Achieving Equitable Impact Through Your Spending

We give my son, Dylan, an allowance each week, and unlike your average 14-year-old, he doesn’t go out and spend it immediately. Usually, he’ll do one of two things with it: save it or invest it.

I don’t know what we did raising him, but Dylan is very intentional about his money. He thinks a lot about where his money is going and what he wants to do with it. He’s started to invest to grow his money and supplement his savings. He likes the idea of being able to buy something big later, rather than something small he wants right now. He’s hoping that he can buy a Mustang one day with the returns from his investment portfolio. (Why a Mustang? Because of the Fast & Furious movies, of course. He’s still a teenage boy!)

Delayed gratification isn’t typical of teenagers, I know. But Dylan likes to be able to spend his money in the way he wants, and have the funds available to him to be able to do so. For example, we have a set amount we can spend on birthday presents for friends, but if there’s something he knows his friend will like that’s above our limit, he’ll just cover the rest of the cost with his own money. He also is very focused on making sure he doesn’t owe my husband and me any money, if he loses or breaks something. He plays a lot of sports and he’s constantly losing his water bottles and buying new ones to replace them.

You may be wondering what the spending choices of a teenager has to do with your business. Well, in the same way Dylan makes decisions about how he spends his allowance, you are constantly making choices about how you spend your business’s money. Every business spends money—as they say, you have to spend money to make money—but few think about the best ways to spend money beyond getting the lowest price for whatever they want to purchase.

To truly make an impact, the main course of your operations, you have to consider not only how you bring money into your company (discussed in Chapter 2), but what you do with that money as it goes back out. There is so much potential in a company’s purchasing power, but few companies see their spending as a tool for impact and alignment with customer values. How your company directs its money says a lot about what your company truly cares about and the lengths it will go to make good on its promises to social causes. An excellent way to signal the authenticity and commitment to social impact that your customers crave is to literally put your money where your mouth is and fully integrate impact across your company’s spending.

Dylan’s intentionality with his allowance means that he can align his spending with his values. He values his friends, so he saves his money in order to give them what they want. He values his family, so he spends his money on things that will make our lives easier, like keeping me from losing my mind if he forgets his water bottle one more time at practice! And he values fast cars, so he’s investing for the long term so he can get the car of his dreams when he can actually drive. (We’ll see if we let him get that Mustang, even if he has the money.)

How is your company aligning your values with your spending? If you have a dollar in your (corporate) pocket, where’s it going? Is it going right back out the door toward a cheap, flashy thing you think you need right now, or are you being intentional about what you do with it, so you are spending it on what you value?

This chapter will build on the previous one to help you understand how your company’s spending can be an essential component of doing well BY doing good. In some ways, analyzing and shifting your spending habits is a relatively easy and straightforward approach to equitable impact. Most companies make hundreds if not thousands of spending decisions each month, and choosing a few spending decisions to test out opportunities for greater impact is a simple way to begin your journey toward greater values alignment. Since many spending decisions are visible choices—such as what kind of caterer or the types of products used at an event—it’s an easy way to signal to customers that you understand their values and they are aligned with what your company cares about.

As in the previous chapter I will walk you through how to complete a second iteration of the Good Business Worksheet (Table 3.1), and you will see how the worksheet can help you understand how you are spending money and how you could spend those dollars in a smarter way that leads to greater impact. Then, we will examine a business case for spending with impact, illustrating how more intentional spending within communities can help increase economic growth and improve business for everyone. Then, I’ll discuss the first step for analyzing your company’s spending and suggest several areas of impact to consider involving your spending habits. The Innovate-Accelerate-Decelerate cycle will show you how to execute the different ways and the next steps to change your spending.

BUSINESS CASE: HOW YOU SPEND YOUR MONEY

The strongest business cases for integrating equitable impact into how you spend your money are the trends highlighted in Chapters 1 and 2: Your customers want you to be good. They want to trust that your company is aligned with their values and that you will execute them authentically. Your equitable impact goals cannot be authentic without considering how you spend your money and how that relates to what you are trying to do for society. There is a lot of upside potential in integrating equitable impact into your operations, as two-thirds of consumers want to buy from companies that create social impact.¹ But there is potential for downside too, if your company uses it as window dressing and doesn’t integrate it throughout all your operations, including spending. Ninety percent of consumers say authenticity is a critical factor in their purchasing decisions.² Making a spending choice that runs counter to your stated values could lead to mistrust from your customers and a loss in engagement. If you are a company that has an explicit value around inclusiveness, but you have a vendor in your supply chain with a history of discrimination against LGBTQ individuals, your customers will see that partnership as a betrayal of your values.

