Closed Caption Transcript
Hi, everyone, thanks for tuning in to Impact Fort Worth. What an incredible lineup of speakers on the cutting edge of social impact. I'm Dr. Vanessa Bouché, associate professor of political science at TCU and co-founder of Savhera, a public benefit corporation diffusing wellness and justice globally through aromatherapy products that provide jobs to survivors of sex trafficking. Before I dive into Savhera, I'm going to start my presentation conceptually to bring you up to speed on what public benefit corporations are, why they exist, and how they are outperforming conventional corporations. Think about conventional models of statutory entities as having two dimensions, the first dimension is purpose versus profit. Does an entity exist to accomplish some social purpose or provide some social good, or does it exist to maximize profit? The second dimension is public or private is an entity run by a public sector governmental organization or by a private sector organization. Given these two axes four major types of entities emerge, governments are public entities that exist to provide social goods. This would include things like public safety, the justice system or public education. And of course, they're funded by taxation. There are also public entities that can make a profit, and this includes the US Postal Service, the FDIC, but their profit is supposed to allow them to be self-sustaining. On the other hand, there are private entities that exist to achieve some social good or outcome, not make a profit. These are typically non-profit or non-governmental organizations that are exempt from paying taxes because they serve a public benefit and to incentivize people to give to these organizations there are tax benefits to the donors. Finally, there are corporations which are private sector entities that exist for the sole purpose of maximizing profit to shareholders. They are taxed at corporate tax rates to pay for the public goods offered by the public sector. We're all very familiar with these types of entities and the taxing incentives and structures around them. However, these conventional models are not exactly working well for the majority of people or the planet. A growing body of research provides ample data showing the ways in which the conventional models are leading to significant wealth gaps between the top 10 percent and the bottom 90 percent. According to the Federal Reserve, the top one percent have seen a 300 percent increase in wealth in the 30 years between 1989 and 2019. Meanwhile, there has been negative or at best, stagnant growth for the bottom 50 percent. At the same time, the earth's temperatures have been rising and global CO2 emissions are exponentially increasing, and simultaneously the global population has also been growing exponentially. So the top one percent owns 90 percent of global wealth even as the earth is warming up and more people are being born into poverty. People have begun to realize that something is not working and something needs to change. Enter the new business designation of a public benefit corporation, recall this graphic public benefit corporations are private entities that balance purpose and profit. So there's really no space for them on this graphic. They exist somewhere between the space of non-profits and corporations. Public benefit corporations are a legal business designation that allow a company to consider all stakeholders, not just shareholders, when making business decisions, put simply, a public benefit, corporations have a quadruple bottom line purpose. People, planet, and profit. It's a very new designation, it has only existed for 10 years and the first state to pass it as a new type of business designation was Maryland in 2010. Currently, 34 states have this business designation and another six states are actively working on it. It appears to be the wave of the future. It's important to note that there is a distinction between registering the company as a public benefit corporation and obtaining a B Corp certification to apply for B Corp certification, a company must take a 200 question assessment. That judge's performance across five impact areas governance, the environment, workers, customers and community. The purpose of the assessment is to show that the company has environmental and socially beneficial business practices, public transparency and the legal accountability to balance profit and purpose. This certification is obtained by a non-profit organization called B Lab and B Lab has certified thirty five hundred B Corps globally. In other words, a company can be registered as a public benefit corporation, but not have B Corp certification. The rise in the number of states allowing for PBC or public benefit corporation designations has led to a rise in PBCs across the country and a very large increase in B Corp certifications. And there are very good reasons for this. First, B Corps appear to grow faster than conventional corporations and have greater ROI. In fact, one study found that BCorps in the UK grew 28% faster than the UK's GDP. Of course, that doesn't account for the social and environmental ROI provided by those B Corps as well. Second, and perhaps explaining why the fast growth is that consumer demand for socially conscious products is increasing, especially among the younger consumers, including millennials and Gen Zers, a new kind of consumer has burgeoned, one who wants to support companies that share their values. Third, investors have caught on to these trends. Savvy investors spot future trends and invest in those trends to realize growth. And the trends are clear. Conventional models are not working for people or