counseling for survivors of human trafficking.
There are advantages from a business standpoint as well. For example, businesses that hire people who struggle to find employment are eligible for a work-opportunity tax credit. But Rush warns it can be used for the wrong reasons. "If the employer is exclusively focused on leveraging the tax credit to get a tax write-off for their business, then you won't see as strong an interest in [employee] retention."
Though social enterprises are trendy right now, Rush sees it as just the beginning. "My dream is to see us become like the Silicon Valley of social enterprise," he says. "We become the destination for all things social enterprise."
Is that possible? His answer: "No doubt about it."