California State CapitolIf you have been following the journey and progress of AB 361— California’s bill that would create a new corporate form for social entrepreneurship called a benefit corporation— from idea to law (see here for a rundown of recent posts), you may be wondering where AB 361 stands right now. And, if there is anything you can do to support this social innovation legislation.Good news, we have updates! And, there are a few simple ways to show your support and cast your ‘vote’ for policies designed for social innovation.

Nod by Senate Appropriations

As California Assemblymember Jared Huffman (the bill’s sponsor) noted in this brief interview taken in July 2011, AB 361 was awaiting final vote from the State Judiciary Committee and, on approval would  head to the State Senate Appropriations Committee.

AB 361 did pass State Judiciary and, most recently, was referred forward by the CA Senate Appropriations committee (as per CA Senate Rule 28.8) since the bill will not have a significant fiscal impact on the state budget.

Up Next: Senate Floor

As early as next week the California State Senate will review the benefit corporation bill in its second reading and will vote on it after a third reading.

Then: Back to State Assembly for Concurrence Vote

Once AB 361 passes in State Senate it will be sent over to the California State Assembly for a final vote, called a concurrence vote.

Finally: to the Governor’s Desk

Passing in the State Assembly, AB 361’s final stop will be Governor Jerry Brown’s desk for final review and signature.

Cast your “Vote” for AB 361

If you are a state resident, you can contact your California state senator and express your support for AB 361 and other legislation that reflects the changing paradigm of business—with the new emphasis on social entrepreneurship. You can mention that how entrepreneurs and consumers in California and specifically your district want options that enable corporations to incorporate not only to generate profit but to have a net positive impact on society.

You can read more about California’s benefit corporation legislation in this Fact Sheet for AB 361 released by Assemblymember Huffman’s office.

Though Innov8Social is entirely dedicated to exploring social innovation, after reading a few posts you still may find yourself asking, “so, what exactly is social innovation again?”
“Social” Typecasting
And you wouldn’t be alone—in the social media-wired world you say the word “social” and many people immediately begin thinking the trifecta: Facebook, Twitter, and everything else (Google+, LinkedIn, etc.)
While online networking capabilities can play a major role in enabling social innovation—the “social” in social innovation is more related to public good or public benefit.
Stanford Professor Rob Reich Explains Social Innovation
If you have about a half hour, the clip below can answer many of your questions, provide a framework to understand social innovation, and introduce you to roses and thorns of the field.
The address is by Director of Program on Ethics in Society at Stanford University, Rob Reich made to 2011 Stanford graduates at Stanford Class Day Lecture on June 11, 2011.
Watch below and read further below for an overview of some of the topics raised.


Key Points from Professor Reich’s Talk:

  • The new social economy seeks to produce social benefits
  • Buzzwords: social entrepreneurship, social innovation, impact investing, venture philanthropy, social enterprise
  • Traditional balance of 3-sector society: government sector, business sector, social/philanthropic sector
  • Today, the boundaries between the sectors are blurring
  • Now, social innovators seek to deliver social benefits within each sector and across sectors
  • Social innovation in business: microfinance, corporate social responsibility, creative capitalism, socially responsible investing
  • Social innovation in non-profit: importance of business strategy, increased focus on measurable social impact (i.e. charitable return on investment/donation), new corporate/legal forms
  • Social innovation in government: White House Office of Social Innovation, partnerships between foundations and U.S. government (Investment in Innovation Fund–I3), Chief Technology Officer and Open Government Initiative
  • Perils of new social economy: 21st century warfare is asymmetrical warfare (nation state vs. non-state actor….i.e. war on terror), unchecked innovation in financial sector contributed to 2008 financial meltdown, 21st century innovation is happening in 20th century framework of policy
  • Concerns: there is inherent tension between for-profit pursuit and social mission, current legislation and structure for non-profits has not been updated since 1969, some forms of social impact are difficult or impossible to measure
Cruise to the San Francisco Chronicle building in SF and you may discover something unexpected on the first floor. A Hub. Or, The Hub (SoMa) to be more specific.In exploring social innovation, a former colleague who is now deeply engaged in the field suggested checking out Hub SoMA. And no sooner did we sign in and enter the lobby–featuring trendy seating and a number of individuals hard at work on a late Thursday afternoon– did I begin to realize that this is no ordinary co-working space.

Take a look at the quick video showing a 360 degree view of the Hub SoMA to get the look & feel…and then read on to find out a few features that make the Hub unique and how it could be a useful tool for any entrepreneur exploring the social innovation space.


