Benefit corporations are new legal structures that we should know about. It is one of several new legal structures to emerge alongside the rise of “social entrepreneurship” in recent years. The interesting thing about these structures is that they shield the board from investor lawsuits. In a regular corporation, any actions other than those taken with the purpose of maximizing shareholder value could be liable.
Here’s an excerpt from the article:
What is a ‘benefit corporation’?
A company whose charter allows the board to consider social or environmental objectives ahead of profits.
What is the advantage?
Protection from investor allegations of not maximizing shareholder value.
Does that make it a nonprofit?
No, a benefit corporation isn’t a nonprofit nor is it tax exempt.
How many states allow it? Seven. With bills introduced in four additional states.
What are the downsides? ‘For an investor, this is a terrible idea’ due to lack of accountability, says Charles Elson, who teaches corporate governance at the University of Delaware. If management makes a bad decision, ‘there’s very little you can do about it as a shareholder.’
WSJ outline some innovative legal structures designed for entrepreneurs who are driven as much by mission as money. The cost of using one of these new legal structures will vary depending on lawyer fees, but generally those fees shouldn’t exceed more than $10,000 for a start-up with fewer than 10 employees.
Here’s an overview:
Ideal for: companies that want to blend traditional capital with “philanthropic” capital, such as from foundations
Available to start-ups in: Vermont, Michigan, Wyoming, Utah, Illinois, North Carolina, Louisiana, Maine and soon in Rhode Island.
Ideal for: companies that want to create a measurable positive impact while and providing greater transparency to the public
Available to start-ups in: Maryland, Vermont, Virginia, New Jersey, Hawaii, California and soon New York
Ideal for: companies seeking to do good on their own terms
Available to start-ups in: California.
1% of Nothing is a startup organization that sits on the intersection of technology and charitable giving. Its purpose is to inspire founders of early-stage companies (tech startups) to donate 1% of his/her assets to a cause of their choice.
The idea is that the promise of new companies to 1% when theequity may be worth nothing, but if they are acquired, that 1% becomes a major donation. Starting today, all companies and employees alike can make a commitment to donate 1% of its assets. 1% of a startup may not be worth much, but in essence, it’s like a lottery ticket in the case where the startup find a successful exit.
Google just announced Google for Nonprofits, which is a this program that bundles together a bunch of useful Google products and services:
Instead of applying to each Google product individually, you can sign up through a one-stop shop application process. If approved, you can access our suite of product offerings designed for nonprofits: up to $10,000 a month in advertising on Google AdWords to reach more donors, free or discounted Google Apps to cut IT costs and operate more efficiently, and premium features for YouTube and our mapping technologies to raise awareness of your cause. We’ve also developed other online resources such as educational videos, case studies and better ways for you to connect with other nonprofits.
Here’s the link to the website, and a link to the blog post introducing this new service.
Here are the results for Chrome for a Cause:
Did you join in Chrome for a Cause? The $1 million tab-heavy campaign has come and gone (with a 250 tab per day maximum, much to our click-frenzied dismay), and Google’s tallied up the final scores. Of the nearly 60.6 million tabs “donated”, 16.2m went for vaccinations, 14.8m tabs for trees, 14.1m for water… 8.6m for books and 6.8m for shelter.
Here’s another tech startup that makes donating to charity much easier.
SwipeGood is the company and their process is pretty straight forward. The way it works is that your credit card transactions are rounded to the nearest dollar and the actual difference from the rounding (less than a dollar) is given to a charity of your choice.
Currently, that list is small, but it includes popular choices such as charity:water and DonorsChoose.org.
On average, SwipeGood users end up donating about $20 each per month. The “spare change” is totaled and charged on a monthly basis. Of those amounts, SwipeGood pockets around 5% — a relatively small amount that serves to cover their operating expenses.
Google is marketing its web browser, Chrome, with an extension where your web surfing and usage of the browser can support a list of causes. The Google Chrome blog does an excellent job in simply describing the campaign:
Starting today, we invite you to support five worthy causes by counting and “donating” the tabs you open in Chrome.
Everyone’s total tabs will determine a charitable donation made on behalf of the Chrome community, up to one million dollars. Here’s what your tabs can do:
10 tabs = 1 tree planted
10 tabs = 1 book published and donated
25 tabs = 1 vaccination treatment provided
100 tabs = 1 square foot of shelter built
200 tabs = 1 person’s clean water for a year
To find out more about this effort and the organizations we’re partnering with, visit google.com/chrome/intl/en/p/cause/.
Here are the rules:
- Get the Chrome for a Cause extension
- Browse the web with Chrome between December 15 – 19
- At the end of each day, you’ll be prompted to click on the extension to submit your tabs
- Choose which charity you’d like to support with that day’s tabs — you can always support the same charity, or pick a different one each day
One of the founders of Facebook is working on a new startup that’s trying to create a social network with a focus on charities called Jumo, which just went into beta today:
Jumo aims to help you discover what causes matter to you by allowing you to follow specific charities as well as keep tabs on what your friends are following. Seems simple enough.
On Jumo each cause/charity has its own relevant news stream, sort of like what would happen if the Facebook app, “Causes,” coincidentally started by Sean Parker and former Zuckerberg roommate Joe Green, had its own social network that allowed you to actually “friend” charities.
Here’s an informative piece on the technologies, economics, and pitfalls of using text message based charitable donations:
Texted donations currently are limited to $5 and $10 increments and capped by mobile phone companies at five a month from a single phone.
But that’s not the only downside. There are huge costs to setting up a short code number and then you have to spend even more money on spreading the word about it:
Thus far, nonprofits have also had to share the five-digit codes, called short codes, which means relying on donors to remember a particular key word like “Haiti” or “aid” to ensure that gifts go to the intended charity. Mr. Eberhard said short codes were expensive, about $12,000 each, and so companies can offer only a few to their clients
Perhaps most important, many nonprofits simply cannot afford the kind of promotional campaign needed to publicize mobile giving efforts, nor do they benefit from the kind of exposure that a round-the-clock, disaster-driven news event provides.