Kickstarter is now a Benefit Corporation

[edy]

Hot off the presses.... Can anyone explain what this really means? And will IndieGogo go the same route?

   
Kickstarter Inc is no more. We’re now Kickstarter PBC — a Public Benefit Corporation. We’re thrilled to share this news, and we’d love to take a minute to tell you exactly what it means.

Until recently, the idea of a for-profit company pursuing social good at the expense of shareholder value had no clear protection under U.S. corporate law, and certainly no mandate. Companies that believe there are more important goals than maximizing shareholder value have been at odds with the expectation that for-profit companies must exist ultimately for profit above all.

Benefit Corporations are different. Benefit Corporations are for-profit companies that are obligated to consider the impact of their decisions on society, not only shareholders. Radically, positive impact on society becomes part of a Benefit Corporation’s legally defined goals.

Kickstarter is excited to join a growing list of forward-thinking organizations — like Patagonia and This American Life — that have taken the big step to become a Benefit Corporation. While only about .01% of all American businesses have done this, we believe that can and will change in the coming years. More and more voices are rejecting business as usual, and the pursuit of profit above all.

If you want to see what we think is important, you can find a link to our Benefit Corporation charter here. We’ve spelled out a specific list of values and commitments we’ll live by: We renew our longstanding commitment to arts and culture. We declare how we plan to conduct ourselves in situations that are often swayed by profit motives. And we newly commit to donate 5% of annual post-tax profits to arts education and organizations fighting inequality. Every year, we’ll release an assessment of how we’re performing on the commitments we’ve made.

There was not a single dissenting vote by a Kickstarter shareholder to re-incorporate as a Benefit Corporation. We’re once again grateful for the support and partnership we’ve had from this group of friends, investors, and current and former team members. Thank you all!

From Kickstarter’s inception, we’ve focused on serving artists, creators, and audiences to help bring creative projects to life. Our new status as a Benefit Corporation hard-codes that mission at the deepest level possible to guide us, and future leaders of Kickstarter.

To all the creators and backers who have helped make Kickstarter what it is today — we’re excited to keep working with you, and helping new creative projects come to life as Kickstarter PBC.

How does this affect campaign owners and backers, with respect to lawsuits or scams? Are campaign owners now held more legally accountable or less?  Is this just how Kickstarter decides to use its profits, and have nothing to do with the campaigns themselves, or obligate campaign owners to follow the same goals? Seems like a P.R. move mainly.

Here is their charter:

https://www.kickstarter.com/charter

Thoughts anyone?

[SeanB]

Tax benefits for the company, they can now write off more as a loss, and failed stuff for sure. Plus lower taxes.

[edy]

Tax benefits for the company, they can now write off more as a loss, and failed stuff for sure. Plus lower taxes.

So actually really just helping them make more money, disguised as a them actually looking like they are doing some socially responsible charity benefit to society? EDIT:   No, they are taxed the exact same way (not sure about writing off stuff), but they have to now be checked by 3rd party to see if what they are doing actually benefits society and environment... So they can't just operate and do anything to maximize profits if it goes against that mandate. A good P.R. move definitely, and they are going to give back some of the profits to help people and not just line their own pockets.

BUT.... What is their "benefit" to society if they ignore calls by backers to flag dubious campaigns?  Sure they can make some more profit by accepting a bad scam campaign, then give it back to society. What about actually NOT accepting the bad campaign or listening to backers who complain? Wouldn't that be more important?

[ferrix]

It gives the company leadership protection for making decisions that will not lead to the most profit. 

[EEVblog]

Got to be a tax dodge in there somewhere.

[ferrix]

Could be, but I can't think of any way this is any "dodgier" than having a normal corporation.  The usual way to avoid taxes is to incorporate in a favorable nation and leave most of your money there.

Is anyone here a forensic accountant?? =P

[donotdespisethesnake]

More to do with PR and branding, apparently Kickstarter Becomes a Public Benefit Corporation, So What?

There don't appear to be any tax benefits, and there is nothing to stop the PBC being sold or charter being changed again. There is no reason why a for-profit company cannot do charitable or public benefit stuff.

So is just to create a friendly brand image for Kickstarter.