Welcome to the Impact Revolution
In the near future, there will be no distinction between entrepreneurs and social entrepreneurs. We will no longer need to segregate investors and impact investors. What seem like meaningful qualifiers today will soon be absolute.
The way that society is headed, we will all need to orient ourselves toward impact. Every entrepreneur and investor will be working on addressing social and environmental issues, and profit or return on investment will only be a byproduct of their success in addressing social ills.
People around the world are dissatisfied with the status quo. Between increased inequality between rich and poor, the adverse effects of climate change, and a growing polarization of politics, we are reaching a tipping point where our legacy systems of government and economy are not serving the world’s citizens well enough.
What happens when enough people are dissatisfied with the status quo? Revolution.
Sir Ronald Cohen, one of the pioneers of impact investing and social entrepreneurship, defines impact as “the measure of an action’s benefit to people and the planet.”
In a new book, Impact: Reshaping Capitalism to Drive Real Change, Cohen claims that we are in the early stages of what he calls “The Impact Revolution.” Following the Industrial Revolution in the 18th and 19th centuries and the Technological Revolution in the past 50-60 years, the Impact Revolution will be characterized by the remaking of our global systems to reorient everything towards impact—solving social and environmental problems.
“We need a new system where, for both moral and prudential reasons, a sense of mission reins in self-interest; where contribution confers greater status than conspicuous consumption; where firms that demonstrate social and environmental integrity are more successful than those that are simply self-interested; and where individuals and organizations are encouraged to find fulfillment in being part of something bigger than themselves, rather than in striving just to make money.”
-Sir Ronald Cohen
According to Cohen, the new system that we need is “impact capitalism.” Impact capitalism is defined by three characteristics:
It aligns the private sector with government, so that the two work in harmony rather than opposition, harnessing capital and innovation to solve social and environmental issues.
It attracts capital from investment markets, in much the same way as private capital has funded entrepreneurs to help bring about a revolution in technology over the last four decades.
It marries social and environmental impact with profit, overthrowing the tyranny of profit and placing impact firmly by its side, to keep it in check.
There are several signs that the Impact Revolution is already underway. Consider the growth in the Certified B Corporation movement. Certified B Corps “meet the highest standards of verified social and environmental performance, transparency, and accountability.” Those companies that have achieved B Corp status have done strenuous work to embed impact into the core of their business. Across the world, there are now 3,821 companies from 150 different industries representing 74 countries.
Impact capitalism has shown signs of becoming more mainstream as well. In the summer of 2019, The Business Roundtable, an association of CEOs from some of America’s largest companies, released a statement in which they redefined their purpose of business statement. In the letter, Business Roundtable members stated, “While each of our companies serves its own corporate purpose, we share a fundamental commitment to all our stakeholders.” Those stakeholders include customers, employees, suppliers, communities, and long-term shareholders.
Business executives at small companies and large corporations alike seem to realize the need to shift to impact. They recognize that customers want to buy products and services from impactful companies, employees want to work for impactful companies, and shareholders want to invest in impactful companies. It’s become clear that doing good is good for business.
What about the sports & entertainment industry, though? Have leagues, teams, athletes, artists, musicians, entertainers, and the brands that associate with all of the above picked up on this new era in business? Has sports & entertainment prepared itself for the Impact Revolution?
I don’t believe it has. Not quite yet. Let’s examine why I feel that’s the case.
“Impact needs to be brought to the heart of our society and take its place at the center of our economic system,” writes Sir Ronald Cohen in Impact. “Impact must become ingrained in our society’s DNA, part of a triple helix of risk-return-impact that influences every decision we make regarding consumption, employment, business, and investment. It needs to become the driving force of our economy.”
Don’t get me wrong, I believe there are signs that the sports & entertainment industry has started to embrace the Impact Revolution. The talent side of the business (athletes, artists, entertainers) in particular seems to understand the need to embed impact into their work outside of the arena. Some of the biggest stars in sports & entertainment today—individuals like LeBron James, Steph Curry, Patrick Mahomes, Serena Williams, and Naomi Osaka—have demonstrated this through their consistent and ongoing philanthropic initiatives and activism.
There are also leagues and teams that have demonstrated an impressive commitment to impact. The NBA and the WNBA, in particular, have offered up their platform to their players as a megaphone to build awareness for the racial justice movement, and encouraged American citizens to get out and vote in the recent elections.
The Philadelphia Eagles are a franchise that comes to mind when thinking about putting impact at the core of their business. Not only did they amplify the voices of star players like Malcolm Jenkins who is a prominent voice in the fight for racial justice, and a co-founder of The Players Coalition, but they have gone to great lengths to operate their stadium, Lincoln Financial Field, in a sustainable way.
Plenty of other examples of impact initiatives from across the sports & entertainment landscape could be listed out here. All of the teams and individuals responsible for the work should be applauded. But the reason I say that our industry has not yet embraced the Impact Revolution is that I don’t believe we’ve made a fundamental shift from the legacy system of doing business (with profit as the primary objective) to the impact capitalism system where impact is placed “at the center of our economic system,” as Cohen instructs.
What would that actually look like? How might we make that full shift as an industry and become leaders at the vanguard of the Impact Revolution? I believe the answer lies in the example of two new pro soccer franchises on the West Coast, who have designed and oriented their entire purpose and mission as businesses towards making a positive impact on people and the planet.
The Oakland Roots SC of the USL and the Angel City FC of the NWSL, to me, demonstrate what it means to be a true impact business in the sports & entertainment industry. For these organizations, making a positive impact on their communities is not something that they think about or work on some of the time, it is something they think about and work on all of the time. It is their reason for being. It is at the heart of their business model.
First, let’s examine the Oakland Roots.
