Innovation Ecosystem

Nurturing social enterprise in Rhode Island

How the work of the late Michael Brown to transform his business into benefit corporation focused on creating positive social value helped to propel the Social Enterprise Greenhouse forward

Photo by Richard Asinof

Kelly Ramirez, the CEO of the Social Enterprise Greenhouse.

By Richard Asinof
Posted 10/3/16
Promoting social enterprise and measuring its value in Rhode Island promises to serve as an important tool in building stronger communities, according to Kelly Ramirez, CEO of the Social Enterprise Greenhouse. The work of the late Michael Brown in transforming his plastics business into Packaging 2.0, the first benefit corporation in Rhode Island, provides an example of how doing well by doing good can increase the bottom line.
Will the potential of launching a Best For Rhode Island campaign, recognizing companies for their work as a social enterprise, help move the business community toward a new understanding of its role in addressing the social challenges the state faces? Will the Rhode Island Foundation be willing to invest in the creation of a Quality of Life index for Rhode Island? Will CommerceRI invest in the development of an index of the Rhode Island innovation economy, modeled on the Index of the Massachusetts Innovation Economy, as a way of benchmarking its efforts?
The Slater Technology Fund continues to serve as a key linchpin for making seed investments in start-up firms in Rhode Island’s innovation ecosystem, focused on innovative firms in the technology and life sciences sectors. As savvy as those investments have been, they point to a larger need: a collaborative public-private fund to make further investments to help firms scale up and cross the chasm into broader market penetration.
And, more than just channeling investments in the infrastructure improvements of aging roads and highways, there is a need to recognize that investments in affordable, safe and healthy housing can create a strong return on investment in educational and health outcomes, particularly in place making and strengthening neighborhoods and a sense of engaged communities.
More than a persuasive public relations campaign attempting to sell Rhode Island as a great place to do business, perhaps the emphasis should be on supporting local community-based initiatives, such as the Neighborhood Health Stations in Central Falls and Scituate, and the Sankofa Initiative, focused on connecting affordable housing and urban farming as a function of neighborhood and community.

PROVIDENCE – The late Michael Brown, entrepreneur, innovator, mentor and pioneer, embodied much of the philosophy and spirit to be found at the Social Enterprise Greenhouse, according to Kelly Ramirez, the CEO of the nonprofit that seeks to build a pipeline of talented social entrepreneurs in Rhode Island.

Brown had created Packaging 2.0, an environmentally responsible plastics company, supplying recycled packaging to leading natural food markets nationwide.

The containers are made from 100 percent recycled PET clear or green soda bottles, and are 100 percent recyclable in many parts of the country. The packaging products are certified to comply with FTC green guidelines.

Brown incorporated Packaging 2.0 as the first “Benefit Corporation” in Rhode Island, which allows a for-profit entity to have, under law, priorities other than maximizing the economic bottom line, focused on creating positive social value.

As part of Packaging 2.0, Brown also created Ocean 2.0, as a subsidiary, focused on finding solutions to clean up the flood of plastic debris in the oceans.

Brown, who first became involved as a volunteer mentor with the Social Enterprise Greenhouse some six years ago, working with 11 businesses in Newport as part of an accelerator program, would often engage in an ongoing conversation with Ramirez about whether or not he was a social entrepreneur, with Ramirez insisting he was and Brown at first reluctant to adopt that label.

In the course of collaboration, Brown not only emerged as a willing social entrepreneur but a driving force behind what is known as transformation, pushing for existing companies to become “benefit corporations” and developing standards and metrics for measuring the social value being created.

Brown died in March of this year, following what his obituary described as his “dauntless dance with death” from cancer.

For Ramirez, Brown’s legacy continues to serve as an inspiration for the evolution of the work at the Social Enterprise Greenhouse and its potential efforts to develop a new initiative here in Rhode Island, called “Best For Rhode Island,” a way of recognizing the businesses that are doing well by doing good and creating social value.

“Michael was inspired by the entrepreneurs and the people that were involved with the SEG community,” Ramirez said. And maybe, she continued, “He found his like-minded tribe.”

Most of the programming at SEG, Ramirez continued, is really executed by volunteers, with the current staff of 11 managing the work.

“In our accelerators, the workshops are all run by volunteers, people who are successful and have amazing [business] experience,” Ramirez said. “All the entrepreneurs are coached by volunteers; all of our committees are run by volunteers. That is, I always say, our secret sauce – something is inspiring those people to become part of this community.”

