Event Summary: Jim Fletcher on the 3C Model

 

On November 14, the Board hosted Jim Fletcher to speak on his most recent project, the Community Contribution Company or 3C legislation. Here’s a summation of the evening by former CBC journalist and principal of Engage Communications, Robb Lucy.
So, we have a challenge: change the way we structure and grow social ventures. How do we innovate so it isn’t just writing a cheque to a favoured charity? How can we bring triple bottom line, investment and marketing to social enterprises?

Those were the questions asked by Jim Fletcher to the Board of Change on November 14th. Fletcher knows his stuff. He’s a 30 year veteran in the Canadian venture capital industry, and has participated in all funding stages, from founding management to Angel and venture capital investing. Fletcher has been actively involved in numerous public policy initiatives to foster a healthy environment for early-stage companies; he was Managing director at Ventures West, Treasurer of Mac Millan Bloedel, CEO of China capital, CFO of the Angus Reid group, and is now Board Chair of www.visioncritical.com.

A few years ago Fletcher was co-chair of the Premier’s Advisory Council on Social Innovation. The quest was to define a new business model for British Columbians who value a balance of social responsibility and profit; to bridge the gap between for-profit businesses and non-profit enterprises; to develop a structure for socially focused investment.

One of 11 recommendations was the “Community Contribution Company”, or C3.

A C3 is a separate legal entity incorporated under BC Business Corporations Act. It would gather investment capital and begin its ‘social enterprise’ work. A C3 can pay 40% of net profits to shareholders, with the balance of 60% put back into its own work, or that of other social ventures. On dissolution of the C3, 60% of its assets must go to another C3 or a registered non-profit charity.

What kind of social ventures? The environment, homelessness, hunger, organic farming, healthcare, education.

An example?

Let’s say you run a small, clean, ‘hole in the wall’ restaurant that provides healthy and affordable food for the poor, even those living on the street, free if they can’t afford it. The food is so good someone says “Hey, why don’t you cater this food and make a profit to support the restaurant?” So you gather some investment, begin “Catering, a C3 Corporation”, buy some trucks and new kitchen equipment, hire people and start making money. 40% of your profits can go back to investors, and the 60% would be used to grow the catering company and support the original restaurant. Customers support the catering company because it’s a ‘C3’; it’s helping to feed the poor. Your ‘social venture’ gets healthier.

That brings us to the benefits of a C3. Your Branding (“Catering, a C3 Corporation”) says you’re doing good, social work. ‘C3’ means goodwill and name recognition. Fund raising is, ideally, easier as it capitalizes on the same image. Funders will know your purpose won’t be hijacked and re-focussed, as could happen with a regular corporation. And your corporate culture is ‘feel good’; you and your employees know you’re doing good work.

The US and Britain have different versions of a C3, those differences being where a C3 can invest, and who can invest in a C3.

C3 is now in BC’s legislation, but the province isn’t putting any ‘push’ behind it. There’s no focus to bring C3s to the public eye. “What’s holding C3s back is public awareness” said Fletcher. “We need some success stories to ensure more C3s happen. Right now there’s no scale.”

Those success stories will begin when a new breed of social entrepreneur embraces the C3, an entrepreneur who believes in a modest return on investment while providing social good. An entrepreneur who knows the advantage of the C3’s branding, investment and corporate culture.

“It’s no panacea or silver bullet” says Fletcher. “It’s hard work making systemic social change. But if C3s begin to work, our social ventures will be much more self-sufficient.”

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