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This field-based case was prepared by Elena Loutskina, Associate Professor of Business Administration; Gerry Yemen, Senior Researcher; and Jenny Mead, Senior Researcher, Olsen Center for Applied Ethics. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation.
I’m a fiscal conservative, and I don’t believe in unbridled capitalism. Impact Makers is how I could best use my skills, experience, and training to go to work every day and make an impact in the world and change the world. That’s not why everyone is here, but that’s why I’m here. — Michael Pirron
Michael Pirron was looking in a mirror thinking about the difficult task he had at hand. Nine years earlier, in 2006, he founded a new type of company, Impact Makers, with the help of $50, a single client, and a laptop. On the surface, the company was no different than any other IT consulting company: it attracted top-quality employees, paid them competitive salaries, and provided superior service to its clients.
What was different was that the company was committed to donating 100% of its lifetime value to charitable causes, largely through partnerships with various nonprofit organizations. In 2015, Impact Makers reached annual revenue of $17.8 million and had cumulatively contributed more than $1 million to local charities since 2006. By any standards, Pirron’s built-from-scratch model had made a significant impact on the local community. But was it enough?
Establishing Impact Makers was a point of pride and achievement for Pirron. His company’s commitment to community added a spring to his step on the way to the office. It made him feel happy and complete in his job and gave him a sense of purpose. He knew that he was not alone in feeling this way. He was surrounded by a team of like-minded individuals and friends. “We are a group of middle-class professionals doing the same work we have always done in the consulting industry and receive market wages,” Pirron said. “But we are now making the same impact in the community as most foundations!”
In 2006, Pirron and his team started with a “big hairy audacious goal” (BHAG) of making a sustainable $1 million cumulative community impact using cash and pro bono work. As the company grew and surpassed this goal, it decided to revise the BHAG to state that by 2024, Impact Makers would make at least a $100 million cumulative impact in the communities in which it did business.
To do that, Impact Makers had to further grow its consulting business both through expanding a menu of services and through conquering new geographical markets. To do either, or both, the company needed a cash infusion. Internal cash was limited, as up to 40% of it flowed to charitable partners, demonstrating Impact Makers’ commitment to its mission. Raising debt for a company without fixed assets was challenging and time consuming.
Complicating it all was that being structured as a nonstock corporation rendered equity raising difficult. Could Impact Makers raise money to grow and stay true to community values at the same time?