Leena Manro (00:00):

Welcome to Up to So Good, the podcast that unlocks the secrets of creating a purpose-driven business so we can all make this world a better place. Come join the conversation.

(00:12):

Hello and welcome to Up to So Good, the podcast that explores the purpose of business. My next guest, Gord Hawley, is one of the founders of Humanity Financial. It's an accounting firm with a heart. So this particular accounting firm, it's not just ... Well, I don't want to say accounting firms are boring, I don't know. But financial services don't exactly have the most exciting reputation, but Gord is such a lovely guest and will share with you his personal journey of being just a regular accountant and accounting and financial services type of a provider for the first 30 years of his working career to then shifting his focus to socially minded purpose-driven enterprises. And specifically, they work with a lot of nonprofits and help them amplify their good by getting their finances in order. It is such a lovely episode, very inspiring, especially for anyone who's looking at what the purpose of their business could be, whether it's accounting or something else.

(01:06):

And spoiler alert, when Humanity Financial shifted their business to be more focused on social purpose as opposed to just the dollars and cents, they did not sacrifice any profit. In fact, their profit went up. So definitely have a listen to see how he did that and I hope you enjoy this episode.

(01:22):

Welcome to Up to So Good, the podcast that explores the purpose of business. And I have with me today as my guest, Gord Hawley of Humanity Financial. Thank you so much for joining us today, Gord.

Gordon Holley (01:33):

Good afternoon, Leena. Thanks for inviting me.

Leena Manro (01:35):

So let's talk a little bit about Humanity Financial, a fellow B Corp, and I think you're the first financial type of, I guess, a business that we've had on our podcast. And so there's a lot of questions about what you do, who your clients are, what your purpose is. So we're going to talk about a few of these things, but we'll start off at a very high level as to what Humanity Financial is and does, and Gord, your role as well because I know for a while, you were the CEO.

Gordon Holley (02:08):

Yep.

Leena Manro (02:09):

And that's recently changed.

Gordon Holley (02:10):

It has.

Leena Manro (02:11):

Okay, great. So let's start there.

Gordon Holley (02:13):

Yeah. So Humanity Financial is an accounting firm, we're a CPA firm, but I think we're unique in the country in that we don't provide the typical services that most accounting firms provide. Most accounting firms provide audit review engagements, tax returns. We work exclusively with social purpose organizations, charities, nonprofits, First Nations, indigenous communities, and we help them build internal financial capacity.

(02:43):

Many of these social purpose organizations, they're there for their cause and they have a background in working on that cause, but they may not have had the financial background. And so the finance department and the workings in the finance department are often a bit like a black hole.

Leena Manro (02:57):

Right.

Gordon Holley (02:57):

Or a black box.

Leena Manro (02:59):

Yeah.

Gordon Holley (02:59):

And so that's where we come in and help organizations when they get in trouble.

Leena Manro (03:06):

Beautiful. And your role at Humanity Financial?

Gordon Holley (03:08):

Oh, yeah. So up until November 1st, I was the president and CEO, and we just recently went through a significant change where we promoted our VP of client services, Pamela Oliva, to take over that role. And I'm now co-founder and advisor to the firm.

Leena Manro (03:26):

But you're just a lovely, lovely human, Gord. We've known you for a little while here at All Purpose.

Gordon Holley (03:30):

Thank you for that.

Leena Manro (03:31):

And we're excited to have you ...

Gordon Holley (03:32):

It's very kind of you.

Leena Manro (03:32):

... on our podcast. So one of the things that you touched on just a moment ago about Humanity Financial being really unique in Canada, I mean, from my understanding, and my understanding is pretty limited in terms of my research, but Humanity Financial seems to me to be a unique financial organization. I mean, definitely in North America. This is not a very common concept because you're not a nonprofit.

Gordon Holley (03:58):

We're not. We're a for-profit organization. We're a social purpose for-profit organization.

Leena Manro (04:02):

But this is a lot to get one's head wrapped around, a social purpose for-profit financial institution that is helping social purpose businesses. Is it incorrect to say it's almost like a financial ... I don't know if institution is the right word. What would the word be? A financial-

Gordon Holley (04:25):

Financial services.

Leena Manro (04:26):

Financial services institution with a heart. That can exist. That's the thing. It is because the purpose that you have is not just about blowing up profit, profit, profit.

Gordon Holley (04:36):

Yeah.

Leena Manro (04:37):

The underneath, what you're actually doing is you're helping impact businesses and purpose-driven businesses succeed.

Gordon Holley (04:45):

Yes. Absolutely.

Leena Manro (04:46):

By helping with them and their finances and all their financial, everything, the back end, taking care of it, but also getting funding.

Gordon Holley (04:54):

So when my wife and I started the firm and decided to specialize, specifically with social purpose organizations, we were advised by a consulting firm that we should specialize, because the more we specialize, the more value we could add to clients. Great. Makes sense. Okay, so where are we going to specialize? We went through a book by a guy named Simon Sinek ...

Leena Manro (05:17):

Oh, yes.

Gordon Holley (05:17):

... who wrote a book called Start with Why. And basically, he says people don't buy what you do, they buy why you do it. And so we really wanted to think about, "Well, okay, if we're going to specialize, where do we want to spend the rest of our careers? What would be meaningful? What would be a good legacy?" And interestingly, independently, we both came to the conclusion that we had led relatively, well, very privileged lives. We both done relatively well. And our big goal in starting the company was to see how we could leave the world a little better than we found it. So what could we do between now and the time we finish our career to support ... And we decided to support social purpose organizations thinking that's how our firm could have the biggest impact ...

Leena Manro (06:09):

Beautiful.

Gordon Holley (06:11):

... to make the world a little better.

