The Minneapolis attorney explains the push for helping businesses with a social purpose
There's an increasing number of entrepreneurs in today's market that are creating businesses with a social purpose. Specializing in corporate finance, with an emphasis on tax-exempt organizations and emerging businesses, as well as cooperatives and other similar businesses, Fredrikson & Byron attorney Kimberly Lowe is part of a team that's working to pass a statute for the formation of these types of businesses — or benefit corporations. We sat down and talked with Lowe about benefit corporations, and what she's doing to help entrepreneurs with a social purpose.
What are benefit corporations and how do they differ from social enterprises?
A benefit corporation is a for-profit entity that has a social mission or purpose. Comparatively, a social enterprise is a nonprofit that has revenue generating, business-like activity to support its existence or programming. The benefit corporation is sort of a cousin to the social enterprise.
What is happening in the state of Minnesota to promote the formation of benefit corporations?
For the last year, I've been chairing a task force that's drafting a law for the formation of benefit corporations. There are 24 other states that have cast benefit corporation statues already, and we are working on the one in Minnesota. The businesses that want to be benefit corporations are committing to a for-profit activity, and part of the business will have social purpose. In other words, it's more of a socially responsible or conscious business. The statute for Minnesota is finished and going to the legislature now. We want to create something that will allow entrepreneurs to form these businesses themselves without engaging legal counsel.
If the statute passes, what is the advantage for entrepreneurs creating benefit corporations?
Many businesses already have value propositions like this. The ability to form a benefit corporation says that [the business] is committed to both profit and a social purpose of some sort. It creates an entity or type of business that allows it to be obligated to function that way — and a lot of people like that concept. In some ways, it's saying, "we're in this all the way," and it's not just a way to market. The statute will allow our business owners in Minnesota to form that type of business, and inform the market and investors about what their value proposition is.
Photo of Kimberly Lowe via Fredrikson & Byron