Kickstarter has decided to become a Public Benefit Corporation, eschewing a focus only on profits to refocus on what they believe will be a public service for creativity. Bye bye Unicorn Status, hello more card games about exploding kittens.
As of 20 September, Kickstarter reincorporated as a Public Benefit Corporation, pledging to place profit below creative cultivation.
In a statement, Kickstarter said: "Kickstarter Inc is no more. We're now Kickstarter PBC -- a Public Benefit Corporation." "There was not a single dissenting vote by a Kickstarter shareholder to re-incorporate as a Benefit Corporation. We’re once again grateful for the support and partnership we’ve had from this group of friends, investors, and current and former team members. Thank you all!" "From Kickstarter’s inception, we've focused on serving artists, creators, and audiences to help bring creative projects to life. Our new status as a Benefit Corporation hard-codes that mission at the deepest level possible to guide us, and future leaders of Kickstarter."
The co-founders of Kickstarter, Yancey Stickler and Perry Chen, also told the New York Times about their desire to never "sell or go public," as "that would push the company to make choices that we don’t think are in the best interest of the company." The company's charter requires it to contribute a portion of its profits to charities that promote the arts, but the PBC status does not in itself preclude selling or going public. Instead it holds Kickstarter to higher standards of transparency, and requires the board explicitly to consider the public benefits of its decisions.
In reality this means that Kickstarter is now legally obliged to behave in a way that is intended to encourage public good.
The ability for companies to incorporate as a "Public Benefit Corporation" is based on a recent piece of United States (and state specific) legislation that allows company to financially commit to ethics over profit -- as of yet, only 19 states have legislation focusing around endorsing public corporate responsibility.
Delaware, where Kickstarter is based, introduced the ability for companies to becomes a Public Benefit Company in 2013.
In order to become a Public Benefit Corporation, a company must demonstrate that it aspires to contribute to public good, and must reflect this in their corporate charter. An example of this -- and in the case of Kickstarter -- would be to avoid using tax loopholes or to donate a percentage of after-tax profits for charitable purposes.
Other PBCs so far incorporated include a company that provides teams for projects, August Public Inc, a company that acts a hub to shift company practices, Responsive, and Ello a social media site free from advertisement.
PBCs are created under a US specific piece of legislation, and an exact analogue doesn’t exist in the UK.
However, a Health and Social Care Act in 2003 allowed the NHS trust to exist as a public benefit corporation, and in August 2015, the CEO of food company Ella’s Kitchen Paul Lindley called for the creation of Public Benefit Companies to encourage companies to be a force for good.
QUANGOs, Community Interest Companies and Social Enterprises follow a similar though varying model to a PBC.
In all cases, the specifics for what a company is required to do is vague, although all companies that purport to be Public Interest Companies must have at least some social responsibility in both ethos and practice.
This article was originally published by WIRED UK
