Every once in a while, South Carolina should be one of the first in something good. This year, we have an opportunity to be at the forefront of something positive and new in business job creation.
This month, I introduced legislation for a creative new model of corporation in South Carolina called the benefit corporation. Similar, bipartisan legislation in the House of Representatives has made substantial progress. By working together, we can help South Carolina be on the cutting edge of innovative business.
Laws governing traditional corporations make it difficult for a business to have any goal but one -- maximizing profits. Traditional corporations are required by law to put profits for shareholders above almost any other consideration. But many business owners realize that the wonders of the marketplace can be harnessed for both profit making and social good at the same time.
After all, why shouldn't a company be allowed to have the goal of making money for its stockholders while at the same time promoting other goals such as environmental sustainability or public educational progress or faith based good works? Why shouldn't a company be allowed to make money and support good causes if that is what the founders and shareholders envisioned.
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A corporation shouldn't have to be a non-profit to do good works. The benefit corporation's legal structure can help businesses do just that if they choose.
Benefit corporations are a new type of corporation which use the power of the marketplace to make money and solve societal problems. More than 450 certified benefit corporations exist in 60 different industries throughout the United States. Seven states have enacted laws that allow companies to choose to be incorporated under the benefit corporation standards. The legislation has received overwhelming and bipartisan support.
Under the proposed law, benefit corporations are allowed to make decisions that are good not only for their shareholders, but also for society as a whole. Benefit corporations must operate in an open manner, have explicit goals to promote societal well-being, and meet objective accountability standards, all while working to make a profit.
For South Carolina, the benefit corporation concept will allow growing businesses and entrepreneur to choose a corporate structure that will permit them to turn a profit while promoting the betterment of their community. Choosing a benefit corporation structure can open up growing businesses to a whole new world of investment opportunities, as more and more investors want to know that their money will not only make a profit but improve our society.
The benefit corporation structure is entirely voluntary and would only be used by companies who see it as the right fit for their mission. Why should South Carolina always be the last state to adopt creative new ways for businesses to thrive? Why should South Carolina be seen as a place that always does business the same old way? With passage of the benefit corporation legislation, we can be at the forefront of providing entrepreneurs choices in how they structure their business and improve their communities. After all, the bottom line isn't always just about money.
Vincent Sheheen represents District 27 in the South Carolina Senate. He was the 2010 Democratic nominee for governor.