In creating value, a question of values
At a time when there are numerous efforts underway to jumpstart the innovation economy in Rhode Island, with an emphasis on high tech, education and advanced industries, the metrics on how to measure the success and failures of such endeavors often fall back onto traditional 20th century economic benchmarks.

These include: how many jobs are created; how high are the profits and revenues generated as a measure of prosperity; how much venture capital has been invested; how many new companies have been recruited; and how many commercial real estate deals have been completed.

The reality, however, is that many if not most technology startup firms fail. The sweet spot for Rhode Island in terms of its relationship with the Boston/Cambridge innovation ecosystem is still not well developed as a function of collaboration.

The selling point of Rhode Island pushed with gusto by Gov. Gina Raimondo and her economic team under Stefan Pryor has been the quality of life offered by Rhode Island.

And yet, the values that create that quality of life – from a celebration of the state’s diversity to its sense of community engagement are often absent from the economic conversation around what is the corporate responsibility beyond charitable giving.

Translated, what are the values businesses are pursuing beyond creating wealth and then preserving that wealth? Is it a shirking of responsibility to say that government and nonprofits are the ones who are expected to fix the social challenges? Is it smart business to avoid paying federal income tax? Are the financial rewards justified when the business practices seek to exploit the vulnerability of their customers, whether it is Wells Fargo creating fraudulent accounts or Mylan jacking up the price for EpiPens?

The other side of that equation is social enterprise, with its intentional focus on creating positive social change and making our communities better and stronger, and by doing so, improving the bottom-line of the business.

This is how Ramirez describes the work of the Social Enterprise Greenhouse and its connection to quality of life: “Because I think we are trying to build a state where business is very intentionally doing good, I would assume that our quality of life would improve.”

Here is the ConvergenceRI interview with Kelly Ramirez, the CEO of the Social Enterprise Greenhouse, reframing the way that businesses can create value and improve their bottom line by pursuing social enterprise and not just profits.

ConvergenceRI: What exemplified Michael Brown’s vision of an engaged community?
Let me talk a little bit about how Michael Brown got involved in our community, which can provide [insight] into how he thought about it.

Michael got involved with SEG very early on, probably about six years ago, when we were running an accelerator program in Newport.

We had about 11 businesses that we were working with, and Michael joined as a volunteer mentor. He brought a lot of energy to the conversation and he was very engaged. He spent a lot of time with the entrepreneurs. And, I think he felt like he had found his place a bit: [it was] his tribe.

[After the accelerator program ended], Michael continued to remain involved with us. He became involved in a conversation that we were having at the time about what is a social enterprise and how do we verify it.

He spent a lot of time [wrestling] with those questions throughout the process. I got to know him very well and I also got to understand the business that he was in.

His family had a plastics business; I felt he felt a little bit torn about being involved in that industry, because he was a sailor and very committed to environmental sustainability.

Michael talked with me quite a bit about how he was innovating in that industry and moving more toward post consumer recycled plastic products.

I would joke with him: “Oh, you’re a social entrepreneur. Just admit it. Just admit it.”

About two years ago, he called me up one day and said: “You’re right. I’m a social entrepreneur. I’m reincorporating my company to become a benefit corporation. I’m going through the B-Corp certification process. And, I’m creating this entity under my business called Ocean 2.0 that my for-profit will support, whose mission will be to do ocean clean-up efforts.

In a sense, Michael was inspired, both by the entrepreneurs and the people that were involved in the SEG community. And maybe he found his like-minded tribe.

Does that answer the question?

ConvergenceRI: Yes, in part. To push a bit further, what constitutes an engaged community of social entrepreneurs. How would you – or Michael – define it?
I’m not sure how to answer that question.

Michael was certainly a mentor to other entrepreneurs. For example, he ended up working with an entrepreneur who has a surfboard company, Spirare, crafting sustainable surfboards. He was working with Kevin [Cunningham] to help him think through the creation of a fin that was made from sustainable plastics.

Right up until the end of his life, he was mentoring Kevin; that was a real match made in heaven.

I would say that Michael was involved in engaged communities. He was very involved with SEG. I know that he was very involved with an environmental group in Newport.

ConvergenceRI: How does his legacy serve as a continuing source of inspiration for you and your work?
For me, he has been the inspiration behind two new initiatives that SEG is exploring. One is this concept called transformation.

