Some social enterprises are lining up to register as Benefit Corporations as the ink dries. Others are waiting longer, for a variety of reasons.

 

 

Joule Energy, a New Orleans-based solar panel installer, is one such company. And it illustrates that registering under the new corporate form in some cases can entail certain complexities.

The company has every intention of becoming a Benefit Corp., a choice that became viable two days ago when Louisiana became the ninth state to pass Benefit Corporation legislation, something I wrote about recently. The primary reason, according to Julian Thomas Jr., director of commercial sales and co-founder of the three-year-old company, has to do with considerations related to expansion. The company has 50 employees, as well as $5 million in revenues that could double this year.

While the firm has no outside investment yet, “We’re interested in becoming a Benefit Corp. so we can have our values locked in as the company grows and we seek outside capital,” he says. “We can continue to offer our employees benefits and make purchasing decisions based not only on price but on sourcing from people who have our same values.” Plus, as the company gears up to raise outside money, being a Benefit Corp. could help attract socially minded funders.

But while Thomas and his partners, whose company is an LLC, would have liked to be in the first group to register, they first wanted to clear up a matter pertaining to a loan made by one of the firm’s co-owners. Joule has enough cash flow to cover operating expenses and either distribute funds to its owners or retire that debt. It’s about “a month away” from fully retiring the loan, says Thomas, and then could register as a Benefit Corporation with no outstanding debt other than a line of credit. Plus, “The mechanism for adjusting the operating agreement is easier to do now than as a Benefit Corporation,” he says. So, Thomas and his partners figure they’ll take care of the loan, then register.

Not a tremendously complicated situation. But it’s one of the myriad of tricky considerations that arise as social enterprises think about becoming Benefit Corporations.

Joule, by the way, is part of an interesting B Lab program, through which participating B Corp-certified solar energy installers will take $500 off the cost of installing systems for employees of fellow B Corp-certified comrades and will make a $500 donation to a charity of their choice.