These value alignment considerations are a huge reason for why you should be intentional about your spending decisions. But, in addition to these consumer-focused motivations, there is also a strong case for rethinking your spending to create broad, community-based economic benefits. Chapter 2 highlighted how people of color have less wealth because of generations of racist policies, which continues to limit their purchasing power. Well, the truth is that our country is becoming more diverse, and as our demographics change, economic opportunities are changing as well. Existing racial gaps in income and wealth³ will have a significant impact on the overall health and vitality of our economy.

These racial gaps will lead to increasing income inequality, with greater amounts of money concentrated in the hands of fewer people. If there is less money to go around, or more money concentrated in the hands of the few, the result is less economic growth for everyone. Income inequality has been shown to slow economic growth: a 1 percent increase in the income of a country’s wealthiest 20 percent is associated with a 0.08 percent lower GDP growth in the next five years. In the United States, the wage gap between Black and white people is responsible for as much as 0.2 percent of lost GDP each year.⁴

I am sure you are asking yourself, “What am I supposed to do about this?! You expect me to undo years of racism with only my company’s budget? No way!”

Well, of course not. These are massive trends that will take massive coordinated public policy to undo, but there is a way for you to contribute to closing these racial gaps by using the tools offered through your company’s spending habits. Your company is an engine of economic activity—for you, for its employees, and also for your community and the other businesses you choose to work with. Being more intentional about your business partners and suppliers can help them grow.

Business ownership and entrepreneurship are two of the best tools for growing the wealth of communities of color. According to the Association for Enterprise Opportunity, “The median net worth for Black business owners is 12 times higher than Black nonbusiness owners,” regardless of their level of wealth before beginning a business. If Black businesses were fully resourced, the employment opportunities and resulting economic growth would be tremendous: if just 15 percent of Black-owned businesses are able to hire one more employee, the American economy could grow by $55 billion.⁵

But these communities face many barriers to fully participating in these wealth-building activities. Black-owned firms, for example, have lower-levels of revenue compared to firms in the same industry, and Black entrepreneurs are less likely to get a loan than their white peers, making it harder to branch out into new business areas.⁶ Asian-American entrepreneurs also face barriers navigating the loan application process from traditional capital providers, forcing them to rely on personal capital, thus limiting their growth potential.⁷

As a business with money to spend, you can make an intentional choice to partner with businesses owned by people of color and help them grow and build wealth, which will further help build wealth for the communities in which they live. If you are having a staff meeting and need some catering, instead of working with the large corporate chain that you usually use for staff lunches, why not consider a smaller company that may need your business more? Instead of getting supplies from a large retailer, maybe there is a small local business that you can build a relationship with. Often, these types of companies are also eager for your business and will provide better customer service and work with you to better meet your needs.

Thinking about your spending as a contribution to the economic growth and development of fellow businesses will help you consider the broad impact of your spending—not only on other businesses, but also on your community.

FIRST STEP: THINK ABOUT THE IMPACT OF HOW YOU SPEND YOUR MONEY

Before you can begin to leverage your spending for equitable impact, you have to understand the current impact of your spending. Most companies don’t consider how their spending affects their community or society—positively or negatively—and their vendor or procurement decisions are the result of personal relationships or habit—they have always worked with the same groups of companies. By analyzing where your money is going and where it could be going, you can start to increase your impact on those around you as well as increase your engagement with customers.

To be able to leverage the full impact of your spending, you have to shift your mindset and think of your business as a member of a community that is bigger than you and your employees. You are a part of a group of people, organizations, and institutions, and when one thrives, it helps everyone around you thrive. Even if you are a large company with offices around the country—or around the world—you still operate in specific places; you spend money in places where people live and work and play. That has an impact, whether you think about it or not. Like my son Dylan, you can be intentional about where your money goes, and change your spending patterns based on your values.

The ultimate goal here is to help your business become a good neighbor. You should see yourself as in partnership with the community or communities in which you work. Your business is an economic engine that can increase profits and earnings, but that does not happen in a vacuum. It affects and is affected by everything going on around it, from the hard work of your vendors and other partners and the compensation they receive to the community groups and government agencies that make where you work a nice, safe place. Once you see yourself as a partner in community health and well-being, it’s easy to understand how changing your spending habits can help improve the places in which you operate.

