1. The primary business objective of the firm is to benefit humanity, other species, and/or the environment.
2. The firm attains financial and economic sustainability.
3. Members of the mother company can get back any amount that they personally invested in the firm, aside from membership fees, if the firm is successful.
4. Profits stay within the firm for expansion and improvement. However, profits resulting from revenues in excess of 20 percent annual growth, or profits resulting from revenues that exceed a ceiling specified in the business plan are transferred to the Pool. The membership can choose to allow the firm to retain any or all of the excess profits for its further expansion.
5. The firm is environmentally conscious, as demonstrated through certification with B Labs or an equivalent third party.
6. The workforce receives competitive wages.
7. The firm is conscious of the happiness of its workers.
8. The firm operates in a transparent fashion. Financial data are made public, similar to that required for 501(c)3 nonprofits and publicly-traded corporations. This includes statistics on the distribution of compensation.
9. The firm adheres to a conflict-of-interest policy. Board members having financial or familial conflicts of interest must recuse themselves from decisions where such a conflict exists.
10. The firm adheres to a policy in which the compensation ratio between the lowest and highest paid employees is 20 or less.
11. Upon dissolution, the firm must transfer any assets to nonprofit charities or Social Businesses in which no directors have a conflict of interest.
Together these criteria help to assure that no individuals profit greatly from Social Business investment dollars. They also assure that members of the mother company can restrict excess growth of the Social Business, if such growth is not beneficial to society as a whole. For example, a Social Business could not pay its CEOs tens of millions of dollars per year, as is commonly done in large profit-maximizing corporations. And members of the mother company would have say in whether a firm retains any windfall profits. In some cases, retention of such profits by the firm might not be in the best interests of society.
With all the restrictions placed on assets, salaries, and growth, why would an entrepreneur even want to obtain funds though the Pool? Several reasons exist:
The primary motivation of the entrepreneur might be to benefit society or the environment. Like all employees, they might like to receive a healthy and reasonable salary appropriate to their skill level and responsibilities. But they might not need an excessive salary. As an alternative, the entrepreneur could choose to start a nonprofit, but a nonprofit is even more restricted than a Social Business funded through the Pool.
The cost of capital would be attractive in the Pool system.
As a Social Business, corporate leaders are not under constant pressure to maximize profits. This may engender a better working environment, allow more flexibility in budgeting, and help reduce moral or ethical conflicts.
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