(Photo via twitter.com/policymap)
The desire to have an impact doesn’t mean socially minded entrepreneurs need to go the nonprofit route.
That’s why PolicyMap, a Center City-based GIS mapping and data organization, recently made the transition from being a nonprofit to a benefit corporation.
Maggie McCullough, president of PolicyMap, told our sister site Technical.ly Philly that the transition would be the first step to eventually becoming a B Corp (a hard-to-earn certification that Azavea, another Philly-based company working in the GIS mapping industry, also currently holds.)
So yes, as a benefit corporation, PolicyMap is considered a for-profit company — PolicyMap is now PolicyMap, Inc. — but as McCullough emphasizes, the org’s founding mission since starting under the Reinvestment Fund back in 2007 remains the same: It has a commitment to making easily downloadable and implementable map data available for other mission-minded orgs to use in their work, such as grant applications.
(PolicyMap also makes its own data visualizations, like this fascinating one it published last year that looked at how the opioid epidemic has spread across Pennsylvania in the past 10 years.)
The main difference for PolicyMap in being a benefit corporation as opposed to a nonprofit, in McCullough’s eyes, is that the company now will have access to a growing pool of private capital and finances from the impact investment space, which could help it grow into a self-sustainable model, whether that means it has extra funds to purchase improved technology, can expand its data offerings or can just have a greater reach.
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“Being a benefit corporation allows us to do both — to be able to be self-sustaining financially, make a profit so we can invest in ourselves one day, raise capital in the future, while always saying to the outside world and potential investors that we have a social purpose and a mission that’s just as important to us as our financial bottom line,” McCullough said.
Foundations, where PolicyMap would traditionally find funds as a nonprofit, just didn’t seem like a viable option anymore because “foundations have bigger problems that need to be solved right now,” she said. And McCullough has found that traditional venture capitalists often look at the markets PolicyMap works with — academic and government spaces — as growing too slowly for any worthy investment.
“So I’m hopeful that it will be a different mindset from a set of [impact] investors who might want to help us grow in the coming years,” she said.
McCullough hasn’t talked with anyone from the impact investment space yet. Reinvestment Fund is, at the moment, PolicyMap’s sole shareholder, meaning it owns 100 percent of the company’s shares, at least until PolicyMap is able to bring investors on board.
But PolicyMap now has its own dedicated advisory board of directors, made up of folks from the tech and venture capital spaces who McCullough said is a set of people with the right set of skills that will help PolicyMap grow.
For any nonprofits considering a move like the one PolicyMap made, here are two considerations: One, be aware that the IRS requires a new tax ID number, new payroll accounts, etc. — almost as if “you were creating a new organization,” McCullough said. And two, consider how you want to grow.
“If it’s something that straddles the two worlds of nonprofit and for-profit business model, then I think it makes sense.”