Monday, February 6, 2012

What do you Get When you Cross a Corporation with a Nonprofit?

The benefit corporation is not yet recognized in Minnesota but seven states have adopted legislation allowing “B Corps” to create benefits for both society and its stakeholders. This is in response to investors who want to balance money making with social purpose.

It allows founders of companies and CEOs to take actions that help society, even if they don’t maximize profits. Under current law in most states, if a corporation did something that didn’t maximize profits, the shareholders could sue the company.

In the January 13, 2012, issue of Forbes online, an article entitled The Rise of the Charitable For Profit Entity, notes that “in the classic model, these social purposes had to be pursued in a non-profit corporation. But some regulations on tax-exempt non-profits such as limitations on political and lobbying activities, attracting and raising investment capital in addition to taxes on unrelated business income have made it a less desirable business entity for some.”

Myrna Meadows, NRS, International Falls

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