A New Way of Doing Business

January 11, 2012

Last week, California became the seventh state to adopt a law allowing companies to legally structure their social and environmental efforts as part of their missions, and so put these efforts on par with profit making goals for the company and its shareholders.

The idea for “benefit corporations,” as they’re called, isn’t new – this concept has been around since the early days of the United States when states began chartering corporations to achieve a specific public purpose, such as building bridges, roads and other infrastructure.

This “new” corporate form, however, joins an ever-expanding list of ways to pursue social enterprise in a for-profit context.  

While these businesses don’t neatly fit into for-profit or nonprofit categories, we hope the new laws ultimately encourage businesses to stay and expand in California.  Entrepreneurs have a new way to combine their philanthropic passions with their business interests, consumers have new incentive to support businesses that align with their values, and charitable organizations have potential new partners in fulfilling their missions and strengthening their capabilities.  At least I hope.

Only time will tell what companies that register as “benefit corporations,” including Ventura-based Patagonia Inc., do that’s truly better and more impactful on society and the environment.

I, for one, will be watching.

Thanks for reading,
Carol Bradford
Senior Counsel and Charitable Advisor, CCF

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