In the business world there’s been this tension between making money and doing good. At least for an emerging group of leaders. Sure, making money – being a viable enterprise – is exceedingly important. It’s hard to be an ongoing enterprise, enduring for the long-term, without effective revenue generation and cash flow management no matter how you structure things.
But more and more there are people who eschew (love that word!) the notion that business is only about profit. It used to be that business was not just about making money – for oneself or one’s shareholders – but also about adding value and doing something good in the world: innovating new high-quality products that last longer than one season (or one year …), building infrastructure, caring for people when they are sick or injured …
Yet, in the world of corporate law, for-profit corporate officers can run into trouble if they engage in activity designed to do anything other than produce a profit, since their duty of loyalty is to the shareholders who funded the operation in hopes of getting the greatest return on their investment. This, of course, has led to making money as an end unto itself. And that focus has led to a lot of people dissatisfied with the jobs they go to every day, just to earn a buck without much in the way of personal or professional satisfaction.
Many of us in business, particularly I’m happy to say the women entrepreneurs around the world, are starting to consider that such return might come in the form of value other than a dollar, euro, ruble or yen (insert your other favorite monetery currency here). Those who consider themselves social entrepreneurs will be glad of this first: enter the Benefit Corporation which made its debut in the state of Maryland recently.
Rather than a primary focus on ‘shareholder value’ (which is creating as much money as possible for corporate owners) – the duty of those running a for profit corporation, the B Corp, like a true social enterprise, can lawfully focus on the needs of everyone connected to the company: shareholders, officers, staff, customers/clients, vendors, communities. That’s a very different focus. So long as the public or social benefit that may serve as the mission of the enterprise is clearly stated in the corporation’s Articles of Incorporation (so investors know what that is and that their investment will not just be focused on money-making but rather value-making and money-making), then the officers and management of the company can legally seek to confer such benefits on people other than shareholders.
Not only can they, but in doing so they must measure and report their beneficial results so that those efforts can be publically tracked. Think of it as a hybrid of the for profit and non-profit corporation. Click here to read an interesting example from the HuffingtonPost.com.
Seems a bit sad that we had to carve out a special legal definition for this. But I’m glad Maryland broke ground with it.
Actually, their law is based on the work of non-profit B Lab, a Pennsylvania company that certifies companies committed to social responsibility. They provide an Impact Assessment for those who aspire to run socially responsible operations, help them save money and raise capital, and give them a forum to meet other kindred spirits in business.
Jay Coen Gilbert, one of the co-founders of B Lab, feels there are more and more investors who want to invest their money in truly mission-driven companies. He was quoted in Bloomberg-Businessweek recently saying: “I think it’s becoming increasingly not only acceptable but sought after by mainstream investors.”
That’s some good news for a change, eh?
Might your legacy project fit into a B-corp structure? Seems like a good option for many who might need to raise capital to get their project going rather than having to rely on raising charitable donations. We look forward to watching the development and stand ready to help you figure it all out.
Cheers, Dolly