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Delaware recently announced the creation of a “Public Benefit Corporation” with a dual responsibility to its shareholders and stakeholders in its business (like customers and suppliers).  27 states have since followed suit.  This fascinating new option for socially conscious business between non-profit and for-profit models offers new options for MBAs to consider when evaluating their career goals.

 

Social enterprise is hot.  In the past 20 years, according to Minnesota Bench Bar, it has blossomed into a full-fledged sector of the American market.  Social enterprises today are estimated to produce nearly 3.5 percent of United States GDP,1 and employ more than 10 million Americans, not to mention the roughly 5 percent of all Americans who report being involved in social entrepreneurship in some capacity.2   The growth of this sector is likely to continue increasing exponentially as pressure from stakeholders, entrepreneurs, and investors has grown tremendously since the 1990s.  In this socially conscious environment, the emergence of a corporate form designed to spur social innovation, the benefit corporation,3 was inevitable.  As of the summer of 2014, benefit corporation statutes have been passed in 27 states, with another 14 legislatures actively considering such legislation.4 

 

The first ninety days of PBC implementation have shown some interesting trends, according to this Georgetown Law study.  For instance, the paper concludes that 30 percent of these companies could have incorporated as non-profits instead, and that a very large percentage (3/4ths) are early stage companies with an obvious ‘green’ or ‘organic’ angle to them.  All of this is pretty much in line with what one would expect in the early going, but it’s nice to have it quantified nevertheless.  From an MBA standpoint, this probably means that you wouldn’t use the PBC status for your new Walmart-staple consumer goods business, but you might use it for your Whole-Foods targeted synthetic beet startup.

 

The fact is, however, even though this is where PBCs are beginning, there’s no reason to believe this is where they will ultimately wind up.   The possibilities are considerable.  For instance, the hot new social network Ello assumed a PBC status in order to guarantee that it would never be required by any future purchaser to show ads.  This is a great example of how PBC status can be a huge leg up for a business trying to enter an already saturated market like social networking, and would be well worth considering for MBAs trying to find an innovative way of framing their entrepreneurial goals.

 

So which schools are likely to be the most receptive to PBC-oriented entrepreneurs?  Well, of course, there are the usual suspects when it comes to Social Enterprise like Stanford, Kellogg and Ross – but your application will stand out far less in an environment where do-gooderism is almost de rigeur.  On the other hand, schools like Wharton and MIT Sloan have exciting initiatives in this area but are often overlooked by socially conscious MBA-seekers.

 

No matter where you apply, remember that a socially conscious business is still a business.  You’re not applying to the Kennedy School for an MPA here.  Don’t try to sell the committee on how good of a guy you are, or how your idea is going to make so many little children happy – instead, focus on sustainability and benefiting all parties involved roughly equally.  Make a thoughtful, sensible pitch instead of trying to tug on a committee’s heart strings.  And consider whether PBC status might add to the case you are trying to make.