Concept Paper
Maryland: A Model State for Common Good Enterprise
Activating and Cultivating Social Enterprise and Socially-Responsible
Business
By Amy Kincaid, ChangeMatters Benefit LLC
November 8, 2011
The Opportunity
Maryland is the first state to pass Benefit Corporation, and now Benefit
LLC, legislation. This unique position presents Maryland with an
immediate opportunity to serve as the leading incubator and
accelerator for sustainable, common good businesses.
The movement for social enterprise and socially-responsible
businesses is gaining traction nationwide (notably in Vermont, Virginia,
New Jersey, North Carolina, and California) and is active around the
world. Maryland could be front and center, but given the speed at
which Benefit legislation, and related structures for hybrid businesssocial ventures, is being introduced, the time window for being a
leadership state is closing fast.
The new legislation strengthens the dialogue and creates opportunity
for action. Now is the time to focus on implementation. Although the
potential for job creation, revenue, and positive community impact is
generally acknowledged, widespread adoption, coordination, research,
and support is trailing behind.
Focusing attention and resources on this wave of entrepreneurial
activity can improve the quality of life in communities throughout the
state by helping to build businesses that demonstrate that it is
possible—and desirable—both to do well and do good. The region could
step forward fully into this role with increased attention, supportive
policies, and investment.
The Challenges
1) Curiosity and interest, but limited state-level commitment or
support.
2) Locations and association that could be supportive forces, do not
have special expertise, are not providing information, and are
not connected to networks.
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3) Common good enterprise activity occurs across industries and
among different tax and business structures.
4) Need for capital and technical assistance for growth.
Question/Recommendation:
What could happen if the State, region, and public and private sector
leaders were to make a commitment to embrace and support social
enterprise and socially-responsible small business, as an economic
development strategy for creating good jobs, generating revenue, and
nurturing innovation and social impact?
Strategy:
1. Implement the new benefit corporation laws.
2. Cultivation and support mission-based, “common good
enterprise,” in both not-for-profit social enterprise forms and forprofit business forms.
3. Measure the impact (of the laws and of these kinds of
enterprises) on jobs, economic and community development,
sustainable/healthy communities.
1. Implementation
The new legislation generates dialogue and creates opportunity for
action, but in Maryland, there is no agency “home,” minimal
regulations or rules, very little info for interested businesses or
advisors, no financial incentives, no formal tax laws or guidance, no
guidance on third-party standards and accountability.
Implementation—Potential Activities and Solutions
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Update state agency information on Benefit options on websites and in
economic development and business support offices.
Develop information and rules or guidance on annual reporting and
qualifications for third-party standards.
Require SDAT to track the number of Benefit Corporations, their stated
primary social benefits, and their annual reports in such a way that this data
can be easily obtained by anyone for analysis.
Require state and county economic development offices to observe and report
on benefit corporation and company activity and impact.
Initiate a statewide public information campaign
o connected with training, perhaps to be focused in particular economic
areas or zones, and
o including a state logo/brand/mark for Maryland Benefit Corporation and
Maryland Benefit Company.
Enable online business filing for existing and emerging enterprises, electronic
report filing, and public access to information on business.
Training and assistance
o to small business owners on what the new laws allow, why they might
consider filing, and how to do it.
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to nonprofit tax-exempt organizations to consider the option of setting
up Benefit corporations or Benefit LLCs as subsidiaries for earned
revenue activities. Again, this would require contracting with providers.
Offer free information and Benefit Corporation/LLC filing days.
Additional points in bids and contracting for Benefit Corporations and Benefit
Companies at State and County levels.
Provide advice to state agencies about legal and tax considerations.
Establish an advisory council on Benefit Corporations and Companies.
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2. Cultivation
Mission-based enterprise are developing, but scattered and in
isolation. Support from traditional and existing sources is not tailored
to these kinds of businesses. Multiple structures and industries makes
it challenging to connect and identify them as a group. At least a select
group of investors is increasingly interested in these kinds of
enterprises. Emerging entrepreneurs are extremely interested in
building balanced bottom-line enterprises.
Cultivation—Potential Activities and Solutions
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Establish a county, state, or regional initiative to focus on fostering common
good enterprise, developing the business and economic environment, and
serving as a connector and advocate.
o Coordinate and accelerate activity;
o Provide information;
o Develop pooled marketing and directories of Benefit Corporations,
social enterprises, and socially-responsible businesses in Maryland;
o Develop (perhaps secure resources for) a pooled fund for impact
investment in Maryland;
o Create a listing of qualified third-party standards;
o Collect referral sources for qualified accounting, legal, and reporting
service providers.