Funk and Soul


Alissa Walker wrote a great post on the Hub for Fast Company (“The Hub Bay Area: Where Change Agents Share Space and Ideas”) in which she overviews the Hub, its offerings, and sheds a little light on its history and design—including that it was designed with advice from the well-known design firm IDEO and under the direction of a local lead architect.

Visiting the Hub SoMA, I definitely picked up on vibes of funk and soul. Work tables on wheels, unique conference spaces, privacy booths for telephone calls (or very small meetings) and conference rooms complete with writable glass walls are all features that give it a funky, groovy feel. And the soul is the sheer diversity of individuals, organizations, causes, and ideas that flow through the airy space in any given moment.


Movement


Sans cubicles there is a lot of movement at the Hub. Literally. Walk around and you will see a CEO of one organization walking over to chat with a founder of a budding social venture. Or you may spot an blogger taking a break for tea and chatting with a developer stirring a latte. Wait until evening and you may see all of the desks and chairs shifted over to host a Hub workshop or networking event.  There is movement at the Hub—and that can be a welcome counterbalance to inertia that organizations and individuals may face when trying to think through a big idea.


en-Listing


Membership at the Hub requires committing to a monthly fee that enables you to use the space for a specific allotment of hours per month. The lowest increment is five hours per month for $25. Is it really worth it? One of the big adds in being a Hub member is being a member of the mailing list—and that may itself make the monthly fee worthwhile. Through the internal listserv you can post about your organization and receive updates on employment opportunities, upcoming events, volunteer activities, and social/health happenings.

Being a Hub member at SOMA also gives you access to Berkeley’s Hub (and vice versa).


Sexy Salad Wednesdays


A peek at Hub SoMA’s calendar  reveals a number of events—intended to inform, introduce, and entertain. Perhaps one of the most memorable events our host (and tour guide) for the afternoon mentioned was Sexy Salad Wednesdays. A time to bring the ingredients you have and share with others to create some healthy, delicious, and downright tempting fruit and veggie re-mixes.

The emphasis on social activity is a key feature of Hub membership. Just like communities aren’t based soley on work, the Hub organizers realize that social change is effectively fostered when it’s, well, social.

From a newly-minted Hub SOMA member, you are invited to take a tour, a peek, and perhaps partake in a sexy salad and consider joining a community of social innovators.


There is an inherent dance in social innovation—balancing social & environmental sensibilities while harnessing entrepreneurial drive. Coming up on the side of small business is a compelling organization that was created for the sole purpose of helping small businesses launch and thrive.

SCORE logo signThink SCORE.
If you have are negotiating success in entrepreneurship, the Service Corps Of Retired Executives (SCORE) may be able to help.  It is a 501(c)3 non-profit, is run by retired/semi-retired volunteers who have either owned & operated a small business or who held a senior position at a corporate level, and are passionate about making business ideas blossom.
After attending a workshop at the SCORE Silicon Valley office, I sat down with Membership Chair, Lido Scardigli to learn about the organization and how it can help budding social entrepreneurs.
Here are 3 ways social entrepreneurs can connect with SCORE:
1. Enlist a Mentor. With over 13,000 mentors in their database, there is likely one that is a good fit for you, your idea, and your company’s evolution. Lido mentioned that an idea is often enough to get the ball rolling with a mentor. And that all too often small businesses wait until they are in a tight spot to seek out help.  Most remarkable? The mentorship services are free! Imagine having an experienced mentor to guide you through the initial stages of building your big idea. The right help at the right time, is priceless.
2. Attend a Workshop. Legal Issues for Startups“, “Simple Steps Startup Basics”, “Marketing on the Internet“, “The Business Plan” are a few of the types of workshops offered regularly by the office in Silicon Valley. And with over 360 SCORE chapters nationwide, you may find these and more offerings nearby.  The workshops usually call for a fee and can be useful, especially for first-time entrepreneurs trying to conceptualize the multitude of moving parts.
3. Use the Business Library. Whether you want to research which form of business you should  incorporate as, find templates for common business forms, or seek written inspiration from entrepreneurs who have succeeded—you can probably find a book or two of interest at a SCORE office. And the advantage of reading the books at SCORE is that you can talk to an experienced volunteer if you have any questions.
You can also peruse the SCORE website for webinars, free templates, how to register for an email mentor, upcoming events, and catching up on the latest headlines.
Launching Innov8Social has been marked by attending fascinating events, the opportunity to be part of compelling legislative efforts, and the chance to interview passionate people in the field.

And it may be time stretch our handshake a little further. Innov8Social would love to enlist your social media support for our efforts.  You can email here with any ideas, feedback, or observations you have on the blog, the concept, and topics discuss.

