How Kickstarter Legally Protected its Mission

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.

If you’re interested in hearing more about our services, please get in touch. 

Article Disclaimer

This article is for general information only and does not constitute specific advice. You should not rely on the information in this article.  Fiona Bruce Solicitors recommends that you seek our specific advice if you wish to rely on the any part of this article. Whilst Fiona Bruce Solicitors makes every effort to ensure that the article is accurate, Fiona Bruce Solicitors excludes all liability for claim, loss, demands or damages of any kind whatsoever (whether such claims, loss, demands or damages were foreseeable, known or otherwise) arising out of or in connection with the use of this article or any other information contained on this website. Any information provided only applies to England and Wales.