How Kickstarter Legally Protected its Mission

An iPad displaying the Kickstarter website

On Monday, the co-founder of Kickstarter, Yancey Strickler, announced on Twitter that they have “codified our mission and values at the deepest possible level.”

Kickstarter is a crowdfunding platform that allows ideas, projects, and products to be financially backed by those who would like them to be a reality. At its core, it is a community-driven company and can only thrive if its user-base has faith in the effectiveness of its mission. Therefore, to protect its mission, Kickstarter has legally become a Public Benefit Corporation. This means it will be legally protected as it makes business decisions that put its mission statement first – it cannot be taken to court by shareholders if it puts purpose before profit. A corporation, by contrast, must legally respond to the needs of its shareholders.

Profit and Purpose

This does not make Kickstarter a not-for-profit company. Profit is still their goal; but they are now legally obliged to pursue and report on their ‘positive impact on society'. Both aims – profit and community benefit – must be considered by their board when making decisions.

Kickstarter’s founders wrote on their blog this week:

“Companies that believe there are more important goals than maximizing shareholder value have been at odds with the expectation that for-profit companies must exist ultimately for profit above all.” 

While it may seem that making this decision would dissuade shareholders from investing in the company, Kickstarter reported voted ‘unanimously’ to change its legal status.

PBCs in the UK?

Public benefit corporations are a fairly new piece of legislation in the United States, first passed in 2010. Since then, 31 states in the US have passed benefit corporation laws, which speaks of a growing trend of ‘for-profit and for-purpose’ companies. While companies that have changed their legal framework in this way are in the minority, Kickstarter hopes that will inspire others to follow.

Public benefit corporations do not presently exist in the UK. In the UK, 'Companies Limited by Guarantee' have similar legislation, but it is important to note that these are not-for-profits.

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