Legal Protections
  • Reduces start-up costs by providing attorneys with a uniform and standardized means for structuring a social enterprise, that is easy to understand, and duplicate from company to company.
  • Changes the fiduciary duty of the corporation’s directors, requiring them to consider the creation of a positive social or environmental impact, in addition to profits when making decisions on behalf of the company.
  • Offers the option of “legacy preservation” to social entrepreneurs who want to ensure that their company, or its assets, will be used to create a positive social impact after they leave the organization or if ownership is diluted. If a company adopts a legacy preservation provision, the business would remain a benefit corporation in perpetuity, regardless of changes in ownership
Marketing
  • Reaching Consumers: The benefit corporation provides social entrepreneurs with an opportunity to cut through the noise of the purely for-profit marketplace, and makes it easy for consumers to identify and patronize social enterprises. Also, because the new entity ensures a high level of standardization from company to company, consumers who understand what it means to be a benefit corporation can comfortably make assumptions about the operations of benefit corporations across different sectors.
  • Greenwashing Prevention: Benefit corporations must file annual reports to shareholders and consumers that demonstrate their positive social or environmental impact. This fosters more transparent business operations, and helps to protect the nascent social enterprise sector from companies that claim to be social enterprises to increase their profits, or generate some other self-serving benefit.

 

New Resources for Non-Profits
  • Many social enterprises form bonds or agreements with nonprofit organizations to provide funding or other resources to non-profit organizations. As many non-profit organizations struggle to find funding, benefit corporations can provide a powerful new source of revenue, and help to diversify their funding sources.
Community Building
  • As difficult as it is for social entrepreneurs to communicate their social mission to consumers, it can be just as difficult for them to find and communicate with other social entrepreneurs. This legislation allows social entrepreneurs to identify each other with greater ease, share best practices, and build a stronger, more cohesive social enterprise sector within the state.