What do for-profit businesses need to do if they are seeking to perform the socially conscious work of a non-profit, as well?
In light of the fact that some for-profit companies are looking for ways to do charitable work while avoiding the limitations imposed by the potential of shareholder derivative lawsuits for failing to maximize profits, new hybrid forms of corporations have been established. Two examples of the new forms of hybrid entities are “benefit corporation” and “L3C” entities.
Benefit corporations, which are recognized in New Jersey, New York, Maryland, California, Hawaii, Vermont and Virginia, must have a dual purpose to perform a public benefit and create value for their stakeholders. L3Cs (low-profit limited liability companies) have the same liability protection and tax treatment as an LLC but must have social benefit as their primary purpose and profit as the secondary purpose.
It remains to be seen whether this new development in the law will take the business community in a more socially conscious direction.