Understanding Impact Business Models: Support for Purpose Driven Enterprises

What is the intent of the Impact Business Model?

How does B Lab define “Purpose-Driven?”

How does B Lab define “Underserved?” 

How do I assess my company’s eligibility for this Impact Business Model?  

What are some examples of products and services that have this impact?

My company may be eligible for this IBM. How do I open this IBM in the B Impact Assessment? 

My company may be eligible for this IBM. What supporting information do we need to provide? 

Concepts in the B Impact Assessment

What is the intent of the Impact Business Model?

Purpose-driven and underserved enterprises can have a positive impact on the economy in several ways. They address social and environmental challenges, create a more inclusive economy, support local businesses and supply chains, drive social innovation and entrepreneurship, and encourage responsible and ethical practices. Ultimately, they inspire consumer behavior toward a more sustainable and fair economic system.

Purpose-driven and underserved enterprises benefit from other business-to-business (B2B) products and services. For example, they might seek the services of a company to improve their financial and operational viability through marketing and communications, strategy, fundraising services, or donor management software. Such companies that offer specialized professional products or services to purpose-driven or underserved enterprise clients may be eligible for the Support for Purpose-Driven/Underserved Enterprises Impact Business Model (IBM). This IBM, found in the Customers Impact Area of the B Impact Assessment, captures impact from companies who provide products or services to purpose-driven or underserved enterprises, intending to improve their operational success or to raise capital for them.

How does B Lab define “Purpose-Driven?”

A purpose-driven company aims to make a positive impact on society or the environment, or both,  going beyond just making a profit. These companies may prioritize the well-being of employees, customers, communities, and the planet. They create value by aligning their goals, decisions, and operations with their broader purpose. By doing so, they contribute to the greater good while remaining economically sustainable.

How does B Lab define “Underserved?” 

Underserved organizations are owned by groups that have traditionally not had easy access to monetary, cultural or social capital to sustain their operations, such as people of color, women or people with low-income backgrounds.  The continued sustenance of these businesses is essential to creating positive social and economic impact and ensuring inclusive economies and equitable outcomes for underserved groups.

How do I assess my company’s eligibility for this Impact Business Model?  

Companies may be eligible for the Support for Purpose-driven/Underserved Enterprises IBM if their revenue-generating products or services meet all of the following criteria:

• The clients paying for the products or services offered must qualify as purpose-driven or underserved businesses.

• The products or services offered must aim to improve the financial or operational success of the purpose-driven or underserved client.

• The products or services offered must be tailored to the client’s operations. The aim is to provide a customized solution that precisely addresses the client's challenges and goals. For example, providing a catering service to a purpose-driven client would not qualify for this IBM as the service is not specifically tailored to the client and aimed at enabling its financial or operational success.

What are some examples of products and services that have this impact?

• Legal services to social enterprises and nonprofit organizations. Organizations well-versed in legal topics such as benefit corporation status and nonprofit tax-exempt applications that specifically help these purpose-driven organizations further their mission, rather than specifically or exclusively to meet compliance criteria. 

• A fundraising software that helps nonprofit organizations receive donations. The software allows nonprofits to set up giving campaigns, receive ad-hoc donations, manage recurring giving, and sell fundraiser tickets to fund their purpose-driven missions.  

• Software and technology for nonprofit organizations.

• Professional services such as accounting by professionals highly trained in delivering these services to nonprofit organizations.

• Marketing and communications companies that support purpose-driven and underserved enterprises in communicating their mission and impacts.

• Incubator or business advisory programs that support the startup of social enterprises or underserved or local businesses.

• Fundraising support or tools that help nonprofit organizations raise money.

• Management consulting aimed at strategic planning or operational improvements of purpose-driven organizations.

Categories of purpose-driven or underserved enterprises include:

• Government and public service institutions are included.

• All non-profit entities and organizations with a clear and focused mission on purpose-driven work (social or environmental good) can be considered purpose-driven enterprises.

• Mission-aligned organizations: Benefit Corporations, certified B Corps, and cooperatives. 

• Educational institutions (e.g., universities).

• Healthcare institutions (e.g., hospitals). 

• Local & independent, small-scale farms.

• Local & independent community banks. 

• Small businesses that are verified as women or minority-owned.

My company may be eligible for this IBM. How do I open this IBM in the B Impact Assessment? 

