Social Entrepreneurs: Make Money, Save the World

Filed in archive Entrepreneurship on March 14, 2010

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I heard a piece recently on National Public Radio on efforts in California to social entrepreneurs. It was enlightening. I hadn't realized the dilemma they face.

The situation is relatively simple. If you own a private company you can carry out your business as you see fit. But at the point in time that you go public and take on stock holders, that changes. Profit becomes a guiding legal motive. And your can be sued if your actions in managing a company don't mazimize profits.

But what if you have a reason not to mazimize profits? What if there were a cheaper way to make your product, but you wanted to use organic materials because even if that wasn't the best thing for profits, it was good for the world? Answer: It doesn't matter. Stockholders have rights.

The NY Times had a piece a couple of years ago that looked closely at efforts to establish legal protection for a new type of company: the for-benefit company. While those behind the efforts see the most promise in California, it looks as though Vermont may become the first state to past such a law.