NEW ORLEANS – On Wednesday, September 28, 2016, the New Orleans Business Alliance (NOLABA), LifeCity, Fishman Haygood, L.L.P. and Propeller hosted a group of lawyers, business owners and entrepreneurs for an educational workshop on “benefit corporations,” an emerging class of businesses that are redefining corporate purpose to consider society and the environment alongside profit for shareholders.
In New Orleans, where socially-conscious business ventures abound, the push towards benefit corporations has the potential to reimagine the gray area between non-profit and for-profit entities as a cohesive “forbenefit” sector—the pioneers of a sustainable business model for the 21st Century that use private sector strategies to solve social and environmental challenges.
In 2012, Louisiana became the ninth state to grant official legal designation to benefit corporations. The law states that unlike traditional C-Corporations, benefit corporations “must have a stated purpose to create a ‘general public benefit’ memorialized in its articles of incorporation.”
Some of the benefits of this filing status are that it “protects mission through capital raises and leadership changes, creates more flexibility when evaluating potential sale and liquidity options, and prepares businesses to lead a mission-driven life post-IPO” according to B Lab’s resource center benefitcorp.net. In years since 2012, the movement towards benefit corporations built national momentum, extending to 30 U.S. states.
Since this law was passed in Louisiana, however, only two companies have become certified and only 10 have registered with the new legal designation. Participants at the event questioned how start-ups could take advantage of the designation, especially as an LLC. B Lab explained that LLCs can simply incorporate language into their legal designation, as opposed to adopting the benefit corporation or L3C status (the later of which has mixed reviews and appears to be losing traction in other states).
In order to help entrepreneurs better understand Louisiana’s benefit corporation statute, NOLABA invited B Lab to give a presentation along local partners driving a similar mission in our region. B Lab is an international non-profit that provides third-party certification to businesses seeking to demonstrate leadership in social and environmental impact. B Lab discussed why companies such as Etsy, Patagonia and Plum Organics are eager to become “Certified B Corps.” Impact certifications, like B Corp, not only build credibility but are also a popular tool to attract and engage employees, especially millennials, who are much more likely to buy sustainable or socially-responsible products.
"We were very impressed by the broad participation in our first New Orleans event for start-ups,” said Rick Alexander, Head of Legal Policy at B Lab. “This is clearly a community that wants to crack the code for using business as a force for solving social issues. Louisianans' are poised to take their place in this movement as early stage ventures see the power of developing businesses with broad purposes, that work to create value for all stakeholders."
“Our goal at the New Orleans Business Alliance is to create a diverse, sustainable and equitable New Orleans economy,” said Alejandra Guzman, Director of Special Projects at NOLABA. “Benefit corporations, those focused on the greater good, add to the overall diversity of businesses within the New Orleans economy and provide a new model for doing business in New Orleans, which offers new opportunities for our residents.”
Providing insights into the local context was Elizabeth Shephard, CEO of LifeCity, a NOLA-based firm that makes social and environmental impact profitable for business. LifeCity offers a locally-based impact management tool for companies interested in measuring and marketing their impact ongoing. Such tools alongside new legal designations support the growth of for-benefits and the impact economy, a focus of LifeCity’s economic development initiative Value Louisiana funded by the Greater New Orleans Foundation.
Fishman Haygood, L.L.P. sponsored the event and is a law firm offering pro bono services to clients looking to set up a benefit corporation or make the transition to one. Businesses interested in more support and resources are encouraged to contact LifeCity at email@example.com.