the planet. B Corps grow fast, in part because consumers are demanding better ways of doing business. And so there's an increasing demand for impact investing opportunities for socially conscious investors who want to realize financial, social and environmental dividends. Enter Savhera. In 2017 I met a woman named Pushpa sitting on the floor of a medical clinic in the red light district of Delhi, I came to learn later that she was trafficked to the brothels in Delhi when she was 13 years old and had been stuck there ever since. On that day, though, she said, with great courage and conviction, "Why should I tell you my story? You're no different from those who exploit my body. You're exploiting my story." When I asked her what she needed, she said, "I need dignified employment to get out of this dirty business." I told her that I would help. When it became clear that I would have to start something if I was going to help her, I faced a choice. Would we be a non-profit or a for profit? Savhera registered as a public benefit corporation in the state of Texas in 2018, just one year after the Texas legislature had made it a business designation in 2017. By 2019 we had pending B Corp certification status with a score of 85.2 on the B Corp assessment. And just for your information, Savhera means new beginning or morning in Hindi, and it was named by our very first employees because this is their opportunity to live a new life. It's a new dawn. In addition to the clear trends towards public benefit corporations, there were two other reasons for the decision and the first is scale. Our mission is to provide work for marginalized women by providing a product or service that could be built to scale that would then produce more jobs, increasing numbers of products and units and more scale. So scale was important to us not only financially but also socially. We want to provide more jobs to more women and our profit would serve as a vehicle for that. Second, was lessons learned from those who had gone before us. There are two companies employing marginalized women, similar to Savhera, Akola and Thistle Farms. Both of these started as non-profit organizations, and both of them realized that the non-profit model was untenable for them to scale. Both of them have since shifted gears and become for profit. Taking these learnings and implementing my own intuition and study, it became clear that the Public Benefit Corporation model was the way to go for Savhera. First and foremost, we invest in people and we care about people, our employees who are survivors of sex trafficking in two different countries work the P.I.E.S model, which is Savhera's model of human flourishing and stands for physical, intellectual, economic and spiritual growth and development. We have a systematic approach to monitor and evaluate the impact of Savhera on our employees livelihoods, and it's encompassed in this model. I could spend an hour just delving into this model and how it operates, but suffice it to say that it serves as our theory of change as we invest in our people to realize the social dividends of our work. Investing in people looks different in different contexts. For our team members in India, they're learning how to read and write, how to ride public transportation and read maps, how to work with their hands and develop fine motor skills through production of sustainable packaging and aromatherapy jewelry. Our team members in the US are learning how to write professional emails, work on spreadsheets and communicate with customers. They are teaching each other and growing in their confidence every day. Even our registered aromatherapist is a survivor of sex trafficking. But we also care about our customers, which is why we are wellness and mindfulness company that genuinely desires to spark joy in and delight our customers with our products and our practices. We also honor the planet in what we do, we sell only USDA certified organic essential oils so that our products don't contribute to water pollution or soil frailty. We're a plastic free company. And all of our packaging uses sustainable materials. We teach our employees about reducing, reusing and recycling. And they even reuse dishwater to water the plants in the office so as to not waste this precious resource. And every day we exist to fulfill our purpose, which is helping everyone to live well and do good. We are passionate about holistic wellness and restorative justice, and we work tirelessly every day towards this purpose and what we do and how we do it. But none of this is without significant challenges. First, the vast majority of people still have a very nascent understanding of public benefit corporations. Most people confuse Savhera as a non-profit organization. So our recommendation to ourselves here is to continue to write about and speak about benefit corporations so that they become more mainstream. A second and related challenge is the ability to raise capital investments, even as there's greater demand for impact investing, the transfer of wealth to younger investors is slowly taking place. Older investors are still somewhat skittish about the idea of social dividends, and they are yet to be convinced that it's good business to do good. Additionally, while the longer term financial gains of public benefit corporations appear to be clear, the fact that it does take longer to see those returns is a turnoff to some, especially if they're not sold on the purpose. Also, the truth is that 97% of venture capital goes to male founders, which leaves female founders in the impact space in a particular quandary with where all the startup capital is. Another hurdle in terms of investment is that