Social Purpose Corporations

What Are Social Purpose Corporations?


Social Purpose Corporations are a for profit business type that is formed for a social purpose. In many ways, the Social Purpose Corporation is like a regular corporation. Social Purpose Corporations are taxed just like regular corporations and follow the same general corporations laws. The big difference is that part of the purpose of the Social Purpose Corporation is to create a social benefit. This means that investors must take into account the mission of the corporation when making business decisions.


Why would you want a Social Purpose Corporation?


Social Purpose Corporations are a great option for people who want a business that is mission driven but still want the benefit of owning a company and making money. With a Social Purpose Corporation, your business can be both mission and profit driven. If you are passionate about giving back to your employees, having an environmentally friendly or “green” company or making a social impact, a Social Purpose Corporation might be the perfect business type for you.


How do you form a Social Purpose Corporation?

Social Purpose Corporations

Social Purpose Corporations are formed by filing Articles of Incorporation with the California Secretary of State.

Certain language must be included in the Articles in order to create a Social Purpose Corporation.

Social Purpose Corporations should also have bylaws which outline the mission or purpose of the company. It is important to make sure that your investors know and understand the mission of your business.




Will creating a Social Purpose Corporation help my business grow?


There seems to be a great shift in the thinking of consumers today. People, particularly millennials want to know that the brands, products and companies they associate with have a social conscious. You can see this with companies like TOMS, Seventh General and Patagonia. This business entity type creates a great marketing platform which will show consumers that your business has a social conscious. Consumers will feel that by using your products or services they too can be a part of making a positive impact in the world.


Can you still make money as a Social Purpose Corporation?


You absolutely can and should make money as a Social Purpose Corporation. Your for profit business should always prioritize profit and growth. Being mission driven or socially conscious will not change the fact that the purpose of your business is also to make a profit. We would argue that in the future, all businesses will need to be mission driven in order to thrive. Socially conscious businesses should not see the drive to make money to be in conflict with their ability to achieve their mission. As your business scales and your profits grow, you will be able to achieve your social mission. Rachel Zurer said it perfectly in the article, What is a Conscious Company?, “Money and profits [should] become the fuel that powers the mission engine.”


For more information about Social Purpose Corporations, check out the California Franchise Tax Board’s description of Social Purpose Corporations.

Call Semanchik Law Group today to schedule a free consultation and discuss how we can help you form a Social Purpose Corporation

We offer social purpose corporation formations on a reasonable flat fee basis.

Call us today to find out more:

(619) 535-1811