Social Entrepreneurs Lobby Lawmakers For New Business Structure
Is it possible for a business to make a profit and benefit society at the same time? A group of entrepreneurs at the Social Enterprise Trust (reSET) offices in Hartford believes it is, which is why they’re pushing the state to allow for the creation of what’s called a Benefit Corporation, or “b-corp.”
At noon Tuesday, a group of entrepreneurs will gather at the reSET offices at 99 Pratt Street in Hartford and march to the state Capitol at 1 p.m. Then, at 2 p.m. the legislature’s Commerce Committee will hold a public hearing on the b-corp issue with an eye toward introducing legislation in February.
A bill that would have created a b-corp legal structure for social enterprises passed the House 128-12 last year, but failed to get called in the Senate.
This year the entrepreneurs at reSET in Hartford hope the second time’s the charm.
A b-corp is a for-profit corporation that seeks to earn profits and achieve social goals. The first b-corps were established in 2007 without b-corp legislation. There are currently 759 b-corps in 27 countries, working in about 60 industries, according to a July 1, 2013 legislative research report. Some of those companies include Cabots Creamery Cooperative, King Arthur Flour, Seventh Generation Household & Personal Care Products, Patagonia Clothing, and Freelancers Insurance.
But there may be plenty more if Connecticut entrepreneurs get a chance to use the certification.
James Woulfe, a public policy and impact investing specialist at reSET, said there are downsides for social enterprise companies that choose to become an s-corp or an LLC. He said allowing companies to use the b-corp designation would help create jobs and give entrepreneurs an opportunity to stay in Connecticut.
One company Woulfe knows that could benefit from a b-corp is Combat2Career. The company takes veterans and helps transition them from the military to civilian careers by matching them with higher education programs and civilian employers.
Woulfe said there are a lot of nonprofit organizations trying to do the same thing in the same space, so instead of competing with them for money, Combat2Career could be partnering with them to bring about positive change. With a b-corp, Combat2Career can still receive investment dollars and the founder can still own a piece of the company and help create more jobs, Woulfe said.
Already 19 states and Washington, D.C. allow similar business designations. Woulfe said there’s a large body of law already established for these types of corporations.
Sen. Gary LeBeau, D-East Windsor, couldn’t agree more.
He said they decided to hold the hearing Tuesday to “be sure people know what it is, and what it is not.”
The b-corp allows businesses to earn a profit and operate a social enterprise, which sometimes means foregoing a profit.
“Right now there’s no mechanism that allows people to have a dual purpose,” LeBeau said Monday.
In order to keep the young entrepreneurs in the state of Connecticut creating, this type of legal structure is crucial, LeBeau said.
“They don’t just want to make money, they want to do something good with their lives to benefit everybody,” he added.
The hearing will be held at 2 p.m. in Room 2C of the Legislative Office Building. For more information about the walk visit socialenterprisetrust.org.