Facilitate dialogue and activity among social entrepreneurs, impact investors,
community-based finance institutions, to raise capital and investment for
social enterprise and socially-responsible business.
Incubate and accelerate common good enterprises and build a portfolio for
investment.
Establish common good enterprise zones.
Conduct targeted recruitment and include at least one “common good
enterprise” in each of the state and county incubators.
Provide business support services tailored for small businesses interested in
and/or pursuing a “triple bottom line” (people, planet, profit), such as Benefit
filing, strategic philanthropy, and other sustainable and community-impact
practices. Expertise has not been demonstrated by state agencies, and this
likely would require contracting with qualified providers.
Inform and train agency staff, elected officials, independent business
associations, and incubators and other support agencies on the Benefit laws,
as well as other structures for social enterprise businesses and sociallyresponsible businesses.
Build online clearinghouse and tools.
Collaborate with existing support networks. Content and expertise on these
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topics would have to be contracted or coordinated, as no comprehensive
resource exists.
Develop follow on technical support and capital for “common good” business
ideas and startups developed through competitions or at the university or
college level.
Fund and provide tailored assistance to common good entrepreneurs.
Encourage state and county economic development offices (and/or CDCs) to
observe and report on the full range of social enterprise and sociallyresponsible business activity.
3. Measure
To what degree is an emphasis and special focus on mission-based
businesses or “common good enterprises” effective in creating more
jobs, sustaining better jobs, increasing tax revenues, developing local
economies, building healthier communities? What is the measurable
impact in these communities in this state? What are the meaningful
results? Is this a nice idea or is it a powerful strategy for community
change?
Measure—Potential Activities and Solutions
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Analyze the data about the number of Benefit Corporations, their stated
primary social benefits, and their impact.
Develop a report and concept paper on the state of common good enterprise
in Maryland, describing case examples, identifying opportunities for growth
and investment, making recommendations for capacity building.
Identify existing tools and develop new ones as needed to help businesses
and social enterprises to measure sustainability and social return.
Disseminate tools (and peer-exchange of experience) among enterprises to
use to measure social return on nvestment.
Observe and report on the activity of all types of social enterprise and
socially-responsible business over time, in the forms of statistics, reports,
case studies, and press coverage.
Connect local enterprises with national and international data and experience.
Outcomes
● Jobs: More jobs created across industries and sectors, longer
retained and with increased accessibility. Many social enterprises
incorporate job creation and workforce development for
populations typically tough to hire and retain.
● Revenue: Increased revenue generated from new or invigorated
business activity and contributed to the state through Benefit
filing and conversion fees.
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Local economic development: Neighborhood and community
development by making new linkages and providing targeted
assistance, strengthening common good enterprises and
connecting them to resources, customers, and each other.
● Innovation: Use of the entrepreneurial impulse, business
practices, market forces, and product and service innovation
across multiple industries and in diverse communities to address
pressing human needs.
● Community wealth: Special investment in diverse leadership and
local business.
● Common good: Recognition and support for the creation of social
value through businesses and relationships that address
community priorities.
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Definitions
Benefit Corporations and LLCs/Companies are business entities
organized under new state-level corporate structures that allow—and
require—pursuit of socially responsible purposes in addition to profits.
A social enterprise or social enterprise business (SEB) is an
organization or venture that achieves its primary social or
environmental mission using business methods (often through their
products and services or through the numbers of disadvantaged
people they employ). A socially-responsible business (SRB) builds
social and/or environmental value into the business model (creating
change through its products and services and/or affecting positive
social change indirectly through the practice of corporate social
responsibility, such as corporate giving, equitable wages or employee
ownership, local and otherwise socially-responsible sourcing,
environmental stewardship, or providing volunteers to help with
community projects).
The phrase “common good enterprise” captures all of this activity,
which happens under different legal and tax structures and in different
industries—agriculture, health and wellness, business services, food
service, workforce development. Industries and sectors represented
include agriculture, community, education and training, youth,
workforce development, retail/thrift stores, microfinance, clean
technology, food and catering, manufacturing and business services,
international development, housing, technology, fair trade. These
enterprises—both tax-exempt and for-profit—are creating jobs,
generating revenue, manufacturing and selling green, sustainablymade products.
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