Leena Manro (06:13):

Yes. Yeah. Well, why don't more people do this?

Gordon Holley (06:17):

Oh, it's a great question. It's an absolutely fabulous question. Our level of enjoyment of the work that we do has gone up exponentially since we started this process. Before, it was fine. We were there for a career and we were trying to make money and earn a salary and provide great service to clients, but it didn't have the social purpose and it's the social purpose for me that's the feel-good piece. That's what ... And I look forward to getting to the office in the morning where I can go and do some more work and help another client. It's just ... I hope that everybody, at some point, is able to experience this feeling of really working. And you experienced this in your role, Leena.

Leena Manro (07:06):

Oh, I do. Yes.

Gordon Holley (07:07):

Right, where you're-

Leena Manro (07:08):

Very much.

Gordon Holley (07:09):

The social purpose is a whole different experience. Life changed for us mostly when we made that decision and then became a B Corp. The B Corp was probably the best learning experience we ever had. It introduced us to more and more ways that we could have positive impact on the world. So how can we have positive impact, not only on our customers, but on our suppliers, on our team members, on everybody that comes in contact with our organization? And that's become our reason for being now.

Leena Manro (07:45):

And you were working in the financial services field for how long?

Gordon Holley (07:48):

Yeah. So I've been 30 ... Let's see, 1990. It's been about 30 years.

Leena Manro (07:56):

Okay.

Gordon Holley (07:56):

And prior to-

Leena Manro (07:56):

And your designation for those 30 years?

Gordon Holley (08:00):

Yeah. Chartered professional accountant ...

Leena Manro (08:06):

Okay.

Gordon Holley (08:07):

... that I received that back in 1990 or 1991.

Leena Manro (08:07):

Okay. And how long have you been doing human financial?

Gordon Holley (08:11):

We really started in ... The firm started in 2008, but we decided to specialize in the social purpose sector in 2013.

Leena Manro (08:21):

Got you.

Gordon Holley (08:23):

And then we became a B Corp in 2020.

Leena Manro (08:25):

So when you compare the first 30 years when you were working just in a normal capacity, and there are many people in financial services as accountants and financial planners that are just ... They're doing fine, they're doing a great job. You've got a stable 9:00 to 5:00, so do that for 30 years and then you cross over into social purpose approximately 10, 11 years ago.

Gordon Holley (08:48):

Yep.

Leena Manro (08:48):

So what has that first 30 years compared to this last 10, 12 years been like?

Gordon Holley (08:54):

There was nothing wrong with the first 30 years. And, in fact, until I got into the social purpose sector, I didn't know what I was missing. It was a fine career. It was relatively rewarding. We met some nice people, had some great clients, but it was all about making money. And with hindsight, that just doesn't feel like a great purpose. If you have a choice to have a business that makes money or a business that supports you and meets your other goals and creates value for society, why wouldn't you do the latter?

Leena Manro (09:29):

Well, why wouldn't you? Why don't people?

Gordon Holley (09:32):

Well, it's a great question. I think-

Leena Manro (09:34):

Maybe they don't know.

Gordon Holley (09:35):

Well, I think this is the big thing. When we started doing the B Corp certification, it was a whole learning experience for us about the different ways that businesses could have positive impact. And it wasn't until we went through that program that we really had a sense of how we could do better.

Leena Manro (09:51):

Amazing.

Gordon Holley (09:52):

And so I think you're right. I think a lot of people just don't know.

Leena Manro (09:54):

Yeah.

Gordon Holley (09:55):

And I think to those that do think about it, they might think that, "Well, you know what? If we're also going to have a social purpose, that means we're going to make less money, we're going to be less profitable."

Leena Manro (10:08):

And that was actually going to be my question. I mean, did you experience some of that or did you become more profitable or about the same?

Gordon Holley (10:15):

Our levels of profit went up significantly. In fact, it's almost a direct correlation around 2020. Now, interestingly, we made some choices to do some fairly big raises for our team members, invest in more technology. So the profitability allowed us to reward our team members better because they're the ones that are really driving it to invest in training, education, infrastructure, and to really grow the company. When COVID hit in 2020, we were less than 10 people. Beginning of 2023, we were about 22, 23 people FTE. And now today, we're closer to 40.

Leena Manro (11:03):

Wow.

Gordon Holley (11:04):

So it's been ... We've been growing pretty quickly.

Leena Manro (11:06):

Yeah.

Gordon Holley (11:08):

But, no, the social purpose just makes all the difference in the world.

Leena Manro (11:13):

And I just love that. Okay. So in addition to you and your wife both feeling more reward, more satisfied in terms of the work, the fact that even the financial rewards grew is incredible. That's a beautiful ... It's such a perfect success story, isn't it?

Gordon Holley (11:33):

It feels pretty good.

Leena Manro (11:34):

Yes.

Gordon Holley (11:35):

Yeah. And it's been amazing. I can't imagine, now looking back, not having had this opportunity. It's an amazing life experience. The people we come in contact with on a regular basis, there's so much more we experience as a business, so much more gratitude and appreciation for the organizations that we work with. Before, we were a necessary evil and businesses paid for it, but it was like, "It's costing me money and we don't like to pay for that."

Leena Manro (12:08):

Yeah.

Gordon Holley (12:09):

For the social purpose organizations, we've been able to have such positive impacts and actually help people reduce their stress and anxiety around finances so that they can focus on their mission and it makes all the difference to the clients. And as a result, they're much more grateful and appreciative than ...

Leena Manro (12:25):

Is it exciting? Is accounting exciting from your perspective?

Gordon Holley (12:27):

Is accounting exciting? It's exciting for us.

Leena Manro (12:29):

Okay.

Gordon Holley (12:30):

No, seriously.

