MICROCAPITAL BRIEF: Benefit Corporation Type Allows Companies to Balance Societal Benefit, Profits

Laws now exist in seven US states recognizing a form of organization called “benefit corporations” (B-corps), which aim to balance societal and financial benefit. This type of entity allows directors of companies to choose to prioritize social good instead of maximizing profits, a practice that could risk shareholder lawsuits under traditional corporate rules. The New York-based nonprofit B-Lab, which certifies B-corps, has been involved in pushing forward the laws [1].

There are now about 500 companies certified by B-lab [1]. In the microfinance industry, these include Grassroots Capital, a microfinance investment company based in New York; InVenture, which is based in the US city of Santa Monica, California, and allows individuals to make interest-free loans to enterprises that are outgrowing microlenders; and Agora Management Corporation, a nonprofit fund based in Washington, DC, that invests in and small and medium-sized enterprises [2].

By Natalie Baer, Research Associate

About InVenture: InVenture is a US-based microfinance service focused on providing investments to microenterprises needing larger loans than can be obtained from microlenders. InVenture accepts interest-free loans of as little as USD 25 from the public to support underserved communities in India, Mali and Mexico. It does this through a hybrid model that includes InVenture Capital Corporation (ICC), a certified B Corporation that provides expansion capital and tracks financial progress, and the InVenture Foundation, a nonprofit that provides training and advisory support to microentrepreneurs through its fellowship program. In 2011, InVenture reported to MicroCapital that it disbursed 36 loans ranging in size from USD 1,000 to USD 10,000 during its first year of operation.

About Grassroots Capital: Grassroots Capital is an asset manager that invests in microfinance, with total assets under management of USD 200 million. Grassroots’ investment strategy is based on a network of locally-based investment managers. The firm’s aim is to deliver “double bottom line” returns to its investors through a combination of long-term capital appreciation and measurable social impact. Grassroots Capital manages the Gray Ghost Microfinance Fund, Bellwether Microfinance Fund, Global Microfinance Equity Fund (GMEF), and the India Financial Inclusion Fund.

About the Agora Venture Fund: The Agora Venture Fund (AVF) was launched by Agora Partnerships in 2006 to invest equity and debt in seed and early-stage entrepreneurs in Nicaragua. It has raised a total of USD 523,000 from investors and from the Netherlands-based DOEN Foundation. The Agora Venture Fund has made a total of 11 investments in companies –ranging from foot clinics to vegetable processing to shoe manufacturing –and has helped attract nearly USD 2.5 million in investment into early-stage businesses in Nicaragua.

Sources and Additional Resources:

[1] Benefit Corporations Aim to Make a Profit — and a Positive Impact http://www.pbs.org/newshour/bb/business/jan-june12/bcorps_02-29.html

[2] About B Corporations
http://www.bcorporation.net/community/search

MicroCapital Universe Profile: Grassroots Capital
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Grassroots+Capital#Description_140_word_limit_

MicroCapital Universe Profile: InVenture
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=InVenture#Description_140_word_limit_

MicroCapital Universe Profile: Agora Venture Fund (AVF)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Agora+Venture+Fund

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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