PBCs are taxed at the same rate as conventional corporations, despite the fact that more of their profit is being invested into their social mission. This potentially leaves less room for profit and the payout of larger dividends. Further, there's not a clear vernacular in terms of what impact investing even means, many use the term only refer to investments in nonprofit organizations where the payout is a social dividend as opposed to impact investing being both financial and social. All of these challenges in terms of raising capital lead to room for many recommendations. First, there should be more research into the actual ROI and time horizon for impact investors and PBCs to realize their ROI and the return should be quantified in both financial and social terms. That means that PBCs need to do a better job of quantifying their social dividends, not just in terms of output, but in terms of real outcomes with cash value. Second, legislature should consider new tax structures for PBCs, and I say this with hesitation because it would require increased accountability of some form to ensure that these companies are not just registering as PBCs to take advantage of the tax benefits of the designation, but are actually producing the social mission that they claim to be. Third, legislature should also consider entirely new asset classes for impact investors. And finally, there needs to be more awareness of gender bias that exists within the investing space so that we can all do a better job in the future of mitigating gender gaps in wealth creation. And then a third challenge is intention to exit. Conventional startups are often looking for a quick exit through acquisition or an eventual IPO, Savhera faces challenges with both of these strategies. Unless there's another PBC with exact purposive alignment, acquisition is out of the question. IPO is also out of the question because there's no stock exchange for PBCs that allow for the company to consider all stakeholders and not just shareholders in making decisions. Shareholders in a publicly traded company expect the company's main objective to be profit. The goal is to make everyone that invests more money. Perhaps then the creation of a benefit corporation stock exchange, where the value proposition is more than profit, but also people, planet and purpose should be considered. So at Savhera, we are building a global brand, using profit as a means to the end of diffusing wellness and justice globally, and we want you on our team. Given the challenges I just told you about raising capital, Sahvhera has embarked on an ambitious crowdfunding campaign to raise $50,000, and there's only a few weeks left to contribute. So many startups raise millions of dollars in crowdfunding campaigns for the next new, cool gadget. But Savhera is not crowdfunding for things. Though we do have some pretty cool products in development, we are fundamentally crowdfunding for people to see lives restored and hope renewed, the world needs everyone to exercise their unique gifts, and millions are denied the right to ever realize what their gifts even are. Savhera is investing in women who, for the first time in their lives, are realizing that they have been uniquely gifted so that they too can give. And we are crowdfunding through the platform IFundWomen, which was created to close the gender gap in venture capital. So thank you so much for your contributions to this critical campaign. You can contribute at Ifundwomen.com/projects/savhera Second, Savhera is one of 12 finalists across the country to win a $25,0000 Amber Grant for female founded companies, please go to AmberGrantsforwomen.com/voting. Scroll down to Savhera and click the up arrow to vote for us. And you can even vote on every device that you own because we want to keep the votes coming. Third, Of course, you can buy our products, which also make excellent presents for friends, family, teachers, co-workers, clients, etc. With the holidays coming up, we are hoping to crush our holiday sales. We literally have gifts for everyone on your list. The aromatherapy industry is anticipated to grow 100% in the next 10 years, and Savhera is well poised to capture that new market share. Our products are organic, 100% pure and more affordable than the competition. And I can guarantee you that no other company comes close to accomplishing what we have accomplished for marginalized women. Switch your brand loyalty. You will not be disappointed. Additionally, we are launching an affiliate program very soon. You can refer people to our e-commerce site and receive an 8% commission on every referral, while earning perks as you gain more referrals. We love the tried and true word of mouth referral system and we can't wait to give you the chance to earn money and rewards. As a token of our gratitude for your referrals and opening up your networks to us. Another fun way to tell your friends about us, while also educating about essential oils and human trafficking is to host a DIY party. The party package is coming down the hatch early in 2021 and we can't wait to give you or your kids the opportunity to host a severe party, make a DIY essential oil spritzers, hand sanitizer, lip balm, scandals, neck pillows, cleaning sprays, etc. , etc. , etc. , while also learning about human trafficking, raising awareness, and hearing stories of hope and redemption. Thank you so much for being a part of Impact Fort Worth. I hope you gained lots of insight and that you walk away with ideas and inspiration. Please feel free to email me if you're interested in connecting. I look forward to hearing from you and learning about the incredible work you are sure to be doing. Thanks again.