Leena Manro (12:33):

No, no, that's ... Yeah [inaudible 00:12:33].

Gordon Holley (12:33):

And this is the big thing. When organizations approach us, they're usually in some state of financial crisis.

Leena Manro (12:38):

Okay.

Gordon Holley (12:38):

And so they're usually anxious, stressed, not focusing on their mission. And so what's great for us is that we've been down this road multiple, multiple times, not our first rodeo.

Leena Manro (12:53):

Yeah.

Gordon Holley (12:54):

We have a path. We've actually defined a theory of change for the work that we do with our clients called The Five Stages of Financial Wellness for social purpose organizations. We know where you are today, we suspect you want to get here, and we'll have a chat about that. And then here's the path. We know exactly what needs to happen to get you from where you are today to where you want to be. And we've done this many, many, many, many times. So it puts people at ease, reduces their stress, reduces their anxiety. And once we can get them caught up and get their financial systems operating it efficiently and effectively, all of a sudden, it frees up time, mental space, capacity, and invest more time and energy on their missions which-

Leena Manro (13:39):

And do more good, really.

Gordon Holley (13:40):

And do more good. Exactly.

Leena Manro (13:44):

Yeah. So do you see a difference in terms of, I guess, the financial needs of social-driven type of companies versus just the average business you used to work with before?

Gordon Holley (13:52):

Oh, almost entirely different.

Leena Manro (13:53):

How so?

Gordon Holley (13:58):

It's a whole different ... Well, first of all, the funding sources are very different when you're selling products and services. It's a very different business. Marketing plays a huge piece. In the social purpose sector, marketing's, for many organizations, less important.

Leena Manro (14:15):

Okay.

Gordon Holley (14:16):

There are many organizations that rely on public donations. They still have to do some marketing and get the word out, but many organizations rely on government funding or foundation funding. And for the most part, they're not doing any marketing. However, they have different issues around how to find the right funding sources, sustainable funding sources, and funding sources that support their organization.

Leena Manro (14:41):

Okay.

Gordon Holley (14:42):

So it's really a different set of challenges.

Leena Manro (14:45):

Okay. Specifically your clients, are they all not-for-profits or is that just a big healthy component of-

Gordon Holley (14:52):

Almost 100% ...

Leena Manro (14:54):

Are not-for-profits?

Gordon Holley (14:55):

... are not-for-profit, charities, First Nations.

Leena Manro (14:59):

Okay.

Gordon Holley (14:59):

I think the only exception to that today are we're working with three or four economic development corporations for First Nations, just because they're so tightly integrated with the nations themselves.

Leena Manro (15:11):

So some of our viewers and our listeners are likely thinking that they want to start some sort of a socially focused enterprise. And for some, it isn't necessarily not-for-profit. But I mean, for those who are willing to go down that not-for-profit path, what would you say are some common missteps maybe early in their financial planning that maybe they should think about?

Gordon Holley (15:36):

Oh, great question. Well, I think the biggest singular thing that we've seen, I think, is some people don't invest enough in planning at the outset.

Leena Manro (15:49):

Okay. Thanks for telling, yeah.

Gordon Holley (15:50):

Planning and preparation makes all the difference in the world from a financial perspective. You want to make sure ... Now, let's talk about two separate things here. One is a social enterprise, which is typically a social business. Many charities and nonprofits, in addition to their mission, will start up a social enterprise to generate a profit that they can use to further their mission.

Leena Manro (16:16):

Okay.

Gordon Holley (16:17):

There's also social purpose organizations, which are the charities, the nonprofits, and the First Nations, but they may or may not run a social enterprise business.

Leena Manro (16:28):

Oh, I see.

Gordon Holley (16:31):

Right.

Leena Manro (16:31):

Oh, I didn't think about that as a distinction. So social enterprise businesses where they are making some profit to further their mission versus social-

Gordon Holley (16:40):

Social purpose organizations.

Leena Manro (16:42):

Like charities.

Gordon Holley (16:43):

Like charities, nonprofits.

Leena Manro (16:44):

Okay, got you.

Gordon Holley (16:46):

Most accounting firms, once they get your finance department operating efficiently and effectively, and you've got all the reporting you need, all the compliance stuff done, often that's where they stop. And this is where we really get started. It's really on ... And interestingly, many social purpose organizations have never turned their mind to finances as a strategic tool to achieve their mission. All they've experienced is the compliance pieces. We've got to track all of our revenues and expenses and we've got to report to the leadership. We've got to report to the board, we've got to report to funders, we've got to report to the government. That's great.

Leena Manro (17:22):

Right.

Gordon Holley (17:22):

But that's just the ...

Leena Manro (17:25):

That's the basic.

Gordon Holley (17:25):

That's the basic stuff.

Leena Manro (17:25):

That's basic stuff.

Gordon Holley (17:26):

Absolutely.

Leena Manro (17:27):

And so then now when you say to look at it strategically, can you share with us just maybe some examples of [inaudible 00:17:34]?

Gordon Holley (17:34):

Absolutely. So in social purpose organizations, there are organizations that are very healthy. We don't come across many of those. Most social purpose organizations struggle to be financially healthy because there's a lot of misconceptions out in the market today about how social purpose organizations should be funded. So there's an overhead myth that basically says, and many people in the country believe this, if they're not intimately involved with the social purpose sector, that spending on overhead is bad. It's wasteful and it doesn't help the organization achieve its purpose. They think that spending on programs is good, so all of your money should be spent on programs. And what we find is, and this has been the result of every single piece of research that's ever been done in the last 50 or 75 years, has come to the conclusion that social purpose organizations spend too little on capacity building and overhead. And as a result ... I mean, imagine a business relying on computers that are 10 or 15 years old, old chairs where people can barely keep their backs straight while they're working during the day.

