We have all heard CEOs, even as high-ranking as Bill Gates, discuss plans being dictated and stymied by stockholder pressures - We all know of myriad situations in which they have felt or actually been forced to put those shorter term gains ahead of a company, its vision, its employees, its customers, and its interactions with and considerations of its impact on the world at large.
It is true that once a company issues stocks there is and should be a fiduciary responsibility to stockholders. However, this responsibility to should not equate to the company being controlled by their dictates. Simple fiduciary responsibility is simply not all there is - especially for the sort of company we envision growing.
Our intent in starting up a company definitely includes making excellent profits. We hope and have every expectation that we will make out very well financially, and provide great returns to any who have faith in our company.
However, beyond this we intend to use our company as an engine that will drive the changes we want to see (more on that later) and perhaps will partner up with others who would see those, too. This is what will, in fact, most drive us - will make the extra hours and trade-offs worth it.
With all of this in mind, we were pretty psyched when we came across the social purpose corporation (SPC) incorporation option. (Of course, we also do not think this sort of special designation should be needed, but recognize that in the system as it stands, it is.)
The SPC is a recent (2012) addition to Washington state's echelon of for-profit corporation options. Filing as an SPC comes with all of the same requirements as a standard incorporation. Plus, the company must file an annual social purpose report - which can range from the short to the heavily detailed, but must describe any ways the company has worked towards its social purpose.
However, it allows the company greater legal latitude to consider not just shareholders, but the greater group of stakeholders - to wit, the potentially very broad group of those, internal and external, who might affect or be affected by a company's actions - when making decisions. It allows the company greater legal latitude to work not just to maximize financial returns, but work towards achieving its social purpose(s).
We think this latitude will be important for our visions to become reality - from ensuring the long term adaptability and health of the company to supporting its employees to supporting the world outside of it. Further, we anticipate this choice helping us winnow the potential partner pool for us, to find those we will really want, if we decide to pursue further partnerships.
More on SPCs:
WA SoS Overview
Related Articles
- http://www.geekwire.com/2012/big-positives-washingtons-social-purpose-corporations/
- http://www.seattlebusinessmag.com/business-corners/law/building-companies-social-purpose
- http://www.avvo.com/legal-guides/ugc/social-purpose-corporation-in-washington-state