Taylor Legal Blog

Benefit Corporations, Benefit LLCs, and Marketing

Posted by Katherine L. Taylor, Attorney and CPA, Chief Problem SolverSep 25, 20110 Comments

In June, Maryland saw the creation of America's first benefit LLC, Clean Currents, a green energy company. Clean Currents was created under the recently passed SB 595, a follow up to the state's benefit corporation law passed last year. SB 595 was sponsored by State Senator Jamie B. Raskin (D-Mont).

Two weeks ago, Governor Martin O'Malley attended the inauguration of Blessed Coffee, a Takoma Park coffee shop. Blessed Coffee is a registered benefit corporation under the law passed last year. The company has pledged to allocate 50% of its net profits from wholesale revenue to social programs in Ethiopia's coffee growing regions, and 50% to community based organizations. O'Malley said of Blessed Coffee that “(i)t's a corporation that looks at not only the bottom line of profit, but also the bottom line of social responsibility.”

The Washington Post article, Takoma Park coffee firm holds 'Blessed' event, in quoting Raskin highlights one of the challenges the state has in encouraging benefit corporations:

“'The law allows community-minded companies to take the high bid,'    Raskin said.
The main benefit of the law, however, is as a branding and marketing tool. The community feels that it's a part of the business, and people are often willing to pay for products when they know the money goes toward groups and causes they support, Raskin said.” (sic)

Cause marketing can be effective. A 2010 study said that 41% of Americans have purchased a product in the past year because the product was associated with either a social or environmental cause. The same study said that 88% of Americans think it is acceptable for a company to involve a cause or issue in its marketing; contrast this to the Millenial Americans, of whom 94% think it is acceptable for a company to involve a cause or issue in its marketing. Additionally, Millenials use a company's support of social or environmental issues to determine other corporate interactions. 87% of Millenials use social and environmental causes as a benchmark to determine where to work. 79% of Millenials use the same benchmark to determine where to invest. As Millenials become more active participants in the marketplace, benefit corporations and benefit LLCs are poised to reap the benefits (pun intended).