Leena Manro (18:56):

Yeah.

Gordon Holley (18:57):

You can imagine that organizations become inefficient, ineffective, and they're not able to not only maintain their existing capacity but also to grow their capacity so that they can grow their impact.

Leena Manro (19:09):

Right, okay.

Gordon Holley (19:10):

And this is why we call it the overhead myth. It's a huge issue. It is a myth. In fact, there was some research in the US a number of years ago that applied artificial intelligence before it was a huge thing to the T990 database in the US and came to the conclusion that there's a significant correlation between organizations that were spending between 30% and 50% of their revenue on overhead and capacity building and growth.

Leena Manro (19:37):

Okay, wow.

Gordon Holley (19:39):

Right? You wouldn't think that. And as a result, these organizations that are actually maintaining and expanding their capacity are able to grow and have more positive impact. So it really is the overhead myth. So anyway, where we start is looking at the organization's financial health, which is usually on their statement of financial position. And we ask questions like, do they have sufficient cash reserves? Let's say something like COVID hits.

Leena Manro (20:06):

Right.

Gordon Holley (20:06):

Right? Something completely unexpected.

Leena Manro (20:08):

Yeah.

Gordon Holley (20:08):

Do you have reserves that you could operate without revenue for six months? And many organizations, they didn't have the reserves and many social purpose organizations went out of business at the beginning of COVID. But those organizations that had significant reserves, that had accumulated significant reserves, had a rainy day fund that they could go without revenue for four to six months while they converted their operations from in-person to remote and continued on business as usual. Great. And now they're in the process of rebuilding those reserves.

(20:40):

So we look at things like cash reserves, we look at things like available lines of credit. Do you have available lines of credit? We look at helping the organization set some financial goals. Where are we today with respect to our financial health and wellness and where do we want to be three, five, 10, 20 years from now? The biggest determinant, I think, of financial health and wellness, our sustainable revenue streams in the social purpose sector. So we help organizations look at their existing revenue streams. And are they sustainable? Many organizations have two or three problems. One is their revenue streams are short term.

Leena Manro (21:20):

Right, yes.

Gordon Holley (21:21):

So they're often one-year contracts. Well, that doesn't really help you plan an organization and make investments that will pay off in the long term. Organizations also struggle with ... I mentioned not enough overhead funding. Many government funders restrict the amount that you can spend on overhead to ...

Leena Manro (21:39):

[inaudible 00:21:39] frustrating.

Gordon Holley (21:39):

... I'm going to say 8% to 15%.

Leena Manro (21:41):

Oh, no.

Gordon Holley (21:42):

And we know that while every organization's different, most organizations need at least 20%, probably closer to 25 just to maintain their existing capacity. And that, by the way, is consistent with the for-profit sector.

Leena Manro (21:55):

Yes.

Gordon Holley (21:56):

Most for-profit service sectors spend at least 25% on their overhead and much higher levels.

Leena Manro (22:02):

Yeah.

Gordon Holley (22:03):

So how could you take an organization that has a social purpose and expect them to do it with less ...

Leena Manro (22:08):

Unbelievable.

Gordon Holley (22:08):

... when they have other purposes in addition to their profit purpose?

Leena Manro (22:13):

Wow. Have those ...

Gordon Holley (22:14):

So there's lots of-

Leena Manro (22:16):

... restrictions baked into whether or not you get the funding or how much funding you get.

Gordon Holley (22:19):

Absolutely.

Leena Manro (22:20):

It's just so much of what you're saying actually makes sense even in the for-profit world.

Gordon Holley (22:24):

Yes.

Leena Manro (22:24):

Especially when you're talking about one-year contracts or short-term contracts and how you're able to plan or not plan your business.

Gordon Holley (22:32):

Absolutely.

Leena Manro (22:33):

And so ... Yeah.

Gordon Holley (22:34):

And I don't know if you've seen ... There's a movie that's come out in the last few years called UnCharitable by Dan Pallotta.

Leena Manro (22:38):

I haven't seen it.

Gordon Holley (22:40):

A fabulous movie. And what he does is he compares how we think about businesses, for-profit businesses, and how we think about charities.

Leena Manro (22:48):

Yes.

Gordon Holley (22:49):

And he just illustrates the differences and says, "Wow, how can we expect these organizations to be successful when we give them entirely different rules?" We make it harder for them in so many ways as a society.

Leena Manro (23:05):

Yeah.

Gordon Holley (23:07):

It's unlikely that they're going to succeed because of all the barriers we put in their way, which we don't put in the way of for-profit businesses. We make it really easy for for-profit businesses to be profitable and to be efficient and effective. And we make it oddly really hard for charities and nonprofits to be successful.

Leena Manro (23:26):

I would even suggest that we make it hard for anything that is in that social purpose mindset to be profitable and successful because there's that in-between stage, too. There's that company that, as you were saying, the social enterprise ones that are selling a product or a service.

Gordon Holley (23:41):

Yep.

Leena Manro (23:41):

But their mission is actually something much different, much more beyond whatever they're selling, right?

Gordon Holley (23:47):

Yep, absolutely.

Leena Manro (23:48):

And so even being a B Corp, I mean, it's not like we get tons of tax incentives as B Corps, right?

Gordon Holley (23:55):

No. It'd be nice if we did.

Leena Manro (23:57):

It'd be very nice if we did. It'd be very nice if we did. You hear that, government. It'd be so nice if we did. Based on your now, what, combined 40 years experience in this industry, do you have any, I don't know, high level things to think about so that things can change?

Gordon Holley (24:14):

Oh, wow.

Leena Manro (24:15):

That's a big question.

Gordon Holley (24:15):

Okay, that's a big question.

Leena Manro (24:16):

We could have a whole episode just on that.

