On July 17, Delaware became the 19th state to enact benefit corporation legislation, which goes into effect on August 1.
What are benefit corporations, why is it suddenly newsworthy now that Delaware has sanctioned them, and what does this have to do with nonprofit organizations?
According to the Benefit Corporation Information Center, a B Corp is “a new class of corporation that 1) creates a material positive impact on society and the environment; 2) expands fiduciary duty to require consideration of non-financial interests when making decisions; and 3) reports on its overall social and environmental performance using recognized third party standards.” In other words, as B Lab, a nonprofit that has shaped B Corp legislation, says:
B Corp certification is to sustainable business what Fair Trade certification is to coffee or USDA Organic certification is to milk.
In a recent blog entry at Forbes, Delaware is important because, “as home to 1 million businesses, including 50% of all publicly-traded companies and 64% of the Fortune 500, it is the most important state for businesses that seek access to venture capital, private equity, and public capital markets.”
Nonprofit organizations can play an important role helping B corporations fulfill their legal obligation to create that material positive impact on society and the environment. On the surface, these businesses give more money and time, but what if you dig deeper and think about tapping into intellectual resources? Businesses have valuable experience to offer, and nonprofits should be thinking creatively about what that could look like.
Michigan has not enacted benefit corporation legislation, nor has it been introduced. If you read the Forbes article, you’ll see that the model is a growing trend, driven by the expectations of consumers and the workforce, and we will likely see it in the future. In the meantime, let’s all be thinking creatively about maximizing the opportunities that will be available to the nonprofit sector.
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