Our core work to date at SEG has been to help launch and grow social enterprises. And that has really focused on entrepreneurs that, from day one, were creating businesses to respond to social challenges.

Michael [and his company] was an example of what we have come to call transformation. Which is a business that maybe started out in one format, that wasn’t necessarily launched to create social change, but transformed to become a business that was focused on social change.

Michael’s core intention behind Packaging 2.0 was to create social change. That was what was driving him; that was what was important to him as his legacy.

The other initiative that he really helped to inspire is coming out of the nonprofit that was created as part of the B-Corp certification process. It is a campaign called “Best For.”

If we were to do it here, it would be called “Best For Rhode Island.”

The concept is that mainstream businesses are and can be increasingly very important actors in creating positive social change in making our communities better and stronger. [The Best For Rhode Island initiative would be a way of identifying and recognizing those companies.]

I think that the Packaging 2.0 story really exemplified that concept.

I think that Michael believed, and I personally believe, the more we can engage business in helping to solve social challenges, the better off we’ll be.

The challenges are too great for us to expect that the nonprofit sector alone can solve these challenges.

ConvergenceRI: Can you tell a story about how Michael changed your thinking and approach?
It is the story of his company, Packaging 2.0, and watching the evolution of his company, and the reality, by changing and transforming the company into a benefit corporation and really changing the incentives by which he was operating, it positively impact his bottom line.

ConvergenceRI: For those who may not be familiar with the concept, what is the technical definition of a benefit corporation?
A benefit corporation is a relatively new legal structure, one that I believe now exists in about 25 states now. The core philosophy behind it is to allow a for-profit to have, by law, other priorities than maximizing the economic bottom line.

It enables companies to make decisions based upon how they want to operate in the community, rather than simply, by law, [being] required to maximize shareholder value and profit.

With the benefit corporation, however, state by state, there has not been a lot of capacity to audit whether or not the companies are creating positive social value.

So, that’s where BCorp. certification comes in, that is a robust certification process, that is verified and audited.

Many of your readers may be familiar with Fair Trade, so think Fair Trade, but for socially responsible companies.

They look at things like governance, and how companies treat their employees, what your supply chain looks like, what you are doing with your profits, and your environmental practices.

ConvergenceRI: Providence Business News, for example, sponsors a number of events to recognize businesses that are the most innovative, the fastest growing, and the healthiest companies. Do you envision SEG creating a similar kind of event, to recognize the Best For Rhode Island businesses?
Yes, depending on whether or not that we as an organization decide that we can take this on. Certainly, we wouldn’t want to do it alone; we are a very collaborative organization. PBN is certainly much better at awards events like that. They have much stronger ties to the business community, so partnerships are always important to get things done and to be more effective.

ConvergenceRI: In your name, you use the term, “greenhouse.” How have the nutrients changed as a result of Michael Brown’s work?
I think Michael was one factor in expanding our vision a bit. Another factor has been how we are beginning to have industry [cluster] focus areas, such as food, and health and wellness.

There is not one definition for social enterprise; the field is evolving. Our initial work with Michael Brown focused on trying to figure out, who’s in, who’s not, what is a social enterprise, and how are we defining it. That work continues to this day.

We are really thinking much more inclusively about what is a social enterprise. What is a do-well, do-good business? I’m of the belief that it is someone who is running a business in an ethical way and that they truly want to make the community better.

Getting involved in the SEG community, it’s really an educational experience. It’s an opportunity to learn about other strategies to do more good.

You know, I’ve been working in the field of social enterprise for 15 years, and I’m constantly learning about how a company could do this or that.

And, just by learning more about the B-Corp certification process myself, I’ve been implementing those practices within SEG.

ConvergenceRI: As much as many folks praise the “quality of life” here in Rhode Island, we do not have any Quality of Life index as to way to measure what that means, moving beyond snapshots and anecdotal stories. An economist at the Boston Fed suggested that such a Quality of Life index might prove to be a competitive advantage for Rhode Island.
Would a Quality of Life index serve as an important companion to the proposed Best For Rhode Island initiative, to better understand where the challenges are, and where progress has been made?
I would see a Best For Rhode Island initiative as a companion to a Quality of Life index. Because I think we are trying to build a state where businesses are very intentionally doing good, I would assume that our quality of life would improve.

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