Gordon Holley (24:18):

Absolutely. If governments could change the way they fund social purpose organizations, it would make a huge difference. Today, virtually, all of the funding from governments has such heavy restrictions on it that the local charity or nonprofit has virtually no say in how the money gets spent. They've got to spend it on this specific program to achieve this specific result. They can't invest in their capacity to grow the organization or even to maintain capacity.

Leena Manro (24:55):

Wow.

Gordon Holley (24:56):

And that's probably the biggest singular challenge that most social purpose organizations have is the restrictions placed by the funders. And what the research has shown now is that by funding operating costs, it allows organizations to grow and have significantly more impact.

Leena Manro (25:18):

That just makes sense, isn't it?

Gordon Holley (25:19):

It does make sense on an intuitive level.

Leena Manro (25:21):

It does.

Gordon Holley (25:21):

Absolutely. And-

Leena Manro (25:23):

You need to operate.

Gordon Holley (25:24):

Yes.

Leena Manro (25:25):

And in order to operate, there's costs.

Gordon Holley (25:27):

But there's somehow we have this ... Funders had this view that nonprofits should be self-sustaining. You should-

Leena Manro (25:34):

How?

Gordon Holley (25:34):

Exactly, right? How did you think they were going to get there? It's a great question.

Leena Manro (25:38):

I mean, I think what ends up happening often is people end up volunteering, underpaying themselves, right?

Gordon Holley (25:43):

And underpaying team members.

Leena Manro (25:45):

Underpaying team members. Yeah.

Gordon Holley (25:46):

In order to come work in the social purpose sector, people have to take a decrease in salary for the most part. And then people get upset when we try and attract really good people who ... And it's a competitive market. We're competing with the for-profit sector. It makes it really tough when funders don't fund enough for us to be able to pay people what they're worth and for the value that they're contributing to the organization.

Leena Manro (26:12):

So a big takeaway maybe in all of this, I mean, you should write a book or some blogs or something.

Gordon Holley (26:18):

I'm thinking about it.

Leena Manro (26:18):

You should. You should because you have so much experience and you've seen it from a bunch of different perspectives. And also, by being a B Corp, I would assume that your lens is also ... You're looking through that lens as well. So tell me more about that. You are a B Corp, but you're also a benefit company.

Gordon Holley (26:34):

Yes.

Leena Manro (26:34):

Which is different from B Corp.

Gordon Holley (26:36):

Now, interestingly, there is no tax benefit ...

Leena Manro (26:40):

Yeah. I know about this.

Gordon Holley (26:41):

... to becoming a benefit corporation. This is something that people do-

Leena Manro (26:44):

That's problematic. That has to change.

Gordon Holley (26:46):

Right. This is something that people do voluntarily.

Leena Manro (26:48):

Right.

Gordon Holley (26:49):

And so there's a relatively limited number of benefit corporations out there. I think we were the first CPA firm in Canada to become a benefit corporation and
we're also a B corporation. And the two fit together very well.

Leena Manro (27:01):

Right. Okay. I think that's where I think I've been confused before because the requirements to become a benefit corporation are very similar to the requirements to become a B Corp. And then you see the word B and you're like B Corp. Does that stand for benefit corporation? It's very confusing. It all feels like it's all one. But these are two different things.

Gordon Holley (27:18):

Yes. The B-

Leena Manro (27:18):

The benefit corporation and a B Corp, two different things, although very similar requirements.

Gordon Holley (27:25):

You can be a B Corp without being a benefit corporation.

Leena Manro (27:29):

Correct.

Gordon Holley (27:29):

So a normal for-profit organization, but in theory, you run the risk because the accepted standard for performance in a for-profit company is profit maximization.

Leena Manro (27:45):

Right.

Gordon Holley (27:45):

And as a B Corporation, if you are spending money on paying team members more, on providing better value to clients, on hiring people from marginalized communities, doing these things that advance your social purpose, arguably, if you have independent shareholders, they could come back and take you to court and say, "You're doing a bad job. You're not maximizing profit."

Leena Manro (28:13):

I never thought of that.

Gordon Holley (28:16):

You're going to get ... So as I understand it, the reason the benefit corporation legislation was started was to protect the owners and the employees of B Corps legally from being sued for-

Leena Manro (28:30):

Not maximizing shareholder profit.

Gordon Holley (28:31):

Yes.

Leena Manro (28:32):

Yeah. Yeah, yeah, yeah. Whoa. We don't have light bulbs flashing right now, but this is a big moment that's very important.

Gordon Holley (28:40):

To become a B Corporation, B Labs, who does the assessments, is an independent third party and they have a certification process that you have to go through. And there's hundreds of criteria. Very robust ...

Leena Manro (28:55):

Very, very robust.

Gordon Holley (28:56):

... process.

Leena Manro (28:56):

Oh, yes.

Gordon Holley (28:56):

In fact, the first time I tried to go through it, I got completely overwhelmed and just stopped because there was so many questions I had.

Leena Manro (29:05):

For someone in such a senior accounting stage to be overwhelmed, I'm shocked.

Gordon Holley (29:10):

Oh, and we were a relatively small company when we started the process.

Leena Manro (29:14):

Yeah.

Gordon Holley (29:14):

And I just found it completely overwhelming.

Leena Manro (29:15):

Yeah.

Gordon Holley (29:15):

And then we started working with someone you know, Kristy over at Decade Impact, who helped us through the certification process, made all the difference in the world, and then helped us identify basically a strategic plan for how we can improve our B Corp score and become better serving society. So our scores have been increasing every year. We've become better at doing good over the years.

