Alternative Corporate Structures for Socially Conscious Startups

These entities, designed for charitable, for-profit entities or other, for-profit entities that operate to help the greater good, became popular in the early 2010s. The infographic took a deeper look into the basics of each, shared below:

(From the B Corp Website) B Corps are for-profit companies certified by the non-profit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. Today, there is a growing community of more than 1,600 Certified B Corps from 42 countries and over 120 industries working together toward one unifying goal: to redefine success in business.

Currently, according to BenefitCorp.net, 31 states—Hawaii, Oregon, California, Nevada, Idaho, Montana, Utah, Colorado, Nebraska, Minnesota, Arkansas, Louisiana, Illinois, Indiana, Tennessee, Vermont, New Hampshire, Massachusetts, New York, New Jersey, Pennsylvania, Delaware, Connecticut, Rhode Island, Maryland, West Virginia, Virginia, South Carolina, Washington, D.C. and Florida—have passed legislation allowing for incorporation using the title of Benefit Corporation, and 7 states (Alaska, Oklahoma, Iowa, Michigan, Ohio, Kentucky, Georgia) are currently working to get legislation passed.

For more information on what it means to be a B Corp, see articles from Bcorporation.net:

- Performance Requirements for B Corps
- Certified B Corps and Benefit Corporations
- Becoming a B Corp
- Current List of Benefit Corporation State Laws

According to Nolo, anL3C is a new variation of the limited liability company (LLC). It is also known as a low-profit, limited liability company. What sets it apart from regular LLCs and other for-profit entities (i.e. corporations, partnership, etc.) is its ability to pursue charitable, educational or socially beneficial objectives as its primary motive.

Although the L3C can also pursue profit-oriented objectives, they are secondary to its social goals. The L3C is a hybrid entity taking on the flexible characteristics of an LLC in connection with a low-profit, socially beneficial objective. There is considerable controversy on their usefulness and whether or not they will endure or be used as an alternative way to achieve social progress.

States, territories, and Native American Tribes allowing for incorporation as an L3C are shared below, as well as effective dates and current tallies of active L3Cs organized as of June 2016:

State/Territory/Tribe	Effective Date	Current Number of Active L3Cs
Vermont	April 2008: 11 V.S.A. § 3001(23)	169
Michigan	January 2009: MCL 450.4102(m)	381
Crow Indian Nation of Montana	January 2009: BILL NO. CLB09·02
Wyoming	February 2009: Title 17, Ch. 15	48
Utah	March 2009: Title 48, Ch.02c	82
Oglala Sioux Tribe	July 2009: Ordinance 09-23	1
Illinois	January 2010: 805 ILCS 180/1-5, 1-10, and 15-5, 1-26.	223
North Carolina	August 2010 (S.L. 2010-187 (= H769)), Repealed January 2014, allowing previously registered operating L3Cs to continue operating under L3C label.	93
Louisiana	August 2010: HB 1421/Act 417	291
Maine	July 2011: H-819	72
Rhode Island	July 2012: H.5279	9
Navajo Indian Nation	December 2014: CD-63-14	1
Puerto Rico	Approved December 2015: S.B. 979

See the entire list of registered L3Cs on InterSector Partners, L3C.

A flexible purpose corporation (a/k/a social purpose corporation or SPC) is a class of corporation in California lacking a profit motive when pursuing a social benefit defined in its charter.[citation needed] A Flexible Purpose Corporation differs from a B Corp in that it targets for-profit entities seeking traditional capital market investment.

If you are looking to incorporate as a traditional legal entity or one of the newer types of businesses like the ones listed above, there are many issues and variables that should be considered before determining which corporate structure is appropriate. Consultation from an attorney is recommended.

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