VIRTUOUS CYCLE OF SPENDING AND GROWTH

The BOW Collective™ (short for Black Owner & Women’s Collective) is an example of what could be possible when businesses think differently about company spending and how they partner with other businesses. Founded in early 2022, BOW is a collective of 50 businesses run by Black women, representing $200 million in annual revenue. The companies have come together to collaboratively compete for large-scale contracts from corporations and government agencies.

BOW was needed because Black women are frequently overlooked for major contracts or investment dollars that would help them expand their businesses. Only 0.3 percent of investment capital goes to businesses owned by Black women, and as a result, only around 1 percent of these businesses generate more than $250,000 in revenue.⁸

The members of BOW intend to leverage their connections and relationships with “Fortune 500 companies and government agencies to broker multi-year contracts,” as well as create “stronger banking relationships and investment opportunities for their businesses.”⁹ The members have worked with clients like Amazon, GSA, the Department of Defense, Toyota, and Skanska.¹⁰

The formation of BOW comes as supplier diversity is increasingly a priority for large companies. A survey of large US and international corporations found that these companies expect to increase their diversity spending goals by 50 percent in the next three years, with 30 percent of them saying they set diversity spending goals for the first time.¹¹

These companies want to partner more intentionally with firms they overlooked before, and the members of BOW are ready to partner with them. These partnerships with BOW and diverse suppliers generally will help these businesses grow and further invest in the success of their companies and their employees.

This virtuous cycle of spending and growth is possible everywhere, and any business can be a part of it. It doesn’t require elaborate funding mechanisms or due diligence; any simple analysis of your spending can help point you in the right direction. Now, let’s move on to the steps required to change your spending and help you be a better neighbor.

WHERE YOUR SPENDING CAN MAKE AN IMPACT

Once you’ve understood the need and value in being a good neighbor and aligning your spending to support it, below are a few areas you can consider when shifting your spending habits to be more impactful.

Vendors

The most obvious beneficiaries of your company’s spending are your vendors and others you hire to help you run your company. A few things to consider:

•   Who helps you implement your employee benefits?

•   Where do you get your office supplies?

•   Where do you purchase food for your employees or guests when you have lunch meetings?

•   What about the year-end gifts that you get for your clients?

When you begin to think about all the different businesses your business works with, the list of possibilities for making an impact is almost endless. Maybe you can work with a local artist to design a new company logo or choose a more sustainable brand of paper for your printers. Changing your vendors is typically something you can shift easily and that can have an impact. Next time you have to choose a new vendor, think about who your dollars are going to and if they can go to someplace where they would make a greater impact.

Supply Chain

Another obvious area for impact intervention is your supply chain. Many companies, large and small, do not know the full social and environmental impact of their supply chain. Do you know how much greenhouse gas was emitted when making your product? Do you know the labor standards of your suppliers or the place where you bought your raw materials? Shifting the practices and partners within your supply chain is a bigger process than choosing a different place for the company dinner, so commitments in this area may take more time and energy. But changes in this area have the potential to make the highest impact, and have the added benefit of being the most visible commitments to social values in your customers’ eyes.

Banking and Other Financial Services

If your business is bringing in money, chances are you are putting it in a bank somewhere. I know of very few entrepreneurs who are still using the “under the mattress” technique for their financial transactions. While banking services are technically not “spending,” where you put your money and what you do with your funds can have an impact. You can have an account in a local community bank that actively invests in your community rather than international banks that may move your money anywhere in the world. If you have an investment portfolio or corporate treasury, you can use those funds to make impact investments, rather than focus only on return maximization.

You can take it a step further and actively use your corporate treasury accounts. Most businesses will keep some amount of funds in savings, mutual funds, or similar accounts, but you can also use excess funds to support your equitable impact goals. For example, McDonald’s (not typically considered an investment firm), had a stake in Chipotle when it was still a Denver-based company, giving them cash to support their expansion.¹² Thinking about your corporate treasury in this way can help you and any company support a business who needs it and, if successful, generate profits for your business as well.

Employee Benefits

This is a little bit of a sneak peek into Chapter 4 (Achieving Equitable Impact by Investing in Your People), but employee benefits are another business expense that’s worth considering as an area of impact. If you offer a 401(k) benefit to your employees, for example, you can offer investment opportunities in socially responsible funds. You could also be a little more innovative with your benefit structure, and offer incentives for volunteering; for example, additional vacation days, gift cards, or something else employees might value.

You can also think about the benefits you offer as an investment in your most valuable resource: your employees. You need to put your money where your mouth is when it comes to values, and the first place you should be doing that is with the people who make up your company. Treat your people like the asset they are with a competitive and strong benefits package.

