Legislation would allow corporations the opportunity to pursue philanthropic goals as part of their business

 Representatives Vaupel & Greig hold panel discussion on proposed Benefits Corporations

  Doing too much of a good thing, such as buying materials exclusively from local vendors or earmarking part of the profits for a social cause, can get a corporation in trouble with its shareholders.

  With current law, an incorporated company is supposed to maximize its profits.  While that doesn’t preclude a company from doing such things as sponsoring community events or awarding scholarships to students, if a shareholder feels such activities are hurting the bottom line too much, they can go to court. 

  Under proposed legislation in the Michigan House of Representatives, a business with such philanthropic goals could file papers with the state as a Benefits Corporation (B-corps) and make them part of their business mission. It would also protect them from lawsuits from shareholders seeking a greater profit.

   Supporters who favor offering this option for a business feel it will appeal to entrepreneurs who would like their business to serve a broader purpose than maximizing profits and that such companies would appeal to younger workers looking for “meaningful” careers, investors wanting their money to assist such efforts, and customers wishing to be supportive.

    To better explain this concept and the proposed legislation, State Rep. Hank Vaupel (R-Fowlerville) and State Rep. Christine Greig (D-Farmington Hills) hosted an informational panel forum on Sept. 23 at Cleary College in Howell.

    “The House Talent and Place Caucus introduced this bipartisan legislation to recognize the status of benefit corporations in our state and allow companies to opt to prioritize their societal mission within their business model,” Rep. Vaupel said. “I hear from B-corps how their status as mission-driven businesses helps them grow their businesses by attracting talented employees, investors and customers.”

    “B-corps bring together a business’ desire to provide a service or product to a community and a desire to serve that community at the same time,” said Rep. Greig. “I’m enthusiastic about bringing legal recognition to the B-corp status, to encourage more businesses to take advantage of such opportunities.”

    Also on the panel with the two lawmakers were Rob Fowler, president of the Small Business Association of Michigan and Nichole Mangis, of Launch Exchange Detroit, who serves on the board of the Detroit Chapter of the Social Enterprise Alliance in Michigan. Fowler spoke on the business impact, while Mangis explained the need for the B-corps bills. She also explained how business currently obtain certification at a Benefits Corporation—a process that is industry oriented and does not involved the government.

   The discussion began with remarks by Jason Boyers, the president of Cleary University, who welcomed the local businesses leaders, social entrepreneurs and students who were present.

   “I’m thrilled about this conversation because I’m familiar with B-corps from when I was in Raleigh, North Carolina,” he said. “B-corps recognizes that benefitting society and shareholders are not opposing goals. We, here at  Cleary, really believe that business creates communities. Also, the younger generation who is looking for meaningful work. Companies that want to attract this new talent need to recognize this aspiration.”

   Vaupel noted that business needs talent, young talent is looking for place, which includes lifestyle, and business also a place to operate. “It’s a reinforcing circle,” he said, adding “A survey indicated that 88 percent of the MBA graduates said they would work for less if it was with a business that had a social mission they supported. This desire to do meaningful work is especially true with the millennial generation. Giving business the option of being a Benefits Corporation is another option in developing, retaining, and attracting talent.”

   Greig, in her comments, said that a bi-partisan group of representatives has been working on the proposed legislation for over a year, but added that the idea of B-Corps has been discussed in the legislature during previous terms. “We’ve looking at what other states have done with their legislation “A four-bill package has been introduced by two Republicans and two Democrats.” 

  Fowler said the idea that “companies do well by doing good is not new. The question of ‘what is new?’ and ‘why now’ is this growing realization that place (or a community) needs business, business needs talent, and talents wants an attractive place to live and work. Communities don’t always understand what business needs. If they didn’t, they’d work at paying more attention. But often business doesn’t know what talent wants.”

    Fowler said that retaining talent is a concern and priority with many companies, adding that “It’s not just skilled trades, but jobs across the board.”

   He said that social entrepreneurship can be an option for a company along with making a profit. “What we’re finding with millennials is that want to make widgets that change the world,” he added. “With the legal recognition of B-corp status from the Michigan Legislature, we can offer another arrow in the economic quiver for business growth in Michigan.”

    The bills would:

    --Create a legal status for B-corps — House Bill 5710 from Rep. Christine Greig (D-Farmington Hills)

    --Require annual benefit reports from B-corps — HB 5711 from Rep. Hank Vaupel (R-Fowlerville)

   --Update the Business Corporation Act to include B-corps    HB 5712 from Rep. David LaGrand (D-Grand Rapids)

    --Update the Business Corporation Act to require annual benefit reports —HB 5713 from Rep. Joseph Graves (R-Argentine Township)

There are currently 15 certified B-corps in Michigan, including the most recently created Higher Grounds Trading Company in Traverse City. While companies in Michigan can go through a certification process to become a B-corp, the status isn’t legally recognized, and businesses could still be found at fault for engaging in philanthropy rather than existing solely to make a profit.

      “Thirty two other states have already adopted B-corp legislation, and I’m hopeful that the Legislature will take quick action on these bills,” Mangis said. She added that while a company can obtain certification regardless of its legal status, being able to file as a benefits corporation provides legal protection and it also “maximizes stakeholder value, not just shareholder value.”

   Vaupel pointed out that this legislation is aimed at companies with shareholders who might wish to change their status or start-ups who would like to take this route. “A privately-owned company can do whatever they want,” he said. “And if a group wants to be a non-profit, they can do that. This would be another option.”