It now sits as a run-down relic of a furniture store along Portland’s new eastside streetcar line between Broadway and Weidler, at 228 N.E. Broadway. It’s a sprawling building of the sort that begs for redevelopment.
Springboard Innovation has such a plan on its drawing board, aiming to turn the building into Hatch, a community-oriented business incubator for social-benefit companies that fall somewhere in that gray area between the for-profit and nonprofit realm.
The target market is unique. So is the financial and corporate structure behind the Hatch venture.
Hatch aims to serve what Pearl calls “hybrid organizations” by providing space and services for mission-driven organizations — both for-profit businesses and nonprofits. It will house business support services including banking, legal, insurance and others.
“Hybrid organizations have a difficult time finding services that can understand and serve a hybrid,” Pearl says. “I hear things like ‘I cannot find a lawyer that understands us’ all the time.”
So it makes sense that to pull off the Hatch concept — which also plans to feature things like a community day care, coffee shop, orchard and garden — would also require a hybrid structure.
While Portland-based Springboard Innovation is a nonprofit, HatchLab Inc., a for-profit working on getting certified as a Benefit Corporation, will manage the Hatch building and collect the rents. Springboard will hold all the controlling stock in HatchLab Inc.
To fund the Hatch project, HatchLab will make what amounts to a public offering of stock that’s sold directly to the community it intends to serve.
It’s an unusual structure but something that’s becoming more common among so-called “social entrepreneurs” who are looking to make a difference as well as a living.
“Social entrepreneurs have taken hybrid models to a new level, crafting it into what is in effect a single structure that can operate as both a for-profit and a nonprofit,” wrote Allen R. Bromberger, partner at New York law firm Perlman & Perlman LLC in an article this year for the Stanford Social Innovation Review. “Social entrepreneurs are now creating complex hybrid structures from the start.”
Alistair Williamson is a designer at heart. Trained as an engineer and a veteran of Tektronix, Williamson started getting interested in the design of companies when he spent five years working on a Web software startup and started looking for corporate structures that would allow for some flexibility. He came up empty.
“C-corps are designed to make money for stakeholders — comma — regardless,” Williamson said.
“When I started looking at the underpinnings of organizations, it’s a monoculture out there. There are two or three organization types and they are all very similar,” he said. “It’s past time to introduce more diversity to our corporate stock.”
Williamson got a chance to experiment a bit with organizational structure while spending six years working at Equal Exchange, the largest fair trade coffee company in the U.S., which operates as a cooperative.
This year, Williamson signed on to serve as president of HatchLab Inc., the for-profit structure that will manage the Hatch organization’s biggest asset — the 50,000 square-foot building — and raise the money for the building’s overhaul.
To do that Williamson and Pearl plan to make a direct public offering — or DPO — of preferred shares to members of the community who want to invest in the Hatch concept.
The idea behind the offering, which by law will be limited to 500 shareholders, is that the shares will maintain a fixed price. No capital gains.
“If there was dissolution, the investors would get back what they put in,” Williamson said. “The capital gains don’t belong to the shareholders. They belong to the community.”
Williamson said that the community offering is not unprecedented but it’s something that he thinks should be more common.
“It’s one example of a model that clearly has a business element, but it’s clearly not just a corporation,” he said.
The Hatch team plans to price individual shares at $100, but because they are limited to 500 shareholders, the minimum investment would be $1,000. The goal is to raise $600,000 — legally a DPO of this kind can raise up to $1 million — which would require some shareholders to pony up more than the minimum.
Whether Hatch will find its shareholders remains to be seen.
“We really want owners invested in the community,” Williamson said. “The risk is what they offer to the community. Not everyone will feel comfortable with it. If the community doesn’t want it, maybe this is not the time or place to do it.”
Another question is whether a budget of around $6 million — the $600,000 from the DPO plus various grants and in-kind donations — will be enough retrofit a building in need of seismic upgrades and other updates. The budget is a moving target as building assessments come in and estimates are delivered by the development team that is coming together to work on the project including Allied Works Architecture, Seattle-based engineering firm KPFF Inc. and development firm Shiels Obletz Johnsen Inc.
Hatch’s core team is optimistic that after three years of planning, Hatch will finally be realized.
“The features of this building are just perfect,” said Paul Osterlund, who is leading the overhaul of the 1920s-era building for Springboard.
Springboard had been looking at industrial buildings for Hatch, but widened its search to retail property and immediately stumbled on the building at 228 N.E. Broadway. With a high-ceilinged interior sporting features left over from its early days as a car service bay and a dairy, it’s easy to see how the space could translate into funky offices and wide open, interactive spaces.
Pearl is adamant that it be a place where the community is involved, where they want to spend time.
“We want the community to feel invited to come in and see what’s going on,” Pearl said.
And she plans to build up a roster of business mentors and volunteers for Hatch clients from those same community members.
“Ten thousand baby boomers are retiring every day,” Pearl said. “They want their lives to be meaningful. Our interest is bringing in citizens who are interested in making a difference.”
- Christina Williams
- Editor, Sustainable Business Oregon
@SustainableBzOR | [email protected] | 503.219.3438