The Mission-Driven Venture Business Solutions to the World's Most Vexing Social Problems

The Mission-Driven Venture provides actionable guidance for leveraging the power of the marketplace to solve the world's most vexing social problems. Written by attorney and financial advisor Marc J. Lane, a renowned thought leader and expert on entrepreneurship, social enterprises, impact investing and entrepreneurial finance, this book reaches the full spectrum of interests represented at the intersection of business and social change. Whether a social entrepreneur, impact investor, socially conscious individual, or a nonprofit or foundation leader, any reader committed to social innovation can benefit from this practical roadmap to the rapidly developing arena of social enterprise.

Through real-world accounts of the journeys and successes of mission-driven ventures, Lane effectively illustrates the transformative potential of social enterprise, inspiring the reader to be an agent of change. Among the many tools offered through The Mission-Driven Venture, readers will:

• Find functional guidance to move from idea to reality with a step-by-step guide to designing and implementing a successful mission-driven venture
• Assess the benefits and challenges of the business models and entity choices available to the social entrepreneur
• Examine the entrepreneurial linkages between nonprofits and for-profits
• Recognize governance issues that can arise when mission and profit objectives clash, and discover tools for managing them
• Explore evolving trends and developments in financing social enterprise
• Discover methods and tools for measuring and reporting social impact
• Develop an effective strategy for achieving both financial success and meaningful social impact

Marc J. Lane, a nationally recognized business and tax attorney and financial adviser, practices law at The Law Offices of Marc J. Lane, P.C. in Chicago (www.MarcJLane.com) and serves as the President of Social Enterprise Alliance’s Chicago chapter.

Marc is an expert on entrepreneurship and entrepreneurial finance, and an influential advocate of best corporate governance practices. Twice a recipient of the Illinois State Bar Association's Lincoln Award, Marc, a “Leading Illinois Attorney” and “Illinois Super Lawyer,” has consistently earned an "AV^® Preeminent^™" rating in the Martindale-Hubbell Legal Directory, the highest ranking awarded. Martindale-Hubbell also includes him in its Bar Registry of Preeminent Attorneys.  By appointment of Illinois Gov. Pat Quinn, he chaired the state’s Task Force on Social Innovation, Entrepreneurship, and Enterprise.

An innovator in helping social enterprises, foundations, investors, lenders and philanthropists leverage capital to maximize financial results while driving positive social change, Marc has taught Social Enterprise at Northwestern University School of Law.  He is also the pioneer behind the Advocacy Investing® approach to socially responsible and mission-related investing (www.AdvocacyInvesting.com).

Marc drafted Illinois' and other states’ Low-profit Limited Liability Company (L³C) legislation, which authorizes the new hybrid business form which can leverage foundations' program-related investments to access trillions of dollars of market-driven capital for ventures with modest financial prospects, but the possibility of major social impact. He continues to champion innovative social enterprise business forms and models throughout the nation.

Marc is the author of 35 books, including Social Enterprise: Empowering Mission-Driven Entrepreneurs, published by the American Bar Association, and The Mission-Driven Venture: Business Solutions to the World's Most Vexing Social Problems, published by John Wiley and Sons. Marc is also an in-demand speaker. His latest keynote focuses on cutting-edge ways to solve some of our most intractable social problems--thanks to new funding and partnership models among impact investors, philanthropies, non-profits, and corporations.

Preface xi

Acknowledgments xv

About the Author xvii

About the Website xix

1 Nothing Stops a Bullet Like a Job 1

“Father G” and Homeboy 5

Vanessa Bartram and WorkSquare, LLC 6

The Origin of Mission-Driven Ventures 7

Businesses Drive Social Change 9

Profits and Purpose 13

Our Agenda 17

2 Where to Begin? Constructing the Mission-Driven Venture 19

Maximizing the Prospects of Financial Success and Meaningful Social Impact 22

Tracking Input, Output, and Outcome Indicators 27

Entity Design Choices 28

Moving from Ideation to Realization 30

Preparing for Launch 35

Zeroing in on Size and Scale 38

3 Communities of Interest: Benefit Corporations and Certified B Corps 40

Delaware Rejects Stakeholderism 43

The Benefit Corporation’s Impact 46

Delaware, the Outlier 49

Patagonia’s Values and Vision 50

Public Good Software Supports Civil Society 52

Ensuring Accountability to Stakeholders 53

4 PRIs and L3Cs 55

The Low-Profit Limited Liability Company (L3C) 59

The “Sustainability Mayor” Leverages His Impact 62

Counseling Data, L3C: A Case Study in Collective Impact 64

5 The Poor and Their Banker Lead the Way 67

Professor Yunus’ Journey 68

The Visit to Jobra 70

The Banking System’s Failure 71

Yunus’ Ingenious Solution 72

The Advent of the “Social Business” 74

Grameen Bank and Its Strategy 75

6 Leveraging Grameen 79

The Power of Cause-Related Marketing 81

The Grameen Family Expands 84

Social Venture Franchising 86

Grameen Empowers Entrepreneurs 88

7 The Mondragón Miracle: Scaling the Peaks Beyond the Pyrenees 91

Italy’s “Social Co-Operatives” 97

France’s “SCOPs” 99

Why Worker-Owned Co-Ops Succeed 99

The Evergreen Cooperatives Build on Mondragón’s Success 100

8 Social Impact Bonds: Aligning Financial and Social Returns 105

Funding Targeted Intervention Strategies 106

“Pay for Success” 112

The Massachusetts Initiative 113

New York City Leads the Way 115

Pay for Success Gains Traction 117

Where Social Impact Bonds Work 118

The Social Impact Bond’s Progeny 119

Empowering the Social Sector 120

9 Building and Rebuilding Communities 121

Donor-Advised Funds 126

The Role Foundations Play 126

Lessons Learned 130

10 Investing for Impact 132

The Origin of Impact Investing 137

Impact Investing Takes Root 142

11 How Impact Investing Works—and Why 147

The Form of the Investment 150

Managing Risk 152

Judging Investment Performance 156

Quantifying Social Returns 157

Cashing Out 159

The Challenges of an Impact Investing Market 161

12 Impact Investing: Pursuing Its Destiny 163

The Importance of Public Policy 165

The Institutional Investors Weigh In 170

The Growth Trajectory Is Clear 174

13 Keeping Score: What Success Looks Like 178

A Safe Haven’s Social Impact 179

Crediting the Causes of Positive Social Change 182

REDF and Social Return on Investment 186

Root Capital and Its “Social and Environmental Scorecard” 189

Acumen Fund and Its “Best Alternative Charitable Option” 190

14 Answering the Call: The Demand for Social Metrics 192

Scaling Success 194

Shared-Outcomes Networks 198

15 Toward a Universal Metrics Language 210

Creating More Social Good 214

The Industry Steps Up 215

Impact Reporting and Investment Standards (IRIS) 216

The Global Impact Investing Rating System (GIIRS) 218

B Analytics 219

Other “Universal” Standards 219

The World Takes Note 220

16 What the Future May Hold: The Triumph of the Mission-Driven Venture 222

The Poorest of the Poor Have Reason for Hope 222

The Growing Role of Business 223

Social Enterprise Gains Influence in the Developing World 224

Business Raises the Bar 225

Governments Reach Out to Mission-Driven Ventures 227

Measurement of Social Performance Becomes

More Sophisticated 228

Stakeholders Look to Substance Over Form 228

Social Capital Takes Center Stage 230

The Stakes Go Higher 231

Collaboration Becomes the Watchword 233

Index 235

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