Workshop Recap: An evening learning how to protect your social mission

April 19, 2011 at 4:23 pm Leave a comment

Ater Wynne hosted our quarterly Social Innovation Incubator meeting on April 6th. With a beautiful view of downtown Portland, we discussed legal options social entrepreneurs (for-profit and non-profit) can consider to protect their social missions.

Thanks to attorneys Doug Morris and David Connell for sharing their expertise and spurring a fascinating conversation. The two hours flew by, and we all learned a great deal. Thanks also to the 12 SII members who attended. Here are their top takeaways from the evening:

  • I learned that being a legal Benefit Corporation entrepreneur is a challenging road that requires a great deal of extra paperwork and is inherently uncertain.  I also learned, however, that I am a part of a very small group of committed individuals – hopefully the trade off will work out in our favor…. Sean Patrick, Million Monarchs
  • Under Oregon law, a corporation’s board of directors is automatically allowed to consider constituents other than shareholders, but only in a buyout offer. Oregon law states that a corporation can include a sentence that allows or requires the board to run a company in a socially responsible manner, but it is unclear whether directors can ignore shareholder primacy. Cindy Cooper, Portland State University
  • The single most interesting, thought provoking, issue I learned was the idea of 200+ years worth of case precedent baggage on the corporate form.  There are some advantages to it, it is clearer know what to expect, but it is also very “backward.” It is refreshing to see that across the nation people are developing benefit corps, constituency statutes and certifications in an attempt to broaden the “corporate” concept and board responsibility to include the issues of social and environmental impacts. Of course the drawback is these new forms are without “precedent” so there is risk in trying to use them.  Fortunately we have a few trailblazers (including Sean!) that are willing to develop the path and take the risks in an attempt to “do the right thing.” Brenda Eichelberger, Portland State University
  • I was most interested in the discussions about a non-profit forming a for-profit corporation.  I found David Connell’s comments about that issue to be very insightful, including that he likes to see independent boards of directors in such situations.   Also, based on what he said, I intend to learn more about how money can flow from a non-profit to a for-profit and what is meant by “arms length transaction.” Paul Clithero, Central City Concern
  • I was glad to learn from a colleague that it is not as difficult as I imagined to transfer from a C-Corp to an S-Corp. Adrienne Karecki, Central City Concern
  • The idea of “mission keeper stock” and the fact this can be created as a tool to protect mission was an intriguing idea we are interested in understanding better. Anaïs Tuepker, Preciva
  • It was interesting that nonprofits could assign a board seat to a specific organization. Jacen Greene, Sustainable Harvest
  • I personally walked into that meeting with the mental thought that as a non-profit business, we’d need to completely separate the for-profit portion of our organization away from the non-profit to eliminate business and legal conflicts. The ensuing conversations were rather educational in helping me personally grasp the concepts of how S-corps, C-corps, and the various hybrids discussed work to define and manage the goals the business wishes to accomplish. Needless to say, now I am open to having more options to explore before we commit to any changes. This meeting was thoroughly enjoyed and appreciated even more than I had anticipated. I look forward to PSU’s SII program for new entrepreneurs helping us attain our ultimate goal of reaching the market place with a more positive and better organized structure than we might attain on our own. Clint Dethrow, Mama’s Fire Gourmet Sauces

Entry filed under: Events, SII Member News.

Congratulations! Fork in the Road takes two prizes at New Venture Championship! Congratulations, Preciva!

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