How Philly is Encouraging Sustainable Business Growth

This is an excerpt from the May 2016 edition of the Good Economist from the Sustainable Business Network. Read the entire issue online here.

Philadelphia Takes Critical Step Towards Becoming the Social Enterprise Capital of the World

Philadelphia City Council’s Committee on the Environment held a public hearing on two bills that would provide the most comprehensive set of tax incentives for triple bottom line businesses in the nation. Five Council members – Blondell Reynolds Brown, Derek Green, Cherelle Parker, Maria Quiñones-Sanchez, and Al Taubenberger – heard testimony from government agencies, non-government organizations, and locally-owned business, including five SBN members.

The first bill improves the capacity of Philadelphia’s current Sustainable Business Tax Credit to fulfill its purpose of increasing the number of local sustainable businesses. If passed, the ordinance would increase the amount of the tax credit from $4,000 to $8,000, remove the cap limiting the program to 25 businesses, and extend the credit’s applicability to the net income portion of the Business Income and Receipts Tax (BIRT).

The second bill amends the Jump Start Philly program to provide a total of 36 months of BIRT tax exemption for new businesses that obtain B Corp certification. Currently, the Jump Start Philly program provides up to 24 months of BIRT exemption for any new business that meets specified job creation requirements. But by placing traditional start-up businesses on equal standing with sustainable businesses, the program creates no incentive for the adoption of sustainable practices in the start-up

SBN Executive Director, Jamie Gauthier, spoke in support of the two bills, regarding both as critical steps to “form the right ecosystem for a just, sustainable economy to grow and thrive.” She emphasized the importance of establishing a foundation for growing the number of sustainable businesses, “Mission driven businesses are a tremendous resource in impacting a host of complex issues, such as deep poverty and environmental concerns. … Increasing the number of businesses committed to a triple bottom line would advance the City of Philadelphia’s goals for shared economic prosperity and sustainability.”

Along with SBN, five members – Marcus Iannozzi of Message Agency, Robert Cheetham of Azavea, Elizabeth Guman of Strategy Arts, Mary Whalen of Solutions for Progress, and Nicole Koedyker of Forsei Consulting – offered compelling testimony about the local economic benefits that a sustainable procurement policy would provide. Elizabeth Guman expressed the significance of creating a culture that holds business more accountable to its community. “Business is not neutral. … The challenges we face in the city cannot be solved by government and nonprofits alone. Business has to be part of that solution – driving a strong economy creating jobs and economic opportunity,” stated Guman.

Both pieces of legislation received favorable recommendations out of committee and, once passed, will dramatically expand the tax incentives currently provided to sustainable businesses. In 2009, Philadelphia became the first city to offer a Sustainable Business Tax Credit – a credit that aims to assist existing Certified B Corporations as well as incentivize more businesses to obtain the certification. However, the credit is presently the lowest of any offered by the City of Philadelphia, and is too small to make a meaningful impact on a company’s bottom line. Additionally, the current program is limited to 25 businesses, representing only a small segment of current and potential businesses eligible.

The need for both policies was identified in SBN’s Good Economy Challenge. The Good Economy Challenge is SBN’s issue campaign developed to highlight the importance of a continued focus on the sustainable economy, with small business as a centerpiece. It is intended to engage Philadelphia’s sustainable business owners, employees, customers, and allies in support of a thriving local economy.