If you are considering opting into this IBM, you will have to answer specific questions about the impact of your product/service that will determine which Impact Business Models you see in your BIA. These questions, called gating questions, ensure that you see the content that is most relevant to your company in your assessment. 

To find the gating questions for the Support for Purpose Driven Enterprises IBM, navigate to the Customer Impact Area and search for the questions titled “Customer Impact Business Model Introduction” and “Customer Focus of Product or Service.”  Respond “Yes” to these questions (not pictured).

This will open the “Beneficial Product Type” and “Direct Impact on Supporting Purpose Driven / Underserved Businesses” questions, which you should answer in the following way:

Only select multiple answer options if different problems are solved through either selling several products/ services or if one product/ service addresses a multitude of problems. 

To ensure that the Support for Purpose Driven Enterprises Impact Business Model shows up, answer the gating questions as shown in the images above. Any deviation from this will prevent the Support for Purpose Driven Enterprises IBM from becoming visible in your BIA. 

My company may be eligible for this IBM. What supporting information do we need to provide? 

These are some examples of evidence that your company can provide during the Verification stage to confirm the applicability of the Support for Purpose-Driven/Underserved Enterprises IBM. These examples are not exhaustive – depending on your company’s specific business model or context, your analyst may require additional or different documentation. 

• A list of the clients served and the reason why each of them is defined as purpose-driven or underserved, the website of each client, a brief description of the service provided to each of these clients, and the percentage of revenue generated in the fiscal year of reference serving each of these clients.

• Company website, which includes information about products or services offered.

• Portfolio or case studies that demonstrate work done for purpose-driven enterprises. 

This documentation confirms the eligibility of your company’s product/service for the Support for Purpose Driven/Underserved Enterprises IBM.  Lastly, you must also provide information about whether your company measures the impact of the product/service and tracks the outcomes related to the product/service to determine if it is achieving the intended positive social impact.

Concepts in the B Impact Assessment

Purpose-driven enterprises - Organizations that are intentionally designed to create positive social or environmental impact rather than just company profits or shareholder returns. Examples include nonprofit organizations, charities, government organizations, Certified B Corps, benefit corporations, for-profit companies designed to create a specific positive social/environmental benefit (i.e. those with an Impact Business Model), cooperatives, local & independent farms, local & independent community banks, and women and minority-owned businesses.

Underserved - This term is used throughout the BIA to describe groups (e.g. populations, individuals, communities, enterprises) that do not traditionally have access to the positive social or economic outcomes delivered by an impactful product or service. Low income, poor, or very poor individuals as well as low income geographic areas are always considered "underserved" in the BIA.
Definitions for "low income" vary by geography, but those that are accepted in the BIA are usually based on generally accepted definitions (e.g. government definitions), rely on reputable socioeconomic data, and/or focus on small-scale geographic areas (i.e. a regional or local income threshold is more likely to be accepted than a national one). Companies should be prepared to explain the methodology, income thresholds, and data sources referenced.
Non-income based definitions of "underserved" may also be considered in the BIA, but will vary widely by context and by geography. Accepted definitions are typically supported by evidence that a group lacks access to the company's positive intervention due to chronic discrimination in a particular market, which may include discrimination based on gender, race, ethnicity, color, disability, political opinion, sexual orientation, age, religion, or social origin.
A beneficiary is an individual for which your company intends to provide a positive impact through its products/services. For some companies "beneficiaries" and "customers/clients" mean the same thing, while for other companies they will be distinct.
For example, a company that sells professional development courses to individuals would consider both its customers and beneficiaries to be the individuals it serves. However, a company that sells solar-powered lanterns to NGOs in emerging markets, which in turn distributes them to underserved individuals, would consider its clients to be the NGOs and its beneficiaries to be the end-users of its product.
Near-term outcomes - This refers to the immediate or near-future results or consequences of a particular event, decision, or action. These outcomes typically occur within a relatively short period, ranging from a few days to a few months. Near-term outcomes are often tangible and measurable, and they can influence subsequent actions or decisions. Unlike outputs, which focus on what is produced/delivered, near-term outcomes focus on the impact or changes that occur as a result of the outputs. They are the effects or consequences of utilizing or implementing the outputs.
Long-term outcomes - The results or consequences that occur over an extended period, usually spanning months, years, or even decades. Long-term outcomes often have a broader impact and may be less immediately visible or measurable than near-term outcomes. For instance, long-term outcomes in the context of environmental conservation could include the restoration of an ecosystem, the reduction of carbon emissions over several decades, or the preservation of endangered species.