Social Entrepreneurship

Consider yourself a social entrepreneur? Perkins Law can help you balance creating change and making a profit.

Social entrepreneurship is an emerging phenomenon in today’s society bridging the gap between for-profit and nonprofit organizations. Billed as “business for the common good,” social entrepreneurs strive to apply the power of business to solve social and environmental problems—making the world a better place while making money at the same time. For affordable flat-fees, Perkins Law can help establish business structures geared toward social entrepreneurs.

Perkins Law Offers Packages For:

Forming a Benefit Corporation
Converting an existing corporation to a B Corp
Forming an L3C and qualifying it in Virginia
Preparing or reviewing required annual benefit reports
Rendering legal opinions related to B Corps, L3Cs, and their activities

Get professional legal guidance at affordable flat rates.

Virginia Benefit Corporations

In 2011, Virginia became one of the first states in the nation to adopt amendments to its corporation statute to specifically recognize “Benefit Corporations” (also referred to as “B” Corporations).

What distinguishes B Corps from ordinary stock corporations?

A ‘B’ Corp must specifically identify itself as a benefit corporation in its Articles of Incorporation.
A ‘B’ Corp must have as one of its purposes the purpose of creating a “general public benefit,” and it has a fiduciary duty to pursue that social mission.
A ‘B’ Corp must publish an annual report of its social impact, demonstrating how it is fulfilling its social mission.
Directors of ‘B’ Corps are held to a different standard than directors of regular for-profit stock corporations (e.g., they are required to consider the effects of any corporation action not merely on maximizing profit for shareholders, but on its employees, subsidiaries, suppliers, customers, the community as a whole, the local and global environment).

The first wave of Virginia B Corps were formed during the third quarter of 2011, and it is also possible for regular stock corporations to convert to B Corps by amending their Articles of Incorporation.

Low-Profit Limited Liability Companies

The low-profit limited liability company (also known as the L3C), is a similar structure based on the limited liability company structure, but the L3C model is meant to open the door for both private equity investors and foundation grants.

While a handful of states now have L3C statutes recognizing this new hybrid form of entity, Virginia does not (L3C legislation was first proposed in the Virginia General Assembly in 2010, but failed make it through committee).

There is a workaround that would permit a social entrepreneur in Virginia to form an L3C in another state (such as Vermont, Michigan, or another state with an L3C statute) and then qualify that entity to do business in Virginia as a foreign corporate entity.

Of course, this process can be very complex—professional legal guidance is highly recommended.