LANSING — Four lawmakers in the Michigan House of Representatives introduced benefit corporation legislation yesterday to bring new entrepreneurship and investment opportunities to Michigan. A benefit corporation, also known as a B-corp, is a type of for-profit corporation that focuses on positive social and environmental impact in addition to more traditional goals, such a maximizing shareholder profits.
Members of the Talent and Place Legislative Caucus, state Representatives Hank Vaupel (R-Fowlerville), Christine Greig (D-Farmington Hills), David LaGrand (D-Grand Rapids) and Joseph Graves (R-Argentine Township) sponsored the bipartisan package of four bills, House Bills 5710-5713.
“Benefit corporations are an innovative tool to attract new business and entrepreneurship to Michigan,” Talent and Place Caucus Chairman Rep. Vaupel said. “They provide an opportunity for businesses to use the markets, rather than traditional charity, to advance their philanthropic missions.”
“B-corps have proved to be talent magnets in the 32 states plus the District of Columbia where B-corp laws are already in effect,” Rep. Greig said. “Employees, especially women and millennials, like to work for companies that combine their social and environment goals with potential profitability.”
“Since traditional corporations may have an obligation to maximize profits for their shareholders above other purposes, having the legal designation as a benefit corporation provides protection from that liability,” stated Nicole Mangis, founder of Launch Exchange Detroit and board member of the Social Enterprise Alliance Detroit Regional Chapter.
There are currently more than 3,000 benefit corporations registered across the country.
“The B-corp concept has really taken off in Grand Rapids, where several businesses have B-corp certification,” Rep. LaGrand said. “But the concern I hear most from these constituents is that their business plans could be vulnerable if they were to seek capital investment or public offerings as their companies grow. Having the certification alone does not provide the security and protections that businesses need.”
Corporations with full legal B-corp status are more easily able to access capital financing, partner with foundations for program-related investments, and to secure venture capital.
Rob Fowler, President and CEO of Small Business Association of Michigan, who serves on the Sense of Place Council, an advisory group to the Talent and Place Caucus, described the legislation as “smart public policy that will provide a stable economic platform for those businesses, their board of directors and their shareholders, who choose to add a social impact purpose to their articles of incorporation.”
The U.S. Social Investment Forum reports that $6.57 trillion is currently invested in some form of Societal Impact Investing in the U.S.