B-Corp (Benefit Corporation): The Nugget

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In a recent conversation with Jim Johnson, the topic of co-op structure came up and we chatted briefly about the new Benefit Corporation, a new form of corporate entity available by statute in at least seven states: California, Hawaii, Maryland, New Jersey, New York, Vermont, and Virginia. The enabling legislation is moving along in several other states already: Michigan North Carolina, Pennsylvania, and Washington, D.C. Jim reflected some "sour grapes" from the co-op movement. The criticism was that, although the B-Corp is an improvement, it's not as good as a truly democratic co-operative enterprise.

That's true.

But, it is a step, one of many. And it has benefits for co-ops currently structured as traditional C-Corporations, particularly those with non-member equity holders. The problem is that U.S. law makes the interests of Capital (investors) primary and the other possible interests of the Corporation secondary. The courts can therefore support various hostile actions by disgruntled Capital who want to pressure the Corporation for better returns on invested Capital. The Benefit Corporation lets the owners of the Corporation decide that they will subordinate the interests of Capital, make them less important than other interests, spelled out in appropriate paperwork and bylaws.

It would therefore seem that a democratically constituted co-operative would want to be a benefit corporation and to add that statement of goals and values to their already powerful co-operator democracy. It would also seem that a traditional C Corporation converting to B Corp status is at least taking a step away from the belly of the Capitalist beast.

Just my three drachma.

Visions & Models: