A nonprofit consultancy? Can such a thing exist? Yes, says Michael Pirron, CEO and founder of Impact Makers, a nonprofit consulting firm headquartered in Richmond, Va. Pirron, an ex-Andersen and ex-Accenture consultant, has traveled the world and worked in various capacities, but his current endeavor, a consultancy of 10, allows him to tap into his need to give back. "I've always tried to figure out how to be involved in the community where I live and at the same time pay the bills," he says. The company made about a half million in revenue in its first year and gave its chosen charity $41,000—and 200 consulting hours. Consulting talked with Pirron about the innovative—and clearly successful—model. Consulting: How is your model different?
Pirron: Impact Makers is an IT and management consulting firm. We focus in healthcare. But we call ourselves the nation's first competitive social venture. We're structured like a nonprofit although we're very profit driven and executives are compensated to maximize profit like any other for-profit consulting firm. But we have no equity ownership and we have a volunteer board of directors, so all of the profits, rather than going to the guy in the corner office goes to our local charitable community partners. Right now we have one—it's a domestic violence program called Safe Harbor that's here in Richmond. But the idea is that the board holds executives accountable to maximize profit and we're compensated on profit, and we can be fired if we don't maximize profit, and the board decides where those profits go. That's the 10,000-foot level.
Consulting: What does your firm bring to the table that a for-profit does not?
Pirron: Well interestingly, I would say, compared to similar level consulting…in terms of service delivery, I think we're comparable. But what's interesting is the twist on corporate social responsibility. [Those efforts] end up costing [companies] a lot of money. Basically by hiring Impact Makers, as long as we're competitive on capabilities and price, they can turn their IT or consulting budget into direct community impact. [For example,] Freddie Mac, when I was there consulting, they had a billion dollars profit; they put 10 percent of their profits into a foundation and gave it away, which is $100 million every year they gave away, which has a big cost obviously, and that sometimes gets in the way of maximizing shareholder value, which is what all corporations need to do. So interestingly, if that same year, [Freddie Mac] pretty much consistently had around an $800 million IT consulting budget, well, imagine it awarding Impact Makers or an Impact Makers-like organization their $800 million IT consulting budget. We're at a 20 percent profit margin, but let's just say conservatively we're at 15 percent. That would mean for no [extra] cost for Freddie Mac, they would get the same services they already had budgeted, so at no additional cost, they would inject $120 million dollars into the community. That's $20 million more than their entire foundation, at no additional cost to them, just simply by hiring us (assuming we are competitive on cost and capabilities).
Consulting: How does this model affect your talent strategy?
Pirron: We certainly want to have people who want to work with us based on our mission. But we hire people based on their ability to deliver, and I think that our model is not for everyone, but for people who are socially motivated. We offer this really unique option to come work with us and make the same as you'd make at Accenture or McKinsey but also have this great direct community impact part to your work.
Consulting: How did you get involved with Safe Harbor?
Pirron: Profits are distributed by our board. Our board decides which organizations we partner with, and the goal is become 20 or 30 percent of their budget, allow them to focus more on service delivery. If you take away 20 or 30 percent of the fundraising pressure away from the management and board, [you] let them spend 20 or 30 percent of their energy that would be on fundraising on service delivery. And then we give them consulting services to help them do that. So by corporate charter, our board has to choose a partner that's local, secular, apolitical, charitable and helps people help themselves. And Safe Harbor is a small organization that fit those requirements and at the same time is pretty darn efficient with what they do with the resources they have and has a small enough budget where a small startup consulting firm, the profits for the first year or two, would really make a significant impact for them. And it resonated with most people on the board.
Consulting: Who are your clients?
Pirron: We've had a really interesting mix. We've really only been a little over a year in business, and we have worked as a subcontractor for North Highland and Ingenix. And we've worked with a whole group of kind of mid-tier to large corporate clients. But we've also done some small business consulting, kind of application development as well, with more mid- to small-sized organizations.
Consulting: Do you have an ideal client?
Pirron: We're a small niche player in healthcare. So we have a niche in healthcare, really specifically in medical management—disease and case management. We do both strategic work and more tactical. But then we also across industries have a focus in project management.
Consulting: What are your plans for the future?
Pirron: We want Impact Makers to steadily grow. We want it to expand to other cities, other mid-sized cities, and have local boards of advisers decide where the profits from each city's office goes. And we also want to expand to other services [such as] marketing consulting, PR consulting and accounting. That's the grand scheme.
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