New Florida Law Allows for "Social Purpose Corporations"
Wouldn't it be nice if folks who wanted to form a Florida corporation to do good (it could happen) and turn a profit were able to incorporate without worrying about being sued for putting the good ahead of the profit?
This revolutionary idea is contained in a bill that passed both houses of the Florida Legislature (unanimously!) in the session that just ended, a bill whose chief originator was Sen. Jeff Clemens and whose House sponsor was Rep. Patrick Rooney Jr., both of Palm Beach County. The law creates two near-identical kinds of entities: benefit corporations and social purpose corporations.
Clemens has been pushing the idea for some time now and -- like a few other Democratic Party ideas for Florida: in-state tuition for immigrant kids, medical marijuana -- enough Republicans finally saw the light (or the polls) that the Legislature acted on it. "It's a better model," Clemens told New Times. "Enrich the bottom line but enrich the community too."
Florida Panthers v Vancouver Canucks
TicketsSat., Dec. 10, 7:00pm
UberTAILGATE: Hard Rock Stadium Dolphins vs. Cardinals
TicketsSun., Dec. 11, 12:00pm
LUXURY SEATING: Miami Dolphins v Arizona Cardinals
TicketsSun., Dec. 11, 1:00pm
Miami Dolphins vs. Arizona Cardinals
TicketsSun., Dec. 11, 1:00pm
Traditionally, for-profit corporations in Florida and elsewhere have been bound by law to place profit first and foremost and were vulnerable to shareholder lawsuits if they failed to do otherwise. In 1970, libertarian economics guru Milton Friedman argued that to sacrifice shekels for the common good was "pure and unadulterated socialism."
Times have changed, though, and social purpose corporation laws have been enacted in 17 states since 2010, chiefly in the Northeast and on the Pacific Coast. The trend is in tune with cultural shifts that -- however superficial they may be -- are most pronounced in the high-tech community, home to a certain amount of New Age thinking. ("Don't Be Evil," proclaims Google's motto.)
"Three states had enacted this sort of law when I first introduced it," Clemens said. "In addition to everything else, we need to be equipped to compete."
The legislation defines "public benefit" as:
a positive effect, or the minimization of negative effects, taken as a whole, on the environment or on one or more categories of persons or entities, other than shareholders in their capacity as shareholders, of an artistic, charitable, economic, educational, cultural, literary, religious, social, ecological, or scientific nature, from the business and operations of a social purpose
Providing low-income or underserved individuals or communities with beneficial products or services. Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business. Protecting or restoring the environment. Improving human health. Promoting the arts, sciences, or advancement of knowledge.
The law includes measures to hold the new-style corporations to account, including enhanced transparency and third-part verification. No special tax exemptions are involved, so there is no fiscal impact.
In Washington state, where social purpose corporations law was passed two years ago, 89 such corporations are now in business, including Get Your Shit Together, a "life and death planning" firm; Starvation Alley Farms, "supporting farmer livelihood and sustainable growing;" and Jefferson County Cannabis (need you ask?).
The new law still needs Rick Scott's signature, but Clemens said that appears to be a sure thing. "This is the first measure I've ever proposed that had the support of both Associated Industries and the Chamber of Commerce," he said.
Clemens doesn't expect "a flood" of new businesses to spring up under the law. "It represents a slow change in our view of the purpose of a corporation," he said. "We need to get away from the idea that it's just about the money."
Fire Ant -- an invasive species, tinged bright red, with an annoying, sometimes-fatal sting -- covers South Florida news and culture. Got feedback or a tip? Contact Fire.Ant@BrowardPalmBeach.com.
Get the ICYMI: Today's Top Stories Newsletter
Catch up on the day's news and stay informed with our daily digest of the most popular news, music, food and arts stories in Broward / Palm Beach, delivered to your inbox Monday through Friday.