Downtown Las Vegas, where young, idealistic business operators are moving into the Arts District and along East Fremont Street, seemed the perfect place to hold an informational powwow about benefit corporations.
Few showed up earlier this week, however, at the Learning Village, a Downtown Project facility, to hear details about Nevada’s new state law enabling the creation of these corporate entities.
A benefit corporation is a for-profit business that makes certain promises to make a positive societal impact while also making money.
To ensure environmental or other societal goals are met — for instance, a promise that all foods in a chain come from suppliers that use no genetically modified ingredients — benefit corporations also have to be more transparent.
No special tax breaks are accorded benefit corporations, said Reno attorney Luke Busby, who lobbied state lawmakers on behalf of the law during the legislative session earlier this year.
“The idea is, essentially, that you want to try to harness the power of business to deal with social issues,” Busby said. “Governments and other parties haven’t been able to do that and, if given the voice, consumers may choose to do the right thing. Companies using it are doing really well, so it seems to be something that’s working.”
Nevada is one of 20 states that have passed benefit corporate laws, Busby said. Another 18 are expected to do so in the next round of legislative sessions.
Benefit corporations do not receive additional tax breaks. But changing their mission to include the public good, Busby said, may appeal to consumers and investors who see beyond corporate fiduciary duties to maximize profits.
About 400 businesses nationwide are designated this way, including Patagonia, Method and eyewear maker Warby Parker, which gives a free pair of eyeglasses to someone who can’t afford them for every pair it sells.
Fewer than 10 people attended the informational meeting.
To keep companies that adopt the model honest, certain entities are allowed to sue them if they are found not to be holding to the terms of their mission statement.
Busby said the model does not turn corporations into charities.
“They are often very profitable with a wider mission or they want to do a wider good,” he said.
Busby said large and small businesses are adopting the model, which will become available in Nevada in January.