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The Common Good Enterprise, Part II: A New Term for an Emerging Sector

The Argument for a New Operating Model

Submitted by: Jim Epstein and Alicia Epstein Korten

Posted: Dec 14, 2011 – 12:23 PM EST

Tags: csr, philanthropy, nonprofit, social enterprise, impact investing

 
Jimepstein_aliciakorten

Why the term “common good enterprise?”

Its power is in clarity.

In part 1, we discussed how the private and the civic sectors are evolving into socioeconomic players with shared responsibilities and overlapping business models. Our suggestion is to call these organizations: Common Good Enterprises.

Common comes from the use of the word “commons”, which describes a relationship to the community as a whole.  Common good intuitively includes a regard for the planet, respect for individuals’ human rights, and support of communities.

The Markkula Center for Applied Ethics provides this definition:

The common good, then, consists primarily of having the social systems, institutions, and environments on which we all depend work in a manner that benefits all [beings].”

The word “enterprise” is also self-explanatory—and speaks to revenue being generated from the sale of goods and services.

Common good enterprise is clearer than other terms being tossed around, such as its more popular sibling “social enterprise.”  Is social enterprise a term that exclusively describes businesses? Or nonprofits? Does the word ‘social’ include the natural environment? Only leaps of the imagination can make the connection.

Another confusing term is the “for benefit enterprise,” increasingly used to define companies in the movement. The term ‘for benefit’ communicates little. We are left with the question:  Benefit for whom?

The Faces of the Movement

Once we step away from confusing terminology, examples of common good enterprises—both among civil society as well as business organizations—abound.

With each adopting a hybrid model, there are some that provide a common good product or service as their principal reason for being. Such organizations may cover all their expenses from membership fees and the sale of goods.  Others, however, use subsidies and donations to help bridge the gap.  

Created just two years ago, civil society organization Practice Greenhealth, for example, receives over one million dollars, or more than half of its total budget, from membership dues generated from hospitals and health systems such as Kaiser Permanente, the Mayo Clinic and MedStar. Membership benefits include access to webinar series, toolkits for greening hospitals and support with implementing environmental preferable purchasing. In addition, Practice Greenhealth generates revenue through contracts with hospitals to do individual assessments of their facilities, as well as to help them find energy suppliers that include renewable energy sources.

Practice Greenhealth was the brainchild of Gary Cohen, founder of Healthcare without Harm, and other pioneers in the green healthcare movement. Attending the Skoll World Forum, Cohen was inspired by the other entrepreneurs and created this new organization to develop a resource engine for his cause.

“Creating a profit center has been really important,” stated Stan Cahill of Practice Greenhealth. “It’s helped stabilize the organization in these uncertain times.”

Yet, other civil society organizations are offering products and building income generation streams specifically to fund other activist activities. These organizations are profiting from the sale of their goods, and channeling the funding back to cutting edge advocacy efforts.

Housing Works, the largest AIDS advocacy group in the United States, lobbies for AIDS-friendly policies at the local, state, national and international levels, in addition to providing direct support to those who are HIV positive.  Ten affiliated thrift shops and a used book store generate over $13 million in revenue annually for the parent organization.

On the other side, within the business sector, the local food movement is helping lead the common good enterprise charge. Just this year Jim, who played a major role in passing the first law giving benefit corporations legal jurisdiction, expanded his commitment to the movement by cofounding Blue Ridge Produce.  The company aggregates locally grown food for sale to grocery stores and wholesale and institution buyers in the Washington Metropolitan area. With the common good built into the company’s DNA, the company soon will have increased local produce at stores like Whole Foods and Harris Teeter and food service companies such as US Foods and Sysco Systems. It will also provide more secure markets for farmers in Virginia and the eastern seaboard, and help reduce the regional food supply’s carbon footprint by keeping food closer to home.

Blue Ridge Produce’s mission is to maintain a healthy farmed community. As part of this mission, the company intends to offer farmers an opportunity to convert to more sustainable practices, including organic farming. Food safety, food source transparency. 

Business networking organizations such as the Social Venture Network (SVN), B Lab and the Business Alliance for Local Living Economies (BALLE) are further helping common good enterprises see themselves as part of a global movement.

Conclusion

These are extraordinary times.

We now live in a world in which MBA students can openly talk about serving the common good.  A time in which civil society organizations can speak about resource engines, when until recently, money was a bad word in many of these very circles. 

The labels we use for this new field matter.

Easy to grasp language provides a framework to help the public better co-create this emerging sector.

It’s time to toss out terms like ‘social enterprise.’ Instead let’s lift up ‘common good enterprise’—a refreshingly straightforward word for the many hybrid organizations that are both pursuing income generation and exactly what the term implies: the common good.  

Clear terminology will lead to real financial benefit. Why not pass legislation that provides government procurement advantages to common good enterprises—whether they are companies or civil society organizations? Perhaps there are new opportunities for access to capital pools. Embracing new language will help make these opportunities a reality.

Previously: The Common Good Enterprise: An Alternative Name for an Emerging Sector

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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