Last week The Detroit Hotel Project was officially incorporated in the fine state of Michigan. It was an exciting day. We opted to form an S Corporation instead of the hybrid limited profit corporate class of L3C for a few reasons. We love what the L3C represents — a company responsible to its community that functions kind of like an efficient non-profit. But we have also heard that there are ambiguities that make expansion difficult, even if one’s mission and values are in the right place. We are instead waiting for Michigan to approve the B Corporation, which is currently in state legislation. An article last week in Crain’s reported that Rich Studley, President and CEO of the Michigan Chamber of Commerce said “There is concern about unintended consequences, such as suggesting that one type of business structure was better or preferential over another.” They are worried that this new status will make companies under traditional corporate structures seem less appealing, “less good.”
This is a little crazy making. First, it may just be that legal responsibility to community and the environment is actually better. Sure, big companies have huge charitable programs that they are in no way legally bound to provide. We commend them. Some big companies behave responsibly. We like them too. Some even make the world a better place! We’re pretty sure those companies aren’t worried that their reputations will be diminished because a new class of company explicitly ties this activity into their legally binding charter. What concern should they have? Marketing perception? Don’t these legitimate ‘good’ S and C Corporations have enough confidence in their quality products and deep acts of integrity to be ok with an evolving structure? Why so much whining?
It’s a little like saying you don’t want us to eat healthily because it makes those who eat McDonalds look bad. Our answer is simple: Be who you are, own it, and understand who you are accountable to. We don’t care where you eat. But we do care about what we put into our own bodies.
Expect us to become active in the lobbying for the B Corporation to pass in Michigan. At that time we will change our structure to support what we think is a powerful and positive movement in business.
To date California, Hawaii, Maryland, New Jersey, New York, Vermont and Virginia have enacted the legal option.