It happens often that a business just wants to do the right thing. Perhaps you want to use environmentally friendly resources and want to manufacture things or provide services in the United States. Perhaps you want to promote the arts or science by establishing some type of program designed to do such a thing. Perhaps you believe that business judgment ought to be guided by faith and the business should serve a higher purpose. These are excellent ambitions but, ultimately, costly, and shareholders are loathe to allow a for-profit business to perform any action that would erode profits. At best, the business has to deal with a vociferous dissent on these issues and at worst, derivative suits erupt. In short, philanthropy is simply bad for business. Until now.
Joining a recent trend among the states, Florida has become the 27th state to allow the formation of benefit corporations (a company pursuing broad public benefits goals) and social purpose corporations (a company pursuing a specific public benefit). That is, caught between a rock and a hard place, a for-profit business making an election to state a beneficial purpose under the new statutes can now decide to engage in philanthropic efforts and provide societal benefits without being worried that their business judgment will be called into question. The definition of what constitutes a “benefit” with respect to the two new types of corporations differs slightly but, generally, businesses opting to organize under the new statutes will be required to state a purpose for the business to have a positive effect on society and/or the environment according to certain recognized standards.
Lying squarely in the middle of for-profit and non-profit corporations, benefit corporations and social purpose corporations are for-profit, socially responsible business entities. In particular, the setup is designed to permit the business to maximize profits but also shield directors and officers from shareholder claims related to making decisions with respect to socially responsible goals (i.e., unrelated to the maximization of profits). To be clear, the new statutes require greater accountability and reporting to state officials and shareholders but, ultimately, the law promotes and endorses the ability of businesses to undertake significant social initiatives.