How’s your state of mind these days? 🧐
With so much of the world in tumult these days, on any given day it’s an open question for many. So, we’re happy to relay the world’s state of affairs just got a teeny bit brighter as the State of Oregon became the first state government to boost public benefit corporations by legislating a contracting preference for this type of business.
As a good number of Unit of Impact’s members are benefit corporations — and because benefit corporations in most states are required to publish an annual benefit report, aka impact report (ahem…), we figured you would be interested in learning more about this new legislation.
House Bill 3572 was signed into law on July 31. It enables Oregon state agencies to give a 5% preference in procuring goods and services from benefit corporations that are incorporated in the state of Oregon.
How This Works
If you’re not savvy to the world of governmental procurement, here’s what this means: If the value of the benefit corporation’s bid on a job is no more than 5% above that of a non-benefit corporation, a state agency has the option of selecting the higher bid.
For context, this works much in the same way as similar governmental contracting preferences that incentivize and promote veteran-, women-, and minority-owned businesses.
The catalyst for Oregon’s new law is recognition of the positive social and environmental impact of the benefit corporation legal structure. Companies that select this legal structure are required to create a public benefit; must use an independent verification standard to certify the benefit they create; and must publish (ahem number 2) an annual report detailing their good works that provided a public benefit. You can learn more about benefit corporations in our blog post, “What is a Benefit Corporation?”
We’ve got some experience with this legal business structure. Two of our co-founding companies are benefit corporations (in Maryland and Idaho 💪) and the third would be if its state had this legislation (ahem number 3, looking at you, North Carolina!), In our view, governments (from small municipalities to states to countries) should be incentivizing companies that conserve resources and tangibly invest in creating positive and measurable outcomes for communities.
A brief primer on governmental incentives for sustainable businesses.
While Oregon is the first state to enact this legislation, this isn’t public procurement’s first rodeo. On the city level, San Francisco was a pioneer with procurement preference for benefit corporations, but it wasn’t used much, and the law expired a few years ago. Cook County in Illinois, the cities of Los Angeles, Philadelphia, and Spokane, WA (you go, Spokane — home to one of our partners, Measure Meant!) all provide varying procurement preferences and tax benefits for, depending upon the locale, sustainable businesses, sustainably certified companies, certified B Corps, and benefit corporations.
On the national level, the federal government this summer introduced new procurement standards aimed at promoting the acquisition of sustainable products and services.
There are more than 2,500 active benefit corporations in Oregon and 15,000 across 40 states that have approved this legal business structure. The Province of British Columbia and several other countries have recognized business models similar to benefit corporations.It would be great to see every state with benefit corporation legislation provide governmental contracting preferences for businesses that use fewer resources and create more social impact, don’t you think? That’s a state of mind — and government — we’d like to live in. 🧘🏻♀️