Philanthropy

Many companies have some kind of philanthropic giving program. These programs are a great first step for creating an impact with your spending and being a good neighbor in your community. But you can take your philanthropic spending a step further by building off these philanthropic activities and integrating community support more deeply into your operations. Maybe there is a local nonprofit you can sponsor for a local fundraising ad campaign, or offer your services to them for free. Or maybe there’s an opportunity to work with community groups to expand your talent pipeline and hire locally—something I’ll talk more about in Chapter 4.

There is another version of the Good Business Worksheet titled “How you spend your money,” which will walk you through these different areas of impact. As with “How you make your money,” I usually work with full teams to implement these elements, and I recommend you do the same.

USE THE INNOVATE-ACCELERATE-DECELERATE CYCLE TO LEVERAGE YOUR SPENDING

Chapter 2 introduced the “Innovate-Accelerate-Decelerate” cycle as a way to implement the changes you would like to see in your company’s business model to increase your equitable impact and trust with customers. You can apply the same cycle as you think about how to leverage your spending for equitable impact, although its execution is slightly different. Just like the earlier analysis in Chapter 2, you can use this cycle to innovate your current spending processes, accelerate what’s already working, and reduce the more harmful aspects of your spending patterns.

Innovate

When considering your company’s spending habits, innovation will focus on processes, which could come from within—through working with your employees or vendors based on opportunities they’ve identified—or you can bring new ideas into your own operations.

Let’s use an example of innovative spending habits related to the “Employee Benefits” area of impact. In the past few decades, a growing movement of “impact investing” has begun to take hold within the financial services industry. The idea behind impact investing is that investors can achieve what are called double- or triple-bottom line returns: social, environmental, and financial. By making investments in solar power companies or companies that explicitly hire formerly incarcerated individuals, your money can create both a financial return and also improve society or the environment.

Impact investing is no longer a nascent trend within the financial industry. Most financial institutions have some kind of impact investing division, and consumers are more and more interested in putting their money into impact investing. These trends are more pronounced among younger millennial consumers; 95 percent of them say they are interested in more sustainable investing strategies.¹³ Large pension funds have committed themselves to implementing impact investment strategies to better serve their members; for example, the California State Teachers’ Retirement System committed to creating an investment portfolio that has a net of zero carbon emissions by 2050.¹⁴

If you’ve read this far, it probably won’t surprise you to learn that there is absolutely no trade-off between regular investing and investing for impact. On average, impact investments do not perform any worse than more conventional investments. The Global Impact Investing Network found that impact investments had about a 5.8 percent average return, with the highest performing funds receiving over 20 percent returns and the lowest performing funds losing about 15 percent. This spread is about what you’d see in conventional investing, which means that doing well BY doing good is possible through investing.¹⁵

You can integrate impact investing into your employee benefits, allowing your employees options to choose impact investment funds for their 401(k)s or other retirement accounts. If you have significant funds invested with a bank or other type of financial institution, you could consider shifting those funds into an impact-focused fund. One of your employees may be interested in helping to make this shift toward impact investing; it could be a professional development opportunity to lead a project and implement this kind of shift in your spending habits.

Accelerate

In Chapter 2, I discussed how expanding and accelerating what is already working in your company can help make equitable impact the main course of your operations. Here, acceleration can come fully from within, but you can also adopt proven practices from outside your company to help accelerate what you’ve already started. If the ideas presented previously around innovation are new pioneering and industry-leading concepts, opportunities for acceleration are things you can quickly expand on to respond to customer demands for greater equitable impact.

Like the innovation of impact investing, other companies and industries have been working on different ways to use spending for social change for years, even decades. Your company can learn from these practices, adapt them to your operations, and expand on them. Just because it wasn’t your idea doesn’t mean you can’t build on it and make it your own. There were lots of superhero movies made before Marvel Studios started to make their own, but Marvel was able to smash box office records and redefine the genre with their own approach to it.

How can you take the Marvel approach to your company’s spending? Accelerating something happening inside your company can help you expand your commitment to equitable impact. When I was the chief impact officer at Living Cities, a philanthropic membership organization of the world’s largest foundations and financial institutions, we were beginning to grapple with our commitment and involvement in the racial justice movements growing across the country. We used public-private partnerships to support low-income people in cities, but had not necessarily acknowledged that most of those people were people of color. These communities face unique and specific barriers because of existing racist policies that could not be changed without confronting head-on the racism that people of color face each day.

We were late to the racial equity party, so to speak. So many organizations had been working on community organizing around racial justice for generations, and while we were working in these communities, we were not necessarily working in partnership around racial justice. Nevertheless, we were able to accelerate our journey by benefiting from the lessons learned from others.

