Monday, April 28, 2014
John Tyler (General Counsel and Corporate Secretary for the Ewing Marion Kauffman Foundation) recently published an article entitled, Analyzing Effects and Implications of Regulating Charitable Hybrid Forms as Charitable Trusts: Round Peg and a Square Hole?, 9 N.Y.U. J. L. & Bus. 535 (2013). Provided below is the beginning of his article:
One of the principle motivating forces driving the creation, expansion, and use of new formal hybrid business structures is a desire among various entrepreneurs, investors/funders, and policymakers to dedicate financial capital and other resources to areas of society that might not be as clearly or easily pursued under traditional forms. These people have seen opportunities to address social problems in new and different ways with financial resources, business models, and compensation structures and incentives not normally targeted to such problems with the same vigor, if at all. They have wanted clearer and simpler legal contexts within which to pursue their purposes and help others do likewise.
It is not that both profit distribution and social or charitable mission are not simultaneously possible under traditional forms. Certainly they are, and various enterprises exist to prove the point, including well-known examples such as Ben & Jerry's, Google and its “dot org” division, the Calvert funds, the Omidyar Network, and certain for-profit hospitals and schools. Others are less well-known, such as businesses that have received program-related investments from private foundations. But a growing impatience with the complexity and real or perceived barriers of existing forms contributed to the emergence of new taxable forms designed to make the combination of profit distribution and social or charitable mission less complicated and more accessible.