State passes b-corps legislation
By: Dirk Perrefort contributed reporting.
Social entrepreneurs in Connecticut will soon have a way to merge good deeds with corporate-style capitalism.
The state legislature this week passed a bill that enables the establishment of benefit corporations. Also known as b-corps, such companies take on the mission of helping society or the environment while also carrying out the traditional corporate goal of maximizing profits.
The law, which will go into effect after it is signed in the fall, makes Connecticut the 26th state in the country to recognize b-corps as a corporate structure. Neighboring and nearby states like New York, Massachusetts, Pennsylvania and New Jersey have all enacted b-corps legislation.
Among those who welcomed the news of the bill’s passage on Monday was Bryan Nurnberger, the founder and president of Simply Smiles, a Norwalk-based nonprofit that sells fair-trade coffee to help indigenous coffee farmers in Oaxaca, Mexico.
30,000 meals
Upon establishing the coffee-selling arm of his business, he elected to incorporate the company in New York. To operate in Connecticut, he said he had to apply for a special exception from the state.
Nurnberger said he plans to transfer his incorporation to Connecticut as soon as the law takes hold.
“It’s simplicity for us,” he said, who spoke on the phone from an Indian reservation in South Dakota.
Simply Smiles started selling coffee in the fall of 2013. To date, its sales have resulted in 30,000 meals, he said.
Danbury business lawyer Hillel Goldman, who represents Nurnberger, said they’ll likely be the first b-corp to incorporate in the state when the law becomes active in October.
“This idea is one that’s really been pushed by entrepreneurs who want to make a difference,” said Goldman, who testified in favor of the legislation for the Connecticut Bar Association‘s business section. “Unlike traditional corporations where the fiduciary duty of the officers and directors is to maximize shareholder profit, the fiduciary duty for officers and directors in a benefit corporation is to maximize the dollars going to the organization’s social mission.”
`Legacy preservation’
While it may not have been a trailblazer on b-corps, Connecticut is being touted as the first state to introduce of a so-called “legacy preservation” option. The clause gives b-corps that have been in business at least two years the choice of locking in their social mission in perpetuity.
In a press release, Kate Emery, the founder and CEO of Social Enterprise Trust, also known as reSET, called the passage of the bill, a “significant, happy milestone.”
Monday’s vote marked the third attempt by b-corp advocates to get the bill passed.
reSET had worked with B-Lab, a national group that promotes b-corp legislation and the Connecticut Bar Association to draft the bill.
According to reSET, interest from those considering forming b-corps is high. The nonprofit said it has communicated with more than 100 individuals about the process.
“Now our work can turn toward creating a vibrant community of social entrepreneurs in the state using the power of the free market,” Emery said, in a statement, “to help solve some of our world’s most pressing problems.”
For social entrepreneurs like Nurnberger, the state’s legacy provision is an especially reassuring feature of the law.
“It protects our intentions,” Nurnberger said. “It will make sure that Simply Smiles operates the way I envisioned it operating forever.”
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Social Enterprise Trust, Inc is a not-for-profit organization recognized as tax-exempt under Internal Revenue Code section 501 (c)(3). .