Social Enterprise Law in Action : Organizational Characteristics of U.S. Benefit Corporations

The benefit corporation is now the most widely adopted innovation in state corporate law in nearly two decades. Thirty-three states and the District of Columbia have passed legislation enabling the formation of benefit corporations. In these states, mission-driven for-profit firms can adopt the benefit corporation legal form to protect directors from liability as they pursue both a social purpose and private profits. Despite scholarly and political interest, little is known about the firms that incorporate as benefit corporations. This Article draws on an innovative national empirical study of benefit corporations, the first of its kind, to understand how business owners are using social enterprise law. The Article provides the most comprehensive count of benefit corporations available and original, data-driven analysis of benefit corporations' national dynamics and organizational characteristics. The findings reveal that at least 7704 benefit corporations have been formed since 2010, with Oregon, New York, Nevada, Delaware, and Colorado home to most. The field is highly varied, but there is a lot of inactivity and a substantial portion of benefit corporations are not evidently delivering any social or environmental benefits. Of the firms with an online presence, 71% do not describe themselves as benefit corporations, contradicting proponents' assertions that the legal status provides market differentiation. These findings suggest that benefit corporation legislation serves a subset of firms, yet it falls short of its transformative promise to upend the prevailing model of shareholder supremacy. Statutes are not well tailored to new, small, privately held businesses, and lack of oversight enables inappropriate firms to become and remain benefit corporations