by Renée McFarland
The social purpose corporation (SPC), a new type of for- profit corporation in Washington, turned two this year. The arrival of SPCs in Washington marked a growing national trend of social entrepreneurs who wish to run a profitable business but who also want to contribute to a greater social good. Traditional corporations have a long history of community involvement, but
the statutes governing SPCs explicitly allow officers and directors to consider
both profitability and social or environmental goals when making decisions.
SPCs can be seen as “hybrid” corporations, falling between traditional and non-profit corporations. At the time this article was written, there were 95 SPCs registered in Washington state. 1 Some of the types of social purposes represented
include cultural exchange, art, educational endeavors, farming, information
sharing, and urban food. This article provides an overview of the SPC.
A number of other states have adopted the “benefit corporation,” another
hybrid business model. A benefit corporation is for-profit, but must have a
corporate purpose to create a material positive impact on society and/or the
environment. Directors and officers must consider the effects of corporate action or inaction on employees of the corporation, its suppliers and customers,
and the community or society. 2 The WSBA Business Law Section’s Corporate
Act Revision Committee (CARC) studied benefit corporations and ultimately
proposed the SPC in SHB 2239. Governor Gregoire signed the legislation,
codified at Chapter 23B. 25 RC W, on March 30, 2012. The new RC W chapter is
an amendment to the Washington Business Corporation Act.
The Social Purpose Corporation
Doing business with a conscience
Photo: Samples of Daily Bird Pottery’s
“naked” clay pottery. Daily Bird Pottery
in Port Townsend recently incorporated
as a social purpose corporation. The
proceeds from the sale of clay birds
like these are donated to charity.