Leena Manro (29:48):

There's a lot of grammar issues with us talking like this, up to so good and being better at doing good, but it's true. It all actually ... If you listen carefully, it all does make sense. It is a good distinction to make for anybody who is trying to be a socially minded enterprise, A for-profits entity that if this is a path you want to take that there's a few different paths, but being a benefit corporation, benefit company, am I saying it right?

Gordon Holley (30:15):

Benefit company.

Leena Manro (30:15):

Being a benefit company.

Gordon Holley (30:17):

Yeah. Benefit company, B Corporation.

Leena Manro (30:18):

B Corporation.

Gordon Holley (30:19):

Yeah.

Leena Manro (30:19):

Being a benefit company, at least in this province in British Columbia, can offer some pretty strong protections, at least perhaps from your shareholders in theory.

Gordon Holley (30:29):

Absolutely.

Leena Manro (30:30):

And actually, that completely computes, that totally makes sense. Oh, I learned so much today. Thank you, Gord. You've clarified some stuff that I've just
read online. I didn't fully understand, so that was a good moment.

Gordon Holley (30:40):

Fabulous.

Leena Manro (30:41):

I hope this conversation makes through the final cut. This is important. But now then the next question one might ask, well, what's the benefit of being a benefit corporation? If there's all this rigmarole, all these hoops to jump through, what's the benefit?

Gordon Holley (31:00):

Well, again, I think the benefit company legislation provides protection.

Leena Manro (31:06):

Yes.

Gordon Holley (31:06):

And as our organization grows, we may take on independent shareholders. We may make where I'm currently exploring things like co-ops or some worker ownership, and I would love to do that, but I would want those people to be protected for having a social purpose. And, in fact, we'd figure out how to bake the social purpose into the organization somehow so that couldn't be changed. And also to protect the people that are then running the organization. So that's why it's important for our company to be a benefit corporation, but being a B Corporation has helped us understand what doing good looks like and all of the different ways that we can be doing better, not only for our team members and employees, also for our clients, also for our suppliers, also for our community. It was a mind-blowing learning experience for us and an ongoing learning experience. This is a never-ending learning experience.

Leena Manro (32:10):

So tell us about some of the things that have been mind-blowing, A few things that have just come to mind in this learning that you're deeply grateful to have uncovered on this journey.

Gordon Holley (32:22):

We had no idea of all of the different ways that many for-purpose organizations cut corners to maximize profit.

Leena Manro (32:35):

Okay.

Gordon Holley (32:36):

And as a result ... I mean, the big one for me is the focus on employee health and wellness. And there's a ... It's really interesting. I've been listening to another podcast series that I connected with through the B Corp movement called On Capitalism specifically. And what was fascinating to me was the linkage between capitalism and exploitation of both workers and the environment.

Leena Manro (33:15):

Yes.

Gordon Holley (33:16):

And so when we view most for-profit businesses, there's a significant amount, I would say, of exploitation. The workers are the ones down doing the work every day and the CEO or the shareholders are making ... The CEO is making 300 times what the frontline workers are making.

Leena Manro (33:35):

Right. Yes.

Gordon Holley (33:35):

Now I'm all for paying a good CEO.

Leena Manro (33:38):

Yes.

Gordon Holley (33:38):

I really am.

Leena Manro (33:38):

Yes.

Gordon Holley (33:39):

But it feels like there's a-

Leena Manro (33:41):

It shouldn't be that kind of.

Gordon Holley (33:43):

It shouldn't be that kind of difference.

Leena Manro (33:46):

Yeah.

Gordon Holley (33:46):

And I struggle with some of these things because I'm a big free market. I think in the charity sector, if we can hire a CEO and if they cost $3 million a year, so long as we're getting $3 million worth of value and they're enabling us to create really positive impact on the communities we serve, fabulous, I'm happy to pay the $3 million.

Leena Manro (34:09):

Wow. Can I apply for that job? I didn't even know CEOs make that kind of money. What?

Gordon Holley (34:14):

There aren't very many.

Leena Manro (34:14):

Oh my goodness.

Gordon Holley (34:16):

Because of the perceptions that paying somebody that much is not appropriate in the ... It's one of the barriers we put in the way. You can't hire people that are really valuable.

Leena Manro (34:27):

Right.

Gordon Holley (34:28):

Right? You can't hire the best and the brightest.

Leena Manro (34:31):

Right.

Gordon Holley (34:32):

So this is something where I struggle with. On the one hand, I think that it makes sense to pay people what they're worth, even senior people.

Leena Manro (34:39):

Yeah.

Gordon Holley (34:40):

And on the other hand, there's that income gap between the people earning the least in the organization and the people earning the most in the organization, and it feels to me like it should be a little narrower than it is.

Leena Manro (34:54):

I agree with you. I think ... And that's actually where that discrepancy from the average worker versus the CEO or the C-suite in general. That's actually been highly problematic and very controversial because that's plagued so many companies and corporations.

Gordon Holley (35:11):

Yes. I'm hoping that for-profits and nonprofits will come closer together.

Leena Manro (35:16):

That would be beautiful.

Gordon Holley (35:17):

That there will be some things that we start allowing nonprofits and charities to do, more like we do with for-profit organizations, and having some requirements that for-profit organizations are less exploitive of both workers in the economy and provide value to their communities and all of those wonderful social purpose things.

Leena Manro (35:37):

It's amazing the things that people are compensated for, how that ends up skewing everything. The goals, yeah.

Gordon Holley (35:45):

Absolutely.

Leena Manro (35:45):

Like with capitalism and with earning top shareholder value, that's been the problem, right?

