Maryland is the first state in the country to allow the creation of a new corporate entity known as a “Benefit Corporation”. This law allows social entrepreneurs to include their social ideals into their corporate charters. While these entities are then bound to their socially conscious commitments, they are also minimizing or eliminating the risk of being sued by shareholders for not maximizing profits. For example, a company may wish to buy from local vendors to reduce their carbon footprint even though the cost of dealing with these vendors is higher.
While the new statute enables entrepreneurs to commit their “for profit” ventures to a specific public good, they will have the extra requirements of an annual report on contributions to their social goals and an audit by an independent third party. Commentators speculate that the new legal designation could unlock new capital from investors interested in mission-driven companies.