We’re celebrating the new year in a big way: Today, the much-anticipated Minnesota Public Benefit Corporation Act went into effect, and Software for Good was one of the first to file as a benefit corporation in the state of Minnesota.
If you are not familiar with a Benefit corporation, Wikipedia of course has a great overview.
The purpose of a benefit corporation includes creating general public benefit, which is defined as a material positive impact on society and the environment. A benefit corporation’s directors and officers operate the business with the same authority as in a traditional corporation but are required to consider the impact of their decisions not only on shareholders but also on society and the environment. In a traditional corporation shareholders judge the company's financial performance; with a B-corporation shareholders judge performance based on how a corporation's goals benefit society and the environment. Shareholders determine whether the corporation has made a material positive impact. Transparency provisions require benefit corporations to publish annual benefit reports of their social and environmental performance using a comprehensive, credible, independent, and transparent third-party standard. In some states the corporation must also submit the reports to the Secretary of State, although the Secretary of State has no governance over the report's content. Shareholders have a private right of action, called a benefit enforcement proceeding, to enforce the company’s mission when the business has failed to pursue or create general public benefit. Disputes about the material positive impact are decided by the courts.
Allowing a company to pursue things beyond pure profit and shareholder return, without having to be a non-profit, makes a lot of sense. It provides an opportunity for companies to be better citizens.