Nadia Eghbal

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Doing Good Doesn't Always Look Like Doing Good

When I published a post last week about alternate funding structures that better align innovation with business, a common response I got was, “Isn’t that what B Corps are for?”

B Corps are a corporate form in the United States designed for for-profits with double or triple bottom lines (considering society and environment in addition to profit). In practice, B corps tend to be companies like Ben and Jerry’s or Klean Kanteen, with explicit social or environmental missions that you could recognize as a “do-gooder” type from a mile away.

B corps have done a great job stimulating public conversation about broadening the goals of a for-profit entity, but in practice, labels like these run the risk of alienating rather than normalizing the idea that companies doing good come in all shapes and sizes.

My suggestion wasn’t that more tech companies become B corps or nonprofits. It wasn’t about encouraging tech founders to tackle issues like homelessness or poverty, either. It was about rising above tax designations and the expectations associated with them to evaluate investor and founder behavior more objectively.

Innovation Isn’t Limited by Sector

Larry Page received flack for suggesting that he would rather leave his billions to Elon Musk than to charity. But his underlying rationale - that he wants to put his money where the innovation is - is not unreasonable. I understood his comments more as a lack of faith in the social sector’s ability to innovate than a lack of interest in making the world a better place.

In a recent article published in the Stanford Social Innovation Review, two nonprofit founders, Bill Shore of Share Our Strength and Darrell Hammond of KaBOOM!, challenged their peers to tackle bigger, riskier barriers to social change rather than continuing to invest in low-risk programs that perpetuate the status quo.

In the case of Share Our Strength, they moved from delivering meals to schools to addressing the stigma associated by children with being on a subsidized food program, which kept them from picking up their meals. In the case of KaBOOM!, they moved from building community playgrounds to encouraging a positive culture that would make kids want to play more often.

This focus on innovation over handouts is beginning to pick up steam in the social sector, and I truly hope that the term “nonprofit” becomes associated with big risks and building better systems rather than charity on a shoestring.

Doing Good Isn’t Limited By Tax Status

“Doing good” does not just mean charity, philanthropy, or helping those less fortunate than you. “Doing good” means changing the game - no matter the industry.

Defined in this way, it seems silly to limit “doing good” to explicit social causes like saving the environment or women’s rights. Doing good can also mean things like connecting people with each other (Facebook), creating a more empathetic world (Secret), helping people trust each other (Craigslist), or enabling more people to earn income on their own terms (AirBnB).

But in order to accept this definition, we need to uncouple the idea of doing good with labels like for-profits, non-profits, social causes, or B Corps, and instead focus on why people are doing what they do, and how they go about doing it.

Are they preserving the status quo, or solving big, hairy problems? Are they excited to make an impact on their society, or are they in it for recognition or money?

It’s Not About Becoming a Nonprofit

Companies don’t become nonprofits because they’re devoted to a social cause. There are plenty of companies devoted to social causes that make lots of money. For example, Revolution Foods is a thriving for-profit company that provides healthy meals to students. You could put for-profit tech companies that support collaborative economies, like Lyft or TaskRabbit, into this category, too.

This is also why I prefer to use the term “social sector” rather than “nonprofit sector”, because not all who work on social causes are nonprofits.

Companies become nonprofits when being profit-driven might compromise the value and integrity of the service they provide. In this situation, our society finds it valuable to continue supporting their mission. That applies to nonprofits like many universities and schools, but it also applies to tech-related nonprofits like Wikipedia or Khan Academy.

Your tax status isn’t determined by the cause you tackle. It’s based on the economics of your model. So although many tech companies have a clear revenue model, especially in the areas of SaaS, enterprise, and e-commerce, some tech companies, namely audience-based companies, do not.

What should we do with tech companies like Snapchat who are clearly innovating and providing value, but don’t have a clear revenue model? Why do we assume those companies need to make as much money as possible? Because they’re solving a communication problem rather than a homelessness problem?

The social sector encompasses multiple ways to fund innovation, whether it’s charging directly, getting subsidized by the government, or getting corporate or crowdfunded donations.

It’s time for the tech sector to consider supporting multiple ways to deliver on mission as well.