One thing Living Cities did when deploying and applying their own organizational principles of racial justice was to analyze the impact of their spending, which led them to set targets around diversifying contractors and vendors. Living Cities created these targets after learning that businesses owned by people of color have a harder time accessing capital, and, therefore, have a harder time growing to a capacity where they can compete with larger companies in their industries.¹⁶ By rejecting the status quo and intentionally seeking out and expanding their vendors and contractors of color, Living Cities provided needed revenue and business to firms that might not have access to contracts from similar organizations.

The barriers to capital access are particularly challenging for food service companies owned by people of color, which is one of the most volatile industries. When Living Cities realized that it was mostly using corporate chain stores to cater lunch meetings, they deliberately changed their default caterers to small businesses owned by people of color in order to better align themselves with their racial equity programmatic goals. It was a very easy thing to do and usually resulted in a tastier lunch!¹⁷

Whom you choose to buy a company lunch from may seem like a small thing, but your vendor decisions can have a large impact, especially if you are a company with large amounts of dollars spent through your procurement processes. Whom you choose to work with also is a strong signal to your employees and customers. Having an immigrant-owned business do your company catering says something about the kind of company you are and can be a powerful marker for your company’s culture.

The steps that Living Cities took to change its food vendors were important, but I don’t want your takeaway to be that you just need to have different types of food at company lunches and you’ve done all you need to do to align your values with your customers. I’ve highlighted Living Cities because their changes in food vendors was a direct result of a broader strategy around racial equity, and their spending habits was one tool they used to meet those goals.

I wrote this book—and you are reading it—to help companies create a strategy that helps them do well BY doing good. If your company spends a lot on vendors but doesn’t have a strategy for how to effectively partner with them as a good neighbor, consider a broader procurement strategy to actively work with and support your vendors. The Good Business Worksheet is meant to help you create that bigger strategy, not to offer a simple checklist for what your company needs to do. As I’ve said, authenticity is important. Customers can smell BS (or to paraphrase one of my favorite characters on Ozark—they can tell if you’ve got some BS in your teeth). If something aligns with your strategy, do it. If it doesn’t, don’t!

Decelerate

The deceleration process requires taking a hard look at what your company is doing and determining where you are doing more harm than good. What are you spending money on that you shouldn’t be, or that you could be spending differently—that is, in ways that would be more aligned with your company’s values and equitable impact goals?

It could be as simple as changing the paper in your printer to recycled paper, or spending less money on paper by changing the default printer setting to double-sided. Or, heck, don’t use paper at all! Pretty much any purchase you make has some environmental impact, and there may be alternative products that are more environmentally friendly.

Tweaking the types of supplies you use in your office isn’t a bad idea, but it would be hard to argue that these kinds of impact decisions are the main course; this seems more like a side dish or low-hanging fruit to me. If you are a company with an environmental mission or one that has made sustainability a core value, but are spending a large amount of money on paper and other disposable supplies, you probably should reconsider this practice and look for more sustainable options.

Where you can go big, and where there is opportunity for a lot of impact, is within your company’s supply chain. If your company is making a product, the impact of that product can be large and far reaching, oftentimes spanning the globe. Let’s say you are a midsized apparel company that sells kids shirts with unique designs. Most of your workforce is focused on design and marketing; you contract out the screen printing of those designs onto the shirts, and the shirt themselves are manufactured by a third-party company that works directly with the screen printer. It may seem like the only thing within your control is the choice of the screen printing vendor, but the reach of your spending is much larger than that. Does the shirt manufacturer follow fair employment practices, pay a living wage and benefits, and so on? And where does the fabric come from that goes into those clothes? Who makes it, and where do the raw materials come from?

At each step of the supply chain process, there are important questions to ask to ensure that where your money is going actually aligns with your corporate values. How are these vendors treating their employees? What are the working conditions at the different factories? What kind of impact do the materials used to make your product have on the environment? Are there harmful chemicals being used, affecting the workers and their community? How much greenhouse gas does the shipping process produce to get your clothes from the raw material stage all the way to the consumer?

As a midsized company, these questions may seem way outside the scope of what you can control. You have a direct relationship with one vendor, and they help you make the product you need, and you cannot really change what choices they make with their own purchasing decisions. But if you and your company have decided that environmental sustainability or fair labor practices are important, questioning your suppliers about these issues is an essential part of your equitable impact business practices. If the suppliers don’t have a good answer, or they aren’t willing to change their practices, you can always work to find a different supplier that is more aligned with your values.

