Mission Protection Mechanisms for For-Profit Entities

Mission protection for socially driven businesses can be structured in numerous ways and formats: by tweaking the existing framework of a traditional for-profit corporate form; by combining two corporate structures and form a hybrid entity; and lastly, by choosing a new or alternative entity type, such as a public benefit corporation or public benefit cooperative, to bake the mission into the DNA of the business. In a series of blog posts, we will explore the mechanics, the efficacy, and the (potential) downsides of each of these mechanisms and formats.

In the first blog, we will explore how the traditional corporation, LLCs, and partnerships, could be fine-tuned to anchor the mission. The focus of this blog will be the golden or veto share, the poison pill mechanism, and the voting trust or voting agreement. We will also discuss how other corporate structures, such as cooperatives and trusts, are used to protect a business’s mission.

In the second blog, we will explore how traditional and alternative debt and equity instruments can be used to bolster a business’s mission.

In the last blog, we will explore the combination of two traditional structures in order to protect the mission, for example a for-profit as a wholly-owned subsidiary of a non-profit and a cooperative sistered to a traditionally financed for-profit corporation.

Our own Jason Wiener recently participated in a lively webinar around these topics. Here is a link to the webinar video on The New Trusts: Democratic Ownership Beyond the ESOP.

Also take a look at the following related posts on our blog:

 

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