Q: How can you support Innov8Social? 
A: Here are 5 things you can do in 5 minutes +1
1. Become a fan of Innov8Social on Facebook here
2. Join the email listserv here
3. Become a member of the LinkedIn group here
4. Follow on Twitter here
5. Subscribe to the YouTube channel here
+1. We can’t overlook the latest online social sharing tool, so feel free to share posts of interest on Google+ Email here for an invite

 

An Idea Only As Compelling As the Community that Supports It 
An idea is only as compelling as the community that supports it~~ and part of Innov8Social’s mission is supporting the idea of social entrepreneurship by building a community of informed, passionate, active individuals.
Arigato ~ Mahalo ~ Merci ~ Shukran ~ Grazie
Thank you for your support. It means the world. I hope engaging with Innov8Social will be as meaningful for you as it already has been for me.

How do you get from idea to state law?

In following the journey of California’s AB 361 and the number of other bills across various states that would create (or have created) a new corporate form called a benefit corporation—learning the impetus for the legislation is often as interesting as

photo: votesmart.org

photo: votesmart.org

understanding the process.

And the story of California’s AB 361 is particularly interesting. You can watch California State Assemblymember for the 6th Assembly District Jared Huffman talk about the crowdsourcing origin of AB 361 and other key points of the bill below.

Assemblymember Huffman is the sponsor for AB 361, which was recently voted through the California State Senate Committee on Banking and Financial Institutions and also successfully passed through the State Judiciary Committee.

California Benefit Corporation Law, From a Legal Lens

How can new entrepreneurs, founders, social enterprises be ready for benefit corporation legislation? Why might new businesses opt to incorporate as a benefit corporation? What makes benefit corporation compelling—from a legal standpoint?

Meet Donald Simon, Attorney and Co-Author of AB 361

These are a few of the questions we asked Donald Simon, Attorney and Partner at Wendel Rosen Black & Dean and Co-Chair of the Legal Working Group. Simon is an environmental activist-turned attorney who has remained steadfast in his passion for conservation causes —having founded two 2 environmental non-profit organizations. He has been a lead attorney in drafting and advocating for AB 361.

We caught up with him after the California State Senate Judiciary Committee hearing on California’s benefit corporation legislation, AB 361.

Watch the Interview

Now it’s the Judiciary Committee’s Turn

california state capitolAs you may recall, last week AB 361— the California bill that would create a new corporate form called a benefit corporation— was presented by sponsor Assemblymember Jared Huffman and witnesses (including certified B corporations, attorneys, and investors) at the California State Senate Committee on Banking and Financial Institutions. It marched forward from there with a resounding vote of 5-1.

The next stop was the Senate Judiciary Committee which heard arguments for AB 361 on July 5th 2011.

How did it go?

With many many more bills on the docket this time around, Senator Noreen Evans— Moderator for the Judiciary Committee– warned early on that argument and testimony for all bills would be kept brief.  When AB 361 was presented, Assemblymember Huffman once again introduced the legislation and outlined his three-prong argument for the bill.

Attorney Donald Simon testified to the legal structure and rationale behind AB 361, emphasizing the reaching effect it could have by creating a unique reason for entrepreneurs and founders to opt to incorporate in California instead of other states, in order to be able to be registered as a benefit corporation. He also provided counter-arguments to opposing concerns—emphasizing the complementary relationship that b corporations have already demonstrated to have with non-profit sector.

A number of certified B corporations and supporters (Innov8Social included!) also provided ‘me too’ testimony.

Opposition to AB 361 also voiced their concerns that California may not yet be ready for a new corporate form for socially responsible business and/or availability of other hybrid structures and potential opposition from California non-profit organizations.


How did the Judiciary Committee vote?

In a vote of 3-0 the bill was dubbed ‘on call’ — to be forwarded to Senate Committee members who were absent at the time of the vote.

By the following day, the final vote was in: 4-0 with one abstaining vote. AB 361 moves forward.

Is there video of the hearing?

Calchannel.com streams State Assembly and Committee hearing sessions online. You can find the Judiciary Committee testimony here: http://www.calchannel.com/channel/viewvideo/2810.

Keep a lookout around 1:30 for the beginning of AB 361 argument.


What’s next for AB 361?

Next is the Senate Appropriations Committee in August after the summer recess, followed by the Floor of the State Senate, then back to Assembly, and then to Governor Brown’s desk. That is the path that AB 361 will have to successfully follow to become California Law.

    How can social innovators and supporters understand the legislative process better? 

