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Kickstarter and the Rise of Purpose-Driven Corporate Social Responsibility

Start-ups are known for changing the world with groundbreaking technology. Now they’re adding disruptive approaches to calculating their bottom line as well by baking sustainability and public benefit right into their economic model, charters, and incorporation status.

The New York Times held up KickStarer as the harbinger of this new breed of company, highlighting the trend of forward thinking start-ups passing on big acquisitions and IPOs in favor of creating public benefit and environmental sustainability.

From tech to design, young companies are baking sustainability right into their charters, and proving out their claims with dramatic transparency.

According to the New York Times article, leading start-ups like Kickstarter are changing perceptions of what a successful growth model looks like by reincorporating as a “public benefit corporation”. Under the designation, companies must aim to do something that would aid the public (such as Kickstarter’s mission to “help bring creative projects to life”) and include that goal in their corporate charter. Board members must also take that public benefit into account when making decisions, and the company has to report on its social impact.

Another new corporate designation, the so-called “B Corp” (as opposed to the well known “C Corp” designation used by most companies), prioritizes sustainability. B Corps must meet rigorous environmental and social-responsibility standards, which they report annually to shareholders — though taking on the status has no binding legal impact. Companies including the e-commerce site Etsy, which went public in April, and Warby Parker, the eyeglasses retailer, have opted to become B Corps.

Recent international research by the Economic and Social Research Council demonstrates companies are now expected to measure their environmental, social and economic impacts, identify targets for improvement, audit their progress internally, and seek external verification to increase transparency. Kickstarters’ focus on maintaining the ability to ensure that money — or the promise of it — would not corrupt their company’s mission of enabling creative projects to be funded is somewhat of an exception in corporate social responsibility (CSR). The study also found that larger companies have made far slower progress in reporting on social responsibility than on their green credentials.