Do Benefit Corporations Represent a Policy Threat to Nonprofits?

Abstract

In the US and increasingly internationally as well, considerable efforts have been made in recent years to introduce new legal forms, such as the benefit corporation, at the local level as an additional structural option for social entrepreneurs. These efforts have been met with considerable apprehension on the part of nonprofit sector advocates, who perceive these new organizational forms as potential competition. This paper investigates whether the benefit corporation is in fact a likely competitive threat to nonprofits. Presenting the findings of an early uptake study, it reviews the early experience with the state-level introduction of the benefit corporation in Maryland, the first state to adopt the new legal form.