If you are a large enough company with a big enough supply chain, you can shift from decelerating bad practices in your supply chain toward accelerating high-impact strategies across your spending practices. Supply chain management is an area ripe for intervention for social and environmental goals, and there are a lot of proven practices to learn from others.

LEVERAGE SPENDING FOR EQUITABLE IMPACT

Walmart is commonly cited to show how supply chains can be leveraged for impact. The ubiquitous retailer has committed to several environmental, social, and governance (commonly referred to as “ESG”) goals, and is using its spending power through its supply chain to achieve those goals. Because Walmart is one of the largest retailers in the world, its supply chain is one of the most massive economic engines on the planet. They are working to use that engine for social impact.

Walmart has set several goals to achieve with its supply chain, from climate change mitigation to respecting human rights to safer, healthier products. They have set standards for their suppliers around labor and environmental criteria, and are participating in advocacy groups that are pushing for socially impactful policies, such as the Renewable Energy Buyers Alliance, which is working to create a zero-carbon energy system. They are also moving toward working with smaller and more diverse suppliers based in the United States.¹⁸

You may not work at Walmart (or maybe you do!) and your company may not have the same level of purchasing power. Because of its size, you likely do not. But chances are you have more power than you think. You can join up with other companies with similar values to coordinate your efforts and learn from each other. The Renewable Energy Buyers Alliance helps coordinate activities for companies committed to environmental goals, and the group CEO Action for Diversity and Inclusion brings together companies committed to racial equity, with specific actions directed at supplier diversity.¹⁹

Regardless of your spending levels, the examples in this section may seem out of your reach or you may not be sure where to start. In the next section, I will walk you through the Good Business Worksheet to help you implement changes in how you spend your money for equitable impact.

PUT IT ALL TOGETHER AND CHANGE HOW YOUR COMPANY SPENDS MONEY

Table 3.1 is another iteration of the Good Business Worksheet, this time focused on how your company spends its money. As discussed, you can complete it by yourself, or with a team of coworkers; as I mentioned, I think it’s best to do this with your team. I’ve also included a sample agenda (see Table 3.2) to help you walk through the different elements of the worksheet. (As always, you can find digital copies of these resources on CapEQimpact.com.)

TABLE 3.1 Good Business Worksheet, Part 2: How you spend your money

TABLE 3.2 Good Business Agenda: How you spend your money

Just like the Good Business Worksheet, Part 1: How You make your money, this worksheet is intended to help you easily map out how you can better leverage the money you spend for equitable impact. Once you are able to identify potential areas of impact, the Innovate-Accelerate-Decelerate cycle will help you implement whatever changes are possible within your company.

Some of these steps may overlap; that’s OK, because it is more of an art than a science. However, you may want to think about the different components like this: innovate is about being a leader in your field or industry around equitable impact; accelerate is about expanding on good work already happening; and decelerate is about not doing harm. I’ll push you, as I do my clients, to think about deceleration as not only “do no harm” with your company, but also as a way you can actually and actively do good.

Steps to Completing the Good Business Worksheet

Step 1: Analyze the full scope of your spending practices to better understand the impact of your spending. You could do a full budget analysis or simply list the areas of your biggest spending.

Step 2: Once you and your team have agreed on the broad outlines, you can go deeper into the different areas of impact within your spending:

•   Vendors

•   Supply chain

•   Banking and other financial services

•   Employee benefits

•   Philanthropy

Some of these areas of impact may be more relevant to your company than others. If you are a service-focused company, there may not be a lot of opportunity within your supply chain, but you may have a large vendor base that can be considered for impact strategies. A smaller company may not have a robust employee benefits package, but could have a strong connection to the community with opportunities for greater community partnerships.

Once you have chosen your top areas for impact, circle them on the worksheet.

Step 3: With these top areas of impact circled on the worksheet, consider what may be some easy fixes that require a low lift from the team to increase impact. These should be things you can do in the next week or so—maybe switching to more sustainable products in the office, or choosing a vendor that’s more aligned with your values. Write these opportunities down in answer to the low-hanging fruit question.

Now that you have your low-hanging fruit, think about things that may be more difficult, take a longer time, and require more resources to achieve, like overhauling your supply chain, or setting diversity goals for your procurement processes. Because these things take more from you and your company, they should produce really high impact results. Write these in answer to the high-impact question.