Gordon Holley (35:53):

And it's interesting, we ... I struggle with this. I'm on a number of boards now. And one of the larger boards than I'm on, it's a national organization, we're struggling with the compensation system for our leaders, the company leaders. And there's such a ... Because the for-profit sector, there's such an emphasis on bonuses and your variable compensation based on the performance of the organization. Me personally, I'm not a big fan of variable compensation. I think you hire good people, you pay them well, and you expect them to do a good job. So it's an interesting piece, but we've been customized to thinking about rewarding people for their performance. Well, hold on. We just hired you. Don't we have the right to expect that you're going to work hard, too? We're going to pay you very well. You shouldn't need to be motivated by money. And it's also really hard in the social purpose sector. It's one thing you can measure money, right? That's pretty easy to measure.

Leena Manro (37:03):

But it's hard to measure impact. Yes.

Gordon Holley (37:05):

Really difficult to measure impact.

Leena Manro (37:05):

Agreed.

Gordon Holley (37:06):

So how do you have that variable compensation piece in a social purpose organization? It's very, very difficult to reward people for anything other than financial performance. The things that you have difficulty measuring. And interestingly, based on the research that I've seen, most of the research that concludes comes to the conclusion that investments in training and professional development are the singular biggest impact on profitability.

Leena Manro (37:38):

I think that ... Well, what timeframe?

Gordon Holley (37:40):

Over the long term.

Leena Manro (37:40):

Over the long term. That's ... Okay.

Gordon Holley (37:41):

Over the long term. Obviously not short term.

Leena Manro (37:41):

Not short term.

Gordon Holley (37:43):

We're starting to see the results of investing in people, processes, capacity, it's paying off. There are some very profitable B Corp organizations and many of them are now able to pay not only living wages but market rates for people, being able to support people with better equipment, better technology, allowing them to be more efficient and more effective. And for the organization as a whole to have more impact. We're starting to see that there's no tradeoff between profitability and social purpose.

Leena Manro (38:21):

In the long run.

Gordon Holley (38:21):

In the long run.

Leena Manro (38:22):

Yeah.

Gordon Holley (38:22):

And, in fact, I think this is what we were seeing with the ESG movement is there were some people in our broader community that were starting to say, "You know what, no, we don't want you to focus only on maximizing profitability," because what we know to be true or what we believe to be true is that the long-term sustainability and health of the organization is going to be based on their impact on the environment, their impact to their governance model, and the degree to which they're doing good in community. And so I think we're starting to get it as a society. I'm hoping we'll reach a tipping point at some point where the vast majority of the population shares this belief.

Leena Manro (39:10):

Yeah.

Gordon Holley (39:10):

But I think the results of the B Corporations are starting to show that long-term financial health can fit really well with social purpose. And I'm hoping at some point our company will follow this path. I heard about an organization the other day who has as one of their primary missions for their team members to go home better people at the end of the day.

Leena Manro (39:37):

Oh, that's beautiful.

Gordon Holley (39:38):

Whether that's improved communication skills that they can use in their lives and their personal relationships, whether it's figuring out how to have less experience, less anxiety, and less stress, communicate better with people.

Leena Manro (39:52):

Wow. Wow, wow, wow.

Gordon Holley (39:56):

Wow, right?

Leena Manro (39:58):

That's beautiful.

Gordon Holley (39:58):

If all of our companies took the position that we're not going to exploit people, we're going to actually figure out how to help them be more successful, not only at work but also when they're personalized, wow, the world would be a far different place.

Leena Manro (40:12):

So Gord, how do we do it?

Gordon Holley (40:15):

Great question. Well, I think the B Corp movement is phenomenal. And it's interesting that the Canadian federal government has now come out in support of worker-owned businesses. They introduced legislation in June or July of this year, reducing the tax on exit for a business owner, essentially making the first $10 million of capital gains tax-free if owners sell to their employees.

Leena Manro (40:50):

Oh, wow.

Gordon Holley (40:51):

Isn't that interesting?

Leena Manro (40:52):

That is interesting.

Gordon Holley (40:53):

I think as a result of that, we're likely to see significantly more business owners consider selling to their employees. I think specifically their employee share ownership trusts. So I am excited by that. I think there's a real opportunity. I think worker cooperatives or when businesses are owned by the workers, they think about running the business differently. They think about maximizing the benefits to the workers.

Leena Manro (41:24):

Yes.

Gordon Holley (41:24):

Not the shareholders.

Leena Manro (41:24):

Yes.

Gordon Holley (41:26):

They think about maximizing the benefits to their clients and the communities they serve. It's a whole different way of running a business that I think really excited to learn more and to explore what the opportunities might be for our business.

Leena Manro (41:40):

For me, being a founder here, a team member here, this has been my education, working at all purpose and seeing the business in real time and seeing, yeah, the accounting principles at play and how that leads to a healthy business. And I'd say it is actually pretty exciting when it's a real-life situation as opposed to ...

Gordon Holley (42:01):

When it's your business.

Leena Manro (42:03):

... when it's your business. Yeah. Because you can't ... Yeah, you can't bury your head in the sand. You have to really look at the numbers. The numbers don't lie.

Gordon Holley (42:11):

Well ... And having the information to make those decisions about how we reward and grow different parts of the organization. Now when we make decisions financially, we have a number of additional lenses that we use. What impact is it going to have on our employees and our team members? What impact is it going to have on our community? What impact is it going to have on our suppliers? It's not just a financial decision anymore. And so that's really been an interesting learning experience for us, but one that the more we learn, the more we enjoy.

Leena Manro (42:49):

So the thing is, I think a lot of our listeners now, people who are listening to the show, they're interested and they're at some stage in their career, they're interested in that intersection between purpose and profit. And some are B Corp, some are not. Some are B Corp curious.

Gordon Holley (43:04):

Yeah.

Leena Manro (43:04):

And, I don't know, I feel like ... So for us, as I said, the introduction to a healthy financial picture and a purposeful business, this is a ... It was actually quite hard to get one's head wrapped around because we're so interested in doing the purpose-driven work. We're so interested. Personally, I love being in creative spaces that one can't ignore that financial picture because that holds everything that's like the foundation.

