In 2010, with over 25 years working in transactional matters involving real estate, trusts and estates, commercial matters and finance, attorney Timothy S. McCausland began investigating the growing trend of states adopting benefit corporation legislation. The B-Corps won McCausland over, especially since at the time he resided within a more rural part of New York and felt that the B-Corp would be a great fit for his region. By working alongside a colleague and friend, Gary Schuster, and familiarizing his state legislators with benefit corporations, the pair was able to push for the legislation and ultimately, for benefit corporation legislation to be passed in New York.
Today, we’re interviewing Timothy, currently serving as the Senior Vice President for Orange County Trust Company, on where he thinks B-Corps are heading, the benefits of going B-Corp for your business, and why once the switch is on for setting up a B-Corp, it can’t be switched so easily back off.
1) What led you to become involved in the Benefit Corporation movement?
When I first started hearing about benefit corporations, I was running an economic development agency in a Sullivan County, NY, which is home of the original Woodstock. I remember thinking it could be a great fit there because of that “back to the garden vibe.” It seemed like the right kind of model and I thought it could take hold in a community like ours. I also thought it could help with an economic development revival, which was needed.
Being a lawyer, I read a little bit more and started to see where New York was on this issue. And at the time NY hadn’t even begun to consider benefit corporations. The thing about a small community is, I knew my elected representatives personally and saw them all the time. I actually would consider them friends. So I brought up the benefit corporation concept to our state assemblywoman, and told her that it could help with an economic development boom in the community. She began to think about it and had to recruit some other people to support, and it kind of went from there. Along the way, B Lab became involved and they’ve really been the lobbyist driving this. I was kind of the one-man shop pushing for B Corps in my community.
2) What are your thoughts on how the Benefit Corporation movement is evolving?
It’s slow – not so much because people don’t know about it, but because it’s sort of like what happened with the LLC. It took the legal community a while to embrace the LLC as far as the practical nature, how you roll it out, and in terms of lawyers being comfortable advising clients about it. The benefit corporation is similar. It will take a while for lawyers to get past the stage of “I’m not confident enough to let you form a B Corp.” But as local and state bar associations have more seminars, workshops, etc., and as lawyers get more comfortable, then they’ll start recommending benefit corporations and more people will get behind it.
3) What are some of the benefits you see in choosing a Benefit Corporation over a traditional for-profit or LLC?
A lot of it falls back to branding. As a company, it’s holding yourself out to the world as a B Corp and saying that you’re in the business of making money, but also “saving the planet.” You’re saying “that’s a good thing and people will buy that product.” Also, in the end, the benefit itself has to be real and that’s the beauty of it. It’s ultimately still up to the market to determine whether or not it all makes sense, because it’s up to consumers to determine whether or not it sense to them.
You start a benefit corporation because you have a parallel mission you want to follow. And you want to be in the position where, if you want to raise capital down the road, your shareholders know you have a dual mission and not just a for-profit mission.
4) What do you think the future looks like for benefit corporation movement?
I do think there is a good future. Right now we’re just experiencing the growing pains of anything new – especially when you have lawyers involved. But once people realize that there’s not much difference from a traditional for-profit – in terms of bylaws and all that – then there will be more growth in the movement.
I think you have to have some companies that are very successful and that have a benefit that is admired, universally. We need rock stars, like Patagonia, to show that this works. Nobody wants to be the first one in the pool.
5) What is some advice you would give to entrepreneurs who are thinking about starting their own Benefit Corporation?
Do your research. Know that it’s easy to set up a benefit corporation, but once you get to a place where you have more than a few shareholders, it’s not easy to turn the switch off. Be careful that what you choose as your mission is one that’s not offensive to too many people. You’re still in the business to make money so don’t pick a benefit that people won’t get behind. You’re still in business for the consuming public, so make sure that there is a return on investment to the company. Also, what you choose as your benefit should have a material connection to the company itself.
Have some more questions about B-Corps for Tim? Reach out to him at tmccausland@orangecountytrust.com or visit the Orange County Trust Company online for more information.
Are you a B-Corporation that would like to be featured on our blog? Or an expert in B-Corps? Email Heather at htaylor@mycorporation.com for more information!