Impact Makers

26 Pages Posted: 10 Jun 2009

See all articles by Patricia H. Werhane

Patricia H. Werhane

University of Virginia - Darden School of Business

Jenny Mead

University of Virginia - Darden School of Business

Abstract

Michael Pirron was a health care services consultant who had always dreamed of starting a "Nonprofit Competitive Business" with a social mission. In 2006, he launched Impact Makers, a new hybrid entity that crossed the nonprofit/for-profit lines. Although it was a small business like many others (paying competitive salaries, bidding for work, providing professional services at market prices), Impact Makers had several unique components: It would contribute strategic consulting, and all profits, to charitable community organizations; there was no stock and equity ownership; it had a volunteer board of directors and its financial information was open to the public. The first two years saw some successes and some setbacks. Impact Makers faced the challenges of growth: how to get more customers, more revenue, and a more predictable revenue stream. How would Impact Makers raise investment capital with its unique organizational structure? And how would the company survive?

Excerpt

UVA-E-0342

Rev. Dec. 15, 2009

IMPACT MAKERS

In July 2001, Michael Pirron, an MBA student in Kellogg's International Executive MBA program, wrote an unconventional final assignment for his “Leadership and Ethics” class. In a paper entitled “A Nonprofit Competitive Business,” Pirron outlined an innovative type of business:

My idea is to create a new kind of nonprofit: a nonprofit foundation whose money comes from operating and competing in the for-profit world and not from donors. The goal of the company would be not to maximize shareholder value, but rather to maximize foundation cash to distribute—and thus to directly maximize social welfare. Given my background, I imagined a nonprofit systems consulting company (or any high-profit service company) that competed for contracts in the private sector, but the profits would go (as a foundation) to the community/charitable organizations, such as to a free clinic or homeless shelter.

By the time he was enrolled in an MBA program, Pirron had worked as a systems consultant for more than 10 years, both for Andersen Consulting (which became Accenture), and independently. Pirron was puzzled by how much more lucrative consulting was than simple employment. “I never understood the dynamic that companies were willing to have huge consulting budgets to outsource. It always seemed like I was contributing to major corporate waste, both as an employee of Andersen Consulting and as an independent consultant.” Consulting companies at the time paid new college graduates an annual starting salary ranging between $ 35,000 and $ 45,000, but hired them out at a rate of $ 100 to $ 150 an hour, pocketing the difference. Pirron found cynicism all around him, from fellow consultants as well as the client's employees. Many of his co-workers talked about how time and money prevented them from doing something more fulfilling. Struck by the disparity between his lifestyle and that of his friends working in nonprofit organizations, Pirron said, “I never understood why those two worlds had to be separated so completely.”

. . .

Keywords: business ethics, sustainability, social responsibility, managing growth, small business, stakeholder management, entrepreneurship, social enterprise, leadership, strategy

Suggested Citation

Werhane, Patricia H. and Mead, Jenny, Impact Makers. Darden Case No. UVA-E-0342, Available at SSRN: https://ssrn.com/abstract=1417205 or http://dx.doi.org/10.2139/ssrn.1417205

Patricia H. Werhane (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4840 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/werhane.htm

Jenny Mead

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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