Gordon Holley (43:33):

Absolutely.

Leena Manro (43:34):

So what advice do you have for people listening who are struggling with that part of it, and maybe, yeah, just ... I mean, what would be some basics for them to think about to encourage them to really clean up and think about their financial health and why it's so important?

Gordon Holley (43:54):

Well, I think we've seen so many successful B Corps now that are financially successful and are attracting and retaining fabulous team members, enabling team member health, wellness, making great careers for their employees and team members, investing in their communities, doing all of these social purpose things and being successful financially. I think now the definition of success financially may change a little bit. I may not be making as much as some of the accountants at other accounting firms. I'm good with that.

Leena Manro (44:34):

So there's this ... I think in general, people need to look at business in a new way because a lot of people came up the way I did. You go to business school, law school, you're in an environment where it's all about shareholder value. Shareholder, shareholder. So let's talk about what has to change. How can we move forward?

Gordon Holley (44:54):

This is a great question because I think we all grew up. And in fact, there is ... I can't remember who it was, but there was a business consultant that's extremely well-known. And basically, it was his philosophy to maximize shareholder value. And we've been following that for 50, 60, 70 years at a minimum. I think what I'm starting to see in the success of the B Corp movement and others is that there are options, and we can make different decisions as business owners to still build a successful business but also to have more positive impacts on the environment, on our team members, on our employees, on their careers, on their families. There's so much more we can do as business owners to have a positive impact. The interesting piece is how we try and reconcile what we learned and what we grew up with what the options are that we're seeing now. How do we reconcile those two things and understand how are we measuring success now? And are there different ways to measure success that enable us to have more positive impacts on society? I think there are.

Leena Manro (46:06):

I think so, too.

Gordon Holley (46:07):

And I think when we get people like you and I and others having these conversations to try and better understand what the options are, I think it's just going to lead to amazing things.

Leena Manro (46:17):

I totally thoroughly agree with that. I encourage more conversations from ... I'd love to connect with you again, bring you back on the show to talk more about these things. I encourage conversations from our listeners and viewers if they want to email us at hello@allpurpose.io, that's our company's email address. I'd love to hear from people as well. And I think part of it is discussing these different models, but also some of the gains, the positive successes and the setbacks and the obstacles, and the fact that people are still thinking about shareholder value. And whatever is rewarded, that's the thing that grows. And so I think we need to really relook at our rewards. And also, I mean, it would be quite nice if the government would support these types of businesses whether it's through tax incentives or whatnot. It'd be so great to have some-

Gordon Holley (47:15):

It would be amazing.

Leena Manro (47:15):

Wouldn't it? A little bit more-

Gordon Holley (47:17):

Even just looking at ... I mean, we've got about 3 million businesses in Canada, roughly. We have about 9,000 B Corps globally, a very, very, very small percentage.

Leena Manro (47:31):

Right.

Gordon Holley (47:31):

But the results that the B Corps are having are unbelievable.

Leena Manro (47:36):

It's phenomenal. Yeah.

Gordon Holley (47:36):

And I think the government's starting to see. I don't know whether they're there yet, but I think they're starting to see the positive impact that these benefit companies and B Corps are having. And I hope at some point in the not-too-distant future, the government will figure out how to encourage more and more of that.

Leena Manro (47:51):

Agreed. That's wonderful. Well, thank you. Thank you. With, I guess those closing remarks, is there any final thoughts that you wanted to share, or?

Gordon Holley (48:00):

No, I just encourage people, if you haven't yet gone down the path of becoming a B Corp or learning about what it means to become a social purpose company, I'd encourage you to start asking questions and doing some exploration, seeing if it's something that you might like. I got to tell you, from my perspective, it's changed my life. I am so thankful that we started down this path. It's made a huge difference to my enjoyment of life and the amount, I think, that we can contribute to society. So win, win, win all round.

Leena Manro (48:32):

Oh my gosh. I totally agree. Everything that you just said and also something you said earlier that you don't know what you don't know. So it wasn't until we embarked on the path of B Corp and really thoroughly investigating what it meant to be a social enterprise. Essentially, that's what we are because we're a for-profit type of a business.

Gordon Holley (48:50):

Yeah.

Leena Manro (48:51):

And the amazing rewards that come with that. And in the long run, hopefully, a lot more profit down the road. But for now, that's okay. That's what we do. I want to thank our wonderful guest, Gord Hawley from Humanity Financial. What a great name, by the way.

Gordon Holley (49:08):

Oh, thank you.

Leena Manro (49:08):

Humanity Financial. We didn't even talk about the names. Perfect name. It's a wonderful company that is unlike many other financial services companies. You are doing amazing work. Humanity Financial is doing amazing work. We wish you all the best and hope this is a model that more and more financial services companies embrace. Not to provide you too much competition, but you know what I mean. It's a good model. Thank you.

Gordon Holley (49:35):

Well, Leena, thank you very much for having me today. It's been a wonderful conversation. Thoroughly enjoyed it. Thank you for having me.

Leena Manro (49:41):

Humanity Financial is up to so good.

Gordon Holley (49:42):

Up to so good. How was that?

Leena Manro (49:46):

It was beautiful. It's perfect. Best, the best one. The best one today. Thanks again. Thanks for joining us. We'll see you next time.

(49:57):

Well, that's all the time we have for today's show. Thank you so much for joining us. And if you've enjoyed the show, please subscribe, hit the like button, or share an episode. And if you have any feedback, questions, or comments, or show ideas, you can email us directly at hello@allpurpose.io. Thank you once again for joining us. We'll see you next time.

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