Step 4: Now that you have taken the first step toward understanding your spending and its areas of impact, you can move on to the Innovate-Accelerate-Decelerate cycle to help you implement your ideas about how to change your spending practices. Start with Innovate and consider which areas of impact would benefit from innovative practices, either created within your company, such as a new approach to choosing suppliers, or outside your company, like offering impact investing products as a part of your 401(k). These may be the answers you gave to the questions on the worksheet, or something else you and your team discussed.

Once you have identified the areas of impact that can benefit from innovation, write them down on the worksheet. Then, use the remaining questions in the Innovate column to help you figure out how to implement these innovative practices:

•   How will you bring innovative practices into these areas of impact? Another way to think about this question is: What innovative strategies can help change spending habits in these areas?

•   What are the next steps to implementing these changes across your company? To put it another way, what needs to get done to allow these changes to happen?

•   Will these changes affect certain groups more than others, and will they worsen or ignore disparities? Don’t forget about your blind spots—what are you missing in these decisions? What inequitable practice might this innovation inadvertently perpetuate?

Once you have the answers to these questions, write them on the worksheet. Remember, it’s critical to actually physically write them down on this worksheet so everyone is aligned and you can use it as an organizing document for your next steps.

Step 5: Repeat this process for the next column as you consider what elements of your operations you can accelerate for greater impact. Which areas of impact would benefit from an expansion of something already happening within your company? Or is there a proven spending practice that you want to bring in to support changes within an area of impact? Again, write these areas of impact in the column, and then answer the following questions to help you make your implementation plan:

•   How will you accelerate impact practices within these areas of impact? Or: What practices are in place that you can expand on to improve your spending practices?

•   What are your next steps to implementing these changes across your company? Or: How can you support team members to implement these acceleration strategies?

•   Will these changes affect certain groups more than others, and will they worsen or ignore disparities? Are all the people who will be affected by these decisions being consulted in the process?

Step 6: Almost done! Repeat this process for the “Decelerate” column. Choose the areas of impact you think can benefit from reducing some harm your company is doing, and answer these questions:

•   What changes can you make in these areas of impact to decelerate the harm being done? Or what can you stop doing that would improve the impact of your spending?

•   What are the next steps to implementing these changes across your company? Or what steps do you need to take to stop these practices from continuing?

•   Will these changes affect certain groups more than others, and will they worsen or ignore disparities? Or who has been most harmed by these practices, and how can they be empowered?

Don’t forget to write everything on the worksheet!

Step 7: You did it! Share the completed worksheet with your team (or the whole company) and keep it handy. Begin to build out the different elements of the next steps as you shift your spending to better align with your company’s values and create better impact.

In the next chapter, we’ll round out the Good Business Worksheet and focus on how your company can better support its employees.

HOW YOU SPEND YOUR MONEY: SYDNEY’S JEWELRY SHOP

Let’s check back in with Sydney and see how she’s doing with the worksheet:

Step 1: She first thinks through her spending habits. She spends most of her money on the materials, but she also spends money on flyers to market her products; currently, she’s also spending on a website in order to create an e-commerce sales channel.

Step 2: She doesn’t have any employees (yet!) so that’s not an area of impact, but the other areas I named seem to apply to her, although as a small operation without much spending, she’s not sure how much impact she can have. But she wants to be sure she considers all her options.

Step 3: Low-hanging spending fruit for her includes buying recycled paper for her advertising flyers. This is easy and she’s surprised she hadn’t thought of it sooner. Something that’s harder, but that she knows is going to have a big impact, is buying only from local businesses as she grows. Right now, she’s not really able to choose the companies she works with—she has to go with the lowest price—but she wants to make sure she’s helping to grow her community as she grows her business.

Step 4: Right now, Sydney is using a large, national bank. She decides to innovate by setting up an account with a community bank in the neighborhood that makes loans and investments in her community.

Step 5: For “accelerate,” she decides she really wants to commit to revisiting her supply chain to meet the goal she set to create a carbon-neutral product. This was a big commitment, but now that she’s looking at how she spends her money, she thinks there may be a simpler solution. She decides to shift from exclusively making plastic jewelry to relying more on wood and metals, and even materials she finds herself in nature, such as rocks and pebbles. (Her commitment to her supply chain shows how these different elements of the Good Business Worksheet can interact, meaning a commitment in one area can support a commitment in another.)

Step 6: For “decelerate,” Sydney’s decided to start working more directly with vendors in her community. She was using an international corporation for her website design; instead, she switches to a local web developer who lives nearby and can provide a more tailored approach to the e-commerce side of her business. It’s a little more money, but better service and a more creative product.

