In what business model do you undertake? Discussing regulatory and governance issues

by Vania D'Angelo Dohme and Lilian A. P. Miguel

In recent times, there has been a decrease in self-centeredness in people, and it must be assumed that this is due to some factors: the first, regrettable, is the increase in poverty, the usual public inefficiency in meeting the basic needs of the population in the countryside environmental degradation caused by decades of use of natural resources under institutional conditions that induce overuse, now felt by climatic catastrophes and extinction of species, among other deplorable evidences, the second possible factor to be raised and the increase of media vehicles that highlight these situations at all times, this is enhanced by a network communication that makes people exchange their impressions, share reflections and conjecture solutions.

The evidence of this altruism can be felt by the countless campaigns that seek to minimize these miseries promoted by the media, organized civil society and the companies' demand to be socially and environmentally responsible, evidently to create stronger bonds with their target audience, which ultimately reveals that these consumers are no longer avid or do not believe in the promise of a glamorous life, full of hedonistic pleasures that the product can offer you, but rather want to be next to a company that has practices ethical and responsible with the surrounding environment, with its employees, who have eco-efficient production practices.

In this scenario, a new generation of entrepreneurs emerges, one that wants to put their expertise and their efforts into a business that can minimize these effects, seeking a strengthening of society through its business intervention. Normally the profile of this agent is young, cultured, informed, ethical and full of force to transform the world, even if it is in a small part of it. The evolution of the idea focused on the construction of the business plan will come up against an element that may be the scissors that cut the root of your dreams: what legal nature of the company to adopt?

The organizations that aim at positive transformations of social impact, whether in relation to people or the environment, are formed legally in an association or foundation, regulated by the Civil Code articles 53 to 61 and 62 to 69, respectively, the most common being the associations [i], whose main characteristics are to be supported by a group of people who believe, and want to fight, in the same cause.

This group of people will legislate and approve a statute to govern the organization's procedures and a board to administer it according to these precepts. Every year this assembly will meet to analyze the fidelity with which the organization is complying with what was established by the collegiate. These managers are not remunerated and there is no distribution of profits among their associates, all the financial surplus must be reinvested in the organization itself.

For obvious reasons, the possibility of not making a profit, that is, not to accompany, although in minimum limits its personal economic growth to the economic growth of the created company, undermines the enthusiasm, mainly of those daring, creative and proactive entrepreneurs.

The for-profit companies, regulated by the Brazilian Civil Code, articles 966 to 1140 [ii], is a solution, however, the high tax burden, the unavailability of incentives and sponsorships will burden the final service offer, which may make it impossible to attend to the causes that aim at social transformation and strengthening of the community. Not to mention the difficulty of counting on the credibility of society, given the difficulties of evaluating the relation of attendance to social causes versus the profitability obtained by its owner.

In view of this, it seems appropriate to discuss a business model, which should lie in the construction of a legal framework, which would support the creation of for-profit companies whose social impact business objective. In spite of the fact that the discussion is long and lacking in many researches and reflections, it is primitive to risk a model, whose only pretension would be to give the first brushstrokes in a painting that will be painted in many hands.

The basic idea is that such a company should be run like an ordinary for-profit company in terms of financial management, processes and people, but that the attainment of its social objectives be validated by a board constituted by people linked to the intended transformations, be they community opinion leaders, experts in the cause, assisted, political, religious and academic representatives. Of course, such formatting would approach companies to obtain tax, incentive and sponsorship facilities common to non-profit social organizations.

The idea is daring, but it is known that daring is related to innovation, able to meet needs that were previously imperceptible, some, few, prosper, others change to thrive, and others are only born to question and provoke ... In which situation is this idea? Who is willing to "pay to see"?