Shhh, It's a Secret: Being Socially Responsible Pays Off

Lots of young companies, especially those run by young CEOs, claim to have a social mission these days. That can mean just about anything, from sending employees off to volunteer at a local not-for-profit organization, to committing a certain percentage of profits to a good cause. Bottom line: it's pretty easy to talk up your CSR (Corporate Social Responsibility) Program and not really do much of anything about it. Two years ago, Ryan Allis and Aaron Houghton, co-founders of iContact, a $38.5 million email marketing company in Durham, NC decided they "wanted to invest in building iContact in a way that aligned with our personal values," says Allis. So last year, they did two things that fundamentally changed the way they did business, and that directly contributed to iContact's bottom line.
First, says Allis, he and Houghton launched their "4-1's Corporate Social Responsibility Program" which commits the company to contributing 1% of its total payroll, 1% of employee time; 1% of product, and 1% of equity to not-for-profit organizations. "Last year, we gave away $150,000 to not-for-profits that employees selected," says Allis. "We gave about $1,000 each to 150 organizations." The company's 300 employees were also given an extra two and half days of paid time off to volunteer at the charities of their choice, and iContact gave away its email product to all North Carolina not-for-profits and also to any U.S. organization (even for-profits) with less than 500 email subscribers. Lastly, Allis and Houghton put 100,000 shares (1%) of iContact into a foundation "that will help us give back in the future." The result: "We've been able to build a better employer recruiting brand," says Allis. "We're been able to recruit better employees - people want to work for us because it's not just about the money."

Secondly, iContact officially became a B-Corp last year, ("B" stands for benefit) a relatively new designation for companies that commit to a triple bottom line. B Corporation, the not-for-profit organization that certifies companies says that:

Certified B Corporations are a new type of corporation which uses the power of business to solve social and environmental problems. B Corps are unlike traditional businesses because they:

Meet comprehensive and transparent social and environmental performance standards
Meet higher legal accountability standards
Build business constituency for good business

In order to become a B-Corp, companies are required to amend their articles of incorporation and pledge that mangers will consider the needs of employees, consumers, the community, and the environment, in addition to shareholders. "You take a test and do a self-assessment and they audit you," says Allis. "If you pass, you can become a B-Corp." Sound like a piece of cake? Approximately 900 companies tried and failed. There are currently 400 B-Corps and among the better known ones are Salesforce.com, Dansko, and Method Products. Allis says that being among their ranks is not just a feel good proposition. For instance, Salesforce.com offers a 75% discount on its CRM software to fellow B-Corps. And, says Allis, "Investors think it's great because in the end, if you do it right, it save you money to be socially and environmentally responsible." He says iContact has saved money on water and energy because B-Corps are compelled to put in place systems that monitor and reduce energy usage. "We've also seen that customers are choosing iContact because they want to go with an email marketing company that cares about the impact it's having on the world."

As iContact strives to outpace industry leader Constant Contact, Allis, who says the company is on track for $50 million in revenue this year, is clearly hoping that B-Corp designation and iContact's 4-1's program will give him a competitive edge. What do you think? Does being socially responsible give companies a leg up in the marketplace?

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