B the Change Weekly
Numerous studies have concluded that, as a general rule, people believe businesses and companies should do good in the world. Consumers choose to buy from sustainable companies if given the option, employees choose companies that provide meaningful work, and entrepreneurs are seeking ways to build their mission into their businesses’ DNA.
One way to ensure a business can be a force for good is to incorporate as a legal benefit corporation—a form of governance now available in 33 states and Italy . But how does it work? And how do entrepreneurs find time to add this level of complexity to the already complicated process of launching a business?
The availability of information, online form generators and publicly available incorporation packages are making it easier to use this governance structure. That’s good news for business owners and operators, to be sure, and it’s also good news for consumers and employees who want to be sure a company is planning to pursue profit and purpose for the long haul. (Although some of these tools are geared for startups, an existing company can reincorporate as a benefit corp, too.)
This week, we share how doing good is getting less complicated.
Happy to share the good news,
The team at B the Change
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From Skeptic to Full-Time Advocate
Rick Alexander almost seems to have been directed by fate to practice—and ultimately rethink—corporate law. “In 1985, coincidentally the same year I entered law school, the Delaware Supreme Court declared in the Revlon rule that the job of the directors was to maximize financial returns for shareholders. That was the first time they had said it,” Alexander says.
Thus, Alexander’s successful 23-year career as a Delaware corporate lawyer was set in motion. He was a leading lawyer engaged in upholding the Milton-Friedman-theory-based law of the land: Place shareholder primacy above all else, meaning maximize financial returns to shareholders no matter the long-term effects on the planet, communities or even the marketplace itself. Then, in 2011, his career was forever changed.
He was presented with the idea of a benefit corporation . Fast-forward to today, and Alexander has helped draft the Delaware benefit corporation legislation (passed in 2013); has served as the Head of Legal Policy at B Lab since 2015; and in 2017, penned the book Benefit Corporation Law and Governance: Pursuing Profit With Purpose (officially released this week).
What changed Alexander’s mind, what has he learned along his journey, and what does he see coming in future years? B Lab co-founder Jay Coen Gilbert asked him. Hear what Alexander has to say in this interview on Forbes.
Startups to Help With the Paperwork
FreeWill was launched to make it easier for people to create high-quality legal wills free, with the aim of making charitable giving within wills easier and much, much more common. FreeWill is funded by Highland Capital Partners and Dorm Room Fund (run by First Round Capital), and was founded by Patrick Schmitt (former Head of Innovation at B Corp Change.org), Jennifer Xia and Helen Zou. The founders and funders have an audacious goal: The company aims to raise $1 trillion globally for nonprofit organizations by making it easier for people to make charitable donations through their wills.
Co-founders Schmitt and Xia share in SSIR : “By providing free, intuitive tools to help people make legal wills (or document their wishes and find a nearby attorney), we have generated nearly $30 million in new bequests in less than six months.”
To secure their long-term vision through long-term growth and eventual leadership changes, FreeWill wanted to incorporate as a benefit corporation. Earlier this year, Clerky partnered with B Lab to create online tools for completing and filing the legal paperwork needed to become a benefit corp. Similar to FreeWill’s belief that more people will engage with planned giving if the process of filing a will is cheaper (even free) and easier, B Lab and Clerky believe that more startups will become benefit corps with the introduction of tools that make the process simpler and cheaper (incorporation on Clerky costs $99, plus official filing fees).
Learn more about this collaboration , which makes doing good doubly easier.
And Now, Publicly Available
Clerky isn’t alone: Cooley LLP has created a publicly available incorporation package for Delaware public benefit corporations (PBC), available through the firm’s Cooley GO docs generator.
“Cooley has seen a surge of interest among clients and investors in the PBC as there is a growing focus on business creating a positive impact on society,” shares Cooley associate Jen Barnett. “To our knowledge, there is no publicly available set of incorporation documents for Delaware PBCs. We believe making the PBC incorporation package publicly available will add efficiency to the early stage, social-impact startup ecosystem and provide the opportunity for entrepreneurs to reflect on whether the public benefit corporation may be appropriate for their business.”
The Cooley GO Docs Public Benefit Incorporation Package Generator allows a business to generate any or all of the necessary incorporation docs, including bylaws, certificate of incorporation, and restricted stock purchase agreement. Find out more about this package —and learn five ways to tell if benefit corp structure is right for your company—in this piece by Barnett.