Our Snapshot 2015 series provides a rough sketch of Planting Empowerment five years down the road - from operations to products to impacts. In this part, we describe how the Planting Empowerment business structure looks.
Planting Empowerment in 2015 will be a self sustaining, fast-growing business with approximately 1000 hectares under cultivation, and approaching $6,000,000 of investment raised for the plantations. The business will restructure to become either an L3C or a B-corporation.
An L3C is a new type of corporation whose principal activity is social or environmental improvement, is limited-profitability, and is more "tax-attractive" to institutional investors such as endowments and trusts. With an eye on attaining scale, we are considering this option in order to tap into the social/environmental carve-outs of some of these investors.
B-corporations are businesses certified as meeting standards of environmental stewardship, corporate governance, and employee rights, among many others. We feel this kind of corporation makes sense if there is stronger demand for PE's products from the smaller retail market. Becoming a B-corp would place Planting Empowerment into a group of forward thinking businesses that share a "triple bottom line" philosophy.
The financial vehicle to carry the business forward is still under construction, but there are two possible scenarios of how to reach sustainability:
1. Non-profit ownership of for-profit. Between 2009-2010, Planting Empowerment went through some growing pains. Namely, facing a lack of operating capital, PE decides to go under the wing of its non-profit arm. The non-profit "mother" buys Planting Empowerment in order to secure venture financing for the for profit, and in 2011 is successful in raising $200,000 in operating capital. With the knowledge that the for profit arm would eventually leave the nest, we focus the financing on building a sustainable, scalable operation.
2. Planting Empowerment remains an independent for-profit. In this scenario, PE either scales organically through its consulting activities and sale of its products, or attains venture funding from an angel investor or venture capitalist. We currently see this option as more unlikely, given the long term nature of growing trees, and lack of an exit event for funders.
In either scenario, Planting Empowerment in 2015 is a thriving, self-financed operation.
With our roots in development, Washington DC seems the city of choice from which to run the business. Depending on the type of corporation pursued, the business may be incorporated in a more tax-friendly state, but the main office will remain in our nation's capitol. The office will be staffed by two of Planting Empowerment's founders, along with three fulltime employees. The US entity will issue future offerings, and own the Panamanian operations arm responsible for the planting and maintenance of the plantations. A full time Operations Director will live and work in Panama.
In our next post, we will discuss the specific programs that Planting Empowerment creates to promote sustainable development through forestry.