A blog whining about other people: not very interesting, not very useful.
But a blog taking a stab at redesigning pieces of a $10,000,000,000,000 system (the market value of U.S. Public Companies): that sounds much better. So below is one take at a design. Naturally it will flesh-out and evolve as the blog continues; as you politely deconstruct it’s weaker points, reflect on its purpose and sagely suggest better approaches. Thanks.
The Purpose
to define a company structure that actively enables and protects a dual purpose company; one that advances an explicit social or environmental good and operates as an profitable commercial enterprise.
The Playing Field
First, let’s recognize that are three alternative designs already out there:
- The Cooperative, particularly a worker or consumer co-op or a credit union.
- The Benefit Corporation 0r B-Corp, a variation of the standard c-corporation. Most US companies are c-corps.
- The L3C, a variation of the LLC limited Liability Corporation.
So rather than attempt to refine those, this design will take a different stance, that of separating ownership of profits from ownership of capital gain. This approach was inspired by my time managing capital investment in Equal Exchange. You can read about it in the post the Beauty of One.
the “Common Wealth” Company | Take 1 | Sept-15-2010
The Common Wealth Company is a commercial enterprise, designed to accept investors and operate profitably. It can be formed under standard corporate law.
First Principle: In a Common Wealth Company (a CWC ?) the two typical sources of financial wealth – profits and capital gain – are separately owned.
Profits are owned and controlled by the owner/investors. For example they be distributed back to those owners, assigned to other organizations, or retained to fund the business, whatever the owners decide.
The capital gain however, the growth in value of the business, cannot be cashed out and belongs to the mission, to the common good. This means that the companies shares to not go up and down in value, but remain at a fixed price.
Principle Two: Alignment of interest and purpose between employees/workers and owners/investors. The adversarial or indifferent relationship between owners or management of a company and the bulk of workers is grounded in their different interests and different paths to success.
Rather than legislate fairness or mediation, the CWC design supports an alignment of interests. After one year, 3% of every employee’s salary and 30% of any bonus is invested in the company. Aside from their roles as shareholders, employees also elect every third director.
Principle Three: The articles of incorporation will explicitly state the communities or stakeholders that the CWC exists to serve and this cannot be solely owner/investors. Each year, on declaring and distributing profits, the non financial wealth generated will be declared and the understanding and goodwill from that benifit will be distributed with equal effort and diligence as the financial benefits are.
And what, if any, is Principle Four?
Good question, what do you think?