Step 7: At each step of the Innovate-Accelerate-Decelerate cycle, she thinks through her blind spots and considers what she may be missing as she rethinks her spending. For example, under Innovate, she makes sure the local bank she will be working with lends to entrepreneurs who are unable to access traditional financing. For accelerate, she determines she hasn’t any blind spots in her choice of materials—which is fine! Sometimes you won’t have an answer to this question. What’s important is that you think about it. For decelerate, she builds off her earlier commitments and finds a company that’s a good fit with her values, not just one that advertises online—another example of how the worksheet components interact.

Step 8: Table 3.3 depicts Sydney’s How you spend your money worksheet. Once she’s done with this, she hangs it up next to the “How you make your money” version of the worksheet, and gets ready for the last section: how she invests in her people.

TABLE 3.3 Good Business Worksheet, Part 2: How Sydney’s jewelry shop spends its money

CASE STUDY: SPENDING FOR RECOVERY IN NEW ORLEANS PROMOTES EQUAL OPPORTUNITY

As we all know, Hurricane Katrina hit New Orleans hard. It’s been years since that disaster, but while much of that city has recovered, many areas of the city and its people are still struggling.

Recognizing that New Orleans had a long road to recovery, civic and business leaders founded the New Orleans Business Alliance in 2010 to create economic opportunity across the city. The organization—referred to as NOLABA—focused on attracting and retaining businesses in the area, developing new small businesses, investing in neighborhoods, and implementing necessary workforce development training.

I started working with NOLABA in my role at Living Cities right around the 10-year anniversary of Hurricane Katrina in 2015. Despite lots of hard work and lots of dollars put into the recovery, there was still much more to do. Living Cities donated financing to NOLABA to support its work, and I helped them expand and manage their partnership with corporate leaders and government officials.

NOLABA was partnering closely with the city government and the mayor’s office, particularly its Network for Economic Opportunity initiative, which was working to create equitable growth strategies to ensure that economic development benefited all people, not just the wealthiest or most privileged. This equitable strategy was based on research that showed if all people of color throughout the New Orleans area had access to the same opportunities as white people, the state would see an additional $7 billion in earnings and $20 billion in economic impact.²⁵

Most of the people and places that were hit hardest by Katrina and its aftermath were in the Black community. New Orleans lost about one in three of its Black residents in the aftermath of the storm,²⁶ and even 10 years after Katrina, about half of the city’s Black residents said they had not recovered, compared to just a quarter of white residents.²⁷ NOLABA knew that to help create robust economic development across the city, they would have to fully invest in the Black community and its businesses.

Part of the challenge was that Black-owned small businesses had not had access to the opportunities that other businesses in the city receive. Even though about 40 percent of the small businesses in New Orleans are Black-owned, they received only 2 percent of the total receipts—a trend going back to the mid-1990s.²⁸ Without greater access to the city’s economic activity, they are unable to grow and thrive at the same levels as other businesses.

To help solve this disparity, NOLABA worked with the city government to connect small, Black-owned businesses with developers and other companies supporting the Katrina recovery efforts. Billions of dollars were being spent to rebuild the city and NOLABA worked to ensure that those dollars stayed local, and that small businesses, particularly small businesses owned by Black people, were able to secure contracts to assist in that recovery.

The city also established a local hiring policy for these contractors to ensure that New Orleans residents could access and benefit from the jobs created. It also passed an employee and contractor minimum wage, raising it from $7.25 to $10.10 an hour, and adjusting it yearly for inflation. In 2021, it reached $15 an hour.²⁹

By doing this, NOLABA created a multiplier effect from these development projects. The money spent not only went to the physical recovery of the city with new homes, buildings, and infrastructure, but also to local businesses and their local employees who supported their construction, either as direct contractors or subcontractors.

These and other efforts led to massive benefits for the city and its residents:

•   Over 30,000 jobs created in the last 10 years.

•   Three percentage point decrease in unemployment rates over the last 10 years.

•   In 2019 alone, $8.5 million in contracts awarded to entrepreneurs of color.³⁰

These results are not only because of the work NOLABA did to direct spending and contracts to small businesses, but also because of their broader equitable strategy to ensure all can benefit from the economic activity in New Orleans. This strategy incorporated all elements of the Good Business Worksheet—making money through sustainable development; spending money in a way that helps small businesses thrive; and investing in people through higher wages. The procurement and contracting efforts were (and are) a major pillar of their approach, and show what’s possible when you think more intentionally about how you spend your money, where you spend it, and who you spend it on.

Even if you aren’t working with city governments and major developers, how can you use your spending differently to create the kind of equitable impact NOLABA was able to create?