From left to right: Sen. Chris Gerlach, Rep. Linda Runbeck, Sen. John Marty
Could new sponsors be the key to passing a social entrepreneur bill in Minnesota?
Sen. John Marty, DFL-Roseville, first introduced the Minnesota Responsible Business Corporation Act in 2006. The bill would give businesses legal authority to incorporate social or community missions into their charters. Without it, Marty believes company directors could be at legal risk if social goals get in the way of increasing profits for investors.
The legislation hasn’t moved much thus far. The version introduced last year by Marty and Rep. Bill Hilty, DFL-Finlayson, didn’t get a hearing in the Republican-controlled Legislature.
The bill did, however, find an important conservative ally: Stephen Young, executive director of the Caux Round Table, a St. Paul organization that promotes “moral capitalism” around the globe. Young reached out to Republican lawmakers and found two who plan to support a revised version of it next session, Rep. Linda Runbeck, R-Circle Pines, and Sen. Chris Gerlach, R-Apple Valley.
“We need to build a broader coalition,” said Young, who thinks the new bipartisan support gives the bill a good chance next year. “I hope this is a proposal that meets the philosophical viewpoints of both conservatives and progressives.”
The new version mirrors most of Marty’s original language, but the Republican version is called the Minnesota Community Enhancement Corporation Act. Some Republicans had previously objected to the “socially responsible” label in Marty’s bill because it could imply that other companies are socially irresponsible.
The legislation wouldn’t affect any companies that want to continue operating as they currently do, but it would give legal protection to companies that want to write social missions into their incorporation articles.
“What I think is the simplest, most important thing the Legislature can do is protect corporate boards,” said Marty. “You don’t want them to be sued for taking care of their customers or the environment or their employees.”
Investors who put their money into community enhancement corporations would do so knowing that short-term profit won’t always be the company’s only priority. The bill doesn’t offer any special tax status to community enhancement corporations. Marty said it would be too difficult for the state to decide which companies deserve the designation.
About half a dozen states have already passed legislation supporting so-called “benefit corporations,” another term that’s been used to describe organizations that blend both profit and social missions. Social entrepreneurs can face drawbacks with both the for-profit and not-for-profit models. Nonprofits are limited in how they can raise money for equipment or building projects, for example. Young said the community-enhancement corporation could be a useful “third alternative” for certain entrepreneurs.