    Simple, get involved.
    That’s what Innov8Social did this past week when we joined a number of social enterprises, state legislators, and policy makers at the State Capitol in Sacramento to observe and testify in support of AB 361 in a Senate Committee hearing.  AB 361 is the California bill that would establish a new corporate form in California. Businesses that elect to incorporate in this new form (i.e. as benefit corporations) would do so with the purpose of creating a general public benefit with their business.
    What is a general public benefit?
    The legislation outlines a general public benefit as a “material positive impact on society and the environment“—taken as a whole and assessed under a 3rd party standard.

    AB 361 at CA Senate Committee on Banking and Financial Institutions

    The June 29, 2011 hearing for AB 361.AB 361’s sponsor, Assemblyman Jared Huffman delivered the first remarks to the California State Senate Committee on Banking and Financial Institutions, chaired by Juan Vargas.

    He outlined key points of the legislation, which was submitted by a number of his constituents.  A few key points he noted:

    • incorporating as a benefit corporation would be completely voluntary
    • benefit corporations would be required to show material positive impact
    • benefit corporations would be required to meet higher standards of accountability and transparency
    • benefit corporations would create a way for consumers to contribute to social impact through their patronage
    • the concept of stakeholders (including the environment, community) would expand on the fiduciary relationship that exists currently between corporations and shareholders to maximize profit.
    • a version of the benefit corporation bill has already been passed in 6 states
    Several witnesses then delivered testimony on the basis of their support of AB 361. These supporters included:
    • Ryan Williams of Method — a scientist at Method–a company that aims to do more than business as usual spoke about Method’s aim to improve the world we work in through supporting infrastructure changes such as AB 361.
    • Don Shaffer — an investor and President & CEO of RSF Social Finance attested to the hundreds of millions of dollars that have been invested in B corporations and underlined the interest of investors in funding social enterprises.
    • Donald Simon — an attorney and partner at Wendel Rosen Black & Dean and Co-Chair of the Legal Working Group & Founder of 2 environmental non-profit organizations pointed out the social entrepreneurial roots already tied to California and the need to update the arcane view of fiduciary duty in the state.
    • John Montgomery — an attorney and Co-Founder of Montgomery & Hansen and Co-Chair of the Legal Working Group behind the bill noted that AB 361 would make California a leader in social enterprise.
    • William Clark — attorney and partner in Drinker Giddle and Reath LLP who has been integral in formulating the model benefit corporation legislation that has been passed in 6 states.  He mentioned that he and B Lab (the organization co-sponsoring the bill) have been working on California’s legislation for the past 2 years.
    A number of other witnesses provided brief testimonial support for AB 361 including leaders from: svt group, green age 360, One World Futbol, inNative, Worklore, Innov8Social, and others.
    Was there opposition?

    There were speakers who voiced opposition to AB 361. This included members from the California Association of Non-profits who were concerned about the impact AB 361 could have on state non-profit organizations seeking funding, noting a potential competition for resources.Attorney Steven Hazen also voiced concerns about the impact of any modification to fiduciary duty standards and the impact on shareholders. He also noted his support of AB 201, a bill proposing the creation of a blended corporate form called a flexible purpose corporation.

    Did AB 361 pass?

    After about an hour of testimony and answering of questions from Committee members, AB 361 went to vote. It was passed by the Senate Committee on Banking and Financial Institutions 5 (in favor) – 1 (against) – 1 (abstained).

    It passed through the Committee.

    What’s next for AB 361?

    It is due in the California State Judiciary Committee next week where it will face a similar process of presentation, witness testimony, and questioning from Committee members.

    While in social innovation exploration mode, last month I reported back from an interesting conference on sustainable enterprise, in which we learned a few key buzzwords in the field.  One was the “Green MBA“—with special focus on triple bottom line accounting.

    Which makes me wonder, is there a parallel “social innovation” LL.M course of study?
    An LL.M is a postgraduate law degree (a Masters in Law) that is typically a one-year, full-time program. It is often pursued to specialize in an area of law. For example there are LL.M programs in taxation, environmental law, international law, and intellectual property.
    With legislative innovations such as the benefit corporation and B corporation gaining traction, it seems that it would be useful and helpful to have attorneys who specialize in this emerging field.  Four pioneering states have already passed benefit corporation legislation. In California, the benefit corporation bill (AB 361) passed a vote in the state assembly 58 to 17, and New York’s benefit corporation legislation (A4692-A/Silver) is heading to the governor’s desk…With the connection between social innovation and law becoming a little more foreseeable than Mrs. Helen Palsgraf and harm caused by an ill-fated newspaper-wrapped package, it is food for thought to consider what tools and methods law students and attorneys have to study this subject further.

    It would be great to hear feedback on any programs you know of, you can also find Innov8Social on Facebook and connect on this topic there.