What are Social Impact Companies and Why Do They Matter?

If you pay any attention to business news and trends, then you have probably noticed an increase in the number of companies embracing “social impact” as a core value. Consumers are taking notice, as a 2018 study found that 78% of Americans expect companies to go beyond making profits; they must also positively impact society.

While corporate social responsibility (CSR) has become a standard metric for companies and for-profit organizations in the past decade until a few years ago, it was far less likely for social impact to be the primary goal of a for-profit business. Now, the number of social impact companies is increasing, and the public is taking notice. Still, what exactly are social impact companies?

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Understanding Social Impact Companies: A Broad Overview

When searching for the phrase “social impact company” or “social impact organizations,” it is difficult to find an official definition. Broadly speaking, social impact companies are organizations that prioritize doing work that consciously, systemically and sustainably serves or attempts to solve a local or global community need.

A diverse group of people in a circle with their hands in the center

The goal of social impact companies differs from the typical corporate social responsibility approach in that making or supporting positive social change is prioritized in all of a social impact company’s work, while CSR tends to be a secondary organizational value. Think carefully selecting clients, projects, and suppliers based on their impact on the world vs. mobilizing employees every few months to volunteer for a local nonprofit. The latter is still a decisive action, but it is not a sustained, systemic change.

So why do social impact companies matter? There is no denying that demonstrating positive social impact can increase a company’s appeal to consumers and job seekers. It offers people the choice to work for or do business with companies that are committing their time, their skills, and in many cases, a small portion of profits to making positive social change. Still, the (positive) repercussions of social impact companies go beyond that.

“Social impact strategy is any effort to create public value that is systematic, sustainable and innovative. Effectively creating social impact is an essential challenge to all organizations regardless of geography or sector.”

– Dr. Peter Frumkin, The Center for Social Impact Strategies

View CauseLabs’ Impact Reports to see an example of the impact of social impact companies.

A diverse group of people holding hands in the air. A photo for our social impact post.

In 2021, challenges that once felt hyperlocal are being discussed on national and global levels. Issues like financial literacy in underserved populations, access to clean water, education for women and girls, and environmental conservation are just a few of the problems that social impact companies are attempting to tackle. The increase in social impact organizations means that the people working to solve these challenges have more resources than ever before. 

Examples of Social Impact Companies (and the good they are doing for their communities)

  • CauseLabs (that’s us!)
    • A custom software development company focused on creating digital tools for organizations committed to making a social change. 
  • Bombas
    • An apparel company who, for every sock sold, donates a pair of socks to someone in need.
  • Brandless
    • A household goods company who donates a meal to Feeding America® with every order.
  • Savhera
    • A wellness company who creates organic essential oils and products that create dignified employment for survivors of sexual exploitation around the world.
  • The Kapor Center
    • A social impact org making the tech ecosystem and entrepreneurship more diverse, inclusive, and impactful. Pioneering work ranging from education programs and community building to evangelism and investing. 
  • Vida Bars
    • A social impact enterprise that provides eco-friendly personal care products free of harsh chemicals, as well as a passion for positively impacting on our world.
  • Danone
    • Yes, event publicly traded companies like Danone can be social impact companies. View Danone’s Impact Journey. It focuses its efforts on 3 pillars: Health, Nature and People & Communities.

Social impact companies are also usually committed to making sure that their supply chains are as sustainable as their work. While “sustainability” often refers to environmental sustainability, social and economic sustainability are also important. This commitment to sustainability means that social impact companies do their best to use suppliers and vendors that are conscious of their impact on the environment, pay workers a living wage, and do not support harmful social policies.

When looked at as a whole, it is clear that social impact companies matter because they take for-profit business models, which have historically been unsustainable in many ways and made them sustainable. This shift creates a snowball of actions that lead to impactful social change. Are social impact companies the solution to global challenges? No. That still requires significant shifts in public awareness, policy, and economic practices. However, the increase of such organizations can be interpreted as a step toward a future where positive social impact is inherent in all business practices.

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We specialize in web solutions for positive impact organizations to further their mission and scale their impact. If that’s your organization, let’s connect and see how we can Grow Positive Impact together.

TL;DR Common Questions

What exactly is a social impact company?

Social impact companies are businesses focused on making a positive impact on social or environmental issues, balancing profit with purpose. For an in-depth understanding, CauseLabs explains it well here.

Why do social impact companies matter in today’s world?

They address critical issues like inequality, sustainability, and community welfare, driving societal progress alongside economic growth. Discover their importance at CauseLabs’ insightful post here.

How do social impact companies balance profit and purpose?

These companies integrate their social mission into their business model, ensuring that their efforts towards social good are sustainable and scalable. Learn more about this balance at CauseLabs here.

Can investing in social impact companies be profitable?

Yes, many social impact companies are both financially successful and effective in making a positive difference, offering attractive opportunities for conscious investors. Find out more about investing in these companies at CauseLabs here.

How can I start or transform my business into a social impact company?

Focusing on core social or environmental issues that align with your business expertise and integrating these into your business model are good starting points. For guidance, check out CauseLabs’ advice here.

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