Oakland Roots SC was established in 2018 by a group of Oakland natives including Edreece Arghandiwal, Benno Nagel, and an Oakland transplant from the UK, Mike Geddes. From the very beginning, the vision for the Roots was to build a professional soccer club whose purpose was to serve the Oakland community.
Since they were playing in the National Independent Soccer Association (NISA) the Roots founders realized that service and impact in Oakland were going to be a major selling point for lower-division pro soccer. It turned out that their focus on impact was an incredible dra—in the Roots’ first season in 2019, they drew an average of 5,189 fans at their home matches.
Oakland Roots Sports Club seeks to harness the magic of Oakland and the power of sport as a force for social good. Whether on the pitch, in the stands, or within the community, Oakland Roots will represent our one-of-a-kind city with passion, pride, and commitment to all things Oakland. Player by player. Supporter by supporter. Resident by resident. One day at a time. One game at a time. This is about Oakland first, always.
-Oakland Roots
To go about building community relationships and embedding impact into their everyday operations, Oakland Roots built out four official “purpose partnerships” with local organization Soccer Without Borders Oakland, Street Soccer USA, youth soccer camp organizer My Yute Soccer, and youth writing center Chapter 510.
The Roots were also the first U.S. club to join Common Goal, a global soccer charitable movement started by Manchester United star, Juan Mata, in which players and teams commit 1% of their earnings to a central fund that aims to tackle some of the world’s biggest social challenges.
After just two years of competition in NISA, Oakland Roots were invited to join the United Soccer League - a major upgrade in competition level. Even with the increase in investment in the club’s personnel that will come with that move, the Roots founders still believe their ultimate purpose is not to simply try and win soccer championships, it is to help improve the lives of their fellow Oakland citizens.
Co-Founder Edreece Arghandiwal told The Athletic about this ambition: “I want to be able to win in every category. Winning in giving back to the community, winning in creating a brand and an asset that no one has seen in sports, winning in creating a game day experience that makes people turn into promoters and advocates of our brand and what we’re trying to accomplish, and more importantly, I want to play soccer at the highest level possible.”
“There is a ton of data that says that purpose-driven organizations outperform those which are not purpose-driven by huge factors,” Geddes added. “It helps you with revenue, it helps you with organizational health, employee retention, everything. It just makes sense to operate in this way. I think in sports, or at least in the United States as I’ve experienced it, you know, when sports has started as a business first, that purpose gets lost a little bit.”
Angel City FC is earlier on in their journey than Oakland Roots, but it’s quite clear that this new professional Women’s soccer club has an unwavering commitment to making an impact.
Founded by actress Natalie Portman, investor Kara Nortman, tech entrepreneur Alexis Ohanian, and entrepreneur Julie Uhrman, Angel City FC is a Los Angeles-based expansion franchise in the National Women’s Soccer League (NWSL). The club also has backing from a star-studded list of celebrity investors including Serena Williams and her daughter Alexis, and former USWNT players Mia Hamm, Julie Foudy, and Abby Wambach.
Much like the Oakland Roots, Angel City FC has been designed from the ground up for impact. Not long after the announcement of its expansion bid in the NWSL, the club’s ownership announced that they have partnered with the LA84 Foundation and its Play Equity Fund to ensure access to sports for communities of color, girls, and physically challenged or developmentally disabled individuals.
In an interview with The Athletic, Portman talked about Angel City FC’s reason for being: “We are building something bigger than a game; a platform where mission and capital coexist. We want to build a fanbase that not only shows up for our team on the field, but also something for our larger community to show up for. Together we can leverage our platform, players and even our organization to show up and get young girls and boys more access to sports.”
“My co-founders and I are committed to building a team in Los Angeles that makes positive change to expand access to sports for kids across this city. We aim to be champions on the field, and champions for equity off the field,” Portman said.
Angel City FC won’t play its inaugural match until 2022, but they are already showing off their impactful style of doing business. Last week, they announced a front-of-jersey sponsorship deal with DoorDash, which will focus on fighting food insecurity in LA. DoorDash and ACFC’s “Be an Angel” Initiative allocates $1 million over the course of the deal to local impact organizations working on the food insecurity issue.
“I’ve always loved the ability of sports to connect communities and make a positive impact,” Tony Xu, the CEO and co-founder of DoorDash, said in a statement. “This partnership will uniquely merge food, sport and culture as we work together to give back to the Los Angeles community we serve and level the playing field for all.”
The deal with DoorDash is emblematic of what we can expect from all of ACFC’s corporate partnerships. The club has committed 10% of all its corporate partnership revenue to support LA-based impact organizations through product, asset, or monetary donations from its sponsors.
Both the Oakland Roots and Angel City FC have impact at the heart of their business. To these innovative new pro sports franchises, impact is their reason for being, and it will drive the growth of their fan bases and fuel the on-field success of their teams. Oakland Roots and Angel City FC are creating the blueprint today for every single pro sports franchise that wishes to be a part of the Impact Revolution.
“The Impact Revolution promises to be just as world-changing as the Industrial Revolution or the more recent revolution in tech,” writes Cohen. “It is a peaceful movement started by young consumers and entrepreneurs, who are disrupting the prevailing business models once again, but this time in order to improve lives, reduce inequality and improve the planet.”
Don’t you want to be a part of something like that? It’s a remarkable and inspiring vision. Shifting to impact capitalism will mean that we don’t have to choose between impact and financial success in our careers. It will mean that we can collectively tackle climate change, wealth inequality, and so many other forms of human suffering.
I believe that the sports & entertainment industry has a unique and powerful opportunity to be a banner-bearing industry in the Impact Revolution. You can feel the energy and enthusiasm for impact at the grassroots level all over the industry. It is time for every single one of us, from the biggest stars and celebrities to the junior members of the smallest organizations, to embrace impact as our single, unifying goal.