Kickstarter - Now a Benefit Corporation

Polygon asks the question on how changing to a Benefit Corporation will change kickstarter by interviewing CEO Yancey Strickler.

What's in a name?

So what exactly is a public benefit corporation? It's a new kind of corporate entity, officially recognized in the state of Delaware (where Kickstarter is incorporated) in 2013. Now available as an option for companies in 27 different states, Strickler says it falls somewhere on the spectrum between a corporation and a true non-profit.

"A benefit corporation has a legal responsibility to perform a social good, to provide a benefit to society," Strickler said from the library of the Kickstarter headquarters in Brooklyn, New York last week. "A company that is a benefit corporation has the opportunity to inscribe legally into their founding corporate documents what those benefits actually are. Rather than just being a company that does good in its practices - and that's something that can change with time - this hard codes that into the deepest possible fabric of the corporate structure. And so it's a very different way of thinking about how a for-profit company would operate.

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Kickstarter's new charter, at a little over 500 words, is a surprisingly light document. But it includes directives that you'll not find in the founding principles at other organizations. Among them are explicit promises that Kickstarter will "defend the privacy rights and personal data of the people who use the service," and that they will "not lobby or campaign for public policies unless they align with its mission and values, regardless of possible economic benefits to the company." One even prohibits the use of "loopholes or other esoteric but legal tax management strategies to reduce its tax burden."

The core of it, however - and the part that Stickler is especially proud of - is Kickstarter's "5 percent pledge," in which the company will annually donate 5 percent of "its after-tax profit towards arts and music education, and to organizations fighting to end systemic inequality." At least half of that money will be earmarked for underserved communities in New York City itself.

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More information.

If they really want to benefit the public, they'll start figuring out some ways to vet projects and follow-up on failures so that their ToS aren't a toothless joke that drives people away.

Vetting is certainly needed. Having fewer projects appear but more high quality ones would be better for everyone.

I don't see a big problem and I've been very happy about Kickstarter so far. I don't think it would be wise to risk scaring developers away instead.

I don't want them scared off per se. More like better prepared with sensible budgets and community thinking in mind from day one.

Silver said:

I don't want them scared off per se. More like better prepared with sensible budgets and community thinking in mind from day one.

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That might well scare away daring and ambitious developers. I don't think greatness comes often from safe and sensible thinking. It would be fine for all these remakes and throwbacks to archaic predictable formulas.

But for the kind of game I really want to see using the crowdfunding model, it might well mean many developers wouldn't be able to dream big.

Obviously, it might mean fewer failures - and if that's so important to people, I guess I can see the point.

Personally, I much, much prefer investing in something that might run over-budget and get a bit out of hand - but with an ambitious design, than I'd want to invest in something that I've seen dozens of times before with a new coat of paint.

But that's me.

I see your point. I'm thinking more along the lines of providing guidance to developers rather than hard and fast rules; except for obviously dodgy things you know?

Silver said:

I see your point. I'm thinking more along the lines of providing guidance to developers rather than hard and fast rules; except for obviously dodgy things you know?

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If there's a smart way to do just that, I guess it might work

Getting better and better. Hiding behind the doing good facade.

One even prohibits the use of "loopholes or other esoteric but legal tax management strategies to reduce its tax burden."

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No kidding. What's the point of being located in Delaware if you dont trust that state to provide that kind of services?
Let the Delaware government do their job and collect from the backrow. That should be enough.

The core of it, however - and the part that Stickler is especially proud of - is Kickstarter's "5 percent pledge," in which the company will annually donate 5 percent of "its after-tax profit towards arts and music education, and to organizations fighting to end systemic inequality."

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The maffia does that. The drug cartel do that. The warlords do that.
Redistributing one fraction of their revenues to help people.

A fraction remains a fraction though. They want to do good? They stop their activity. From that point, it is no longer 5 per cent that is available, but the entirety of it.

Which systemic inequality by the way? KS projects reflect themselves systemic inequality, in the ways some people are allowed in the scheme of theft by underdelivering and other people are not.

The delivery field is not a great equalizer. Some deliver. Other dont.

Undelivering is a great equalizer, a lot more people are able to undeliver. Actually, people who fail at underdelivering fail because they try to deliver instead of focusing on underdelivering.

So KS want to commit money to end systemic inequality while their own system reflects systemic inequality?

Self termination will better serve that purpose than re allocating a fraction of the collected money from a system that sustain inequality.

And so it's a very different way of thinking about how a for-profit company would operate.

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So apparently, a for profit company allow people to live better with themselves, they do not need to dress their acts to get a feel good sensation.

ChienAboyeur said:

Which systemic inequality by the way? KS projects reflect themselves systemic inequality, in the ways some people are allowed in the scheme of theft by underdelivering and other people are not.

The delivery field is not a great equalizer. Some deliver. Other dont.

Undelivering is a great equalizer, a lot more people are able to undeliver. Actually, people who fail at underdelivering fail because they try to deliver instead of focusing on underdelivering.

So KS want to commit money to end systemic inequality while their own system reflects systemic inequality?

Self termination will better serve that purpose than re allocating a fraction of the collected money from a system that sustain inequality.


So apparently, a for profit company allow people to live better with themselves, they do not need to dress their acts to get a feel good sensation.

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Developers reputation for delivering (or not) is sadly the best metric we have available. Risk is kickstarters business and they should be doing more to minimise that risk. Although I'm not sure what they could do myself short of project managing every campaign which is unrealistic.

I tried to read Chien but I failed again.

That's an opportunity. Not being understood offers the luxury to write things as they are instead of constantly spinning.

Silver said:

Developers reputation for delivering (or not) is sadly the best metric we have available. Risk is kickstarters business and they should be doing more to minimise that risk. Although I'm not sure what they could do myself short of project managing every campaign which is unrealistic.

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KS is in the business of underdelivering. The reputation to deliver is only relevant to situations when people are committed to deliver.

The goal when going to KS is not to deliver, but to underdeliver.

This broadens the pool of people who are likely to be attracted to KS. Many less people who are likely to be excluded because they are not proficient enough to deliver.
The proficiency level to underdeliver is much lower than it is to deliver.

KS offer to allocate a fraction of their revenues to fight systemic inequality while the KS platform exhibits system inequality.

The lowering of the bar (underdelivering) means that a lot more people should be represented as successful crowdfunded project managers.

That is not the case. And KS is itself a system of inequality. People who are offered to underdeliver on KS come from the same stock that is not representative of the people who are likely to run properly an underdelivering project.

What is the point of allocating revenues to fight systemic inequality when you promote systemic inequality yourself?

Arsonists might make a living off putting fire to forests. Though, if they are interested in preserving forests, instead of allocating a fraction of their revenues to reforestation, they might as well refrain from putting fire to forests.
It will work better.

great, I read systemic inequality and got triggered.

ChienAboyeur said:

That's an opportunity. Not being understood offers the luxury to write things as they are instead of constantly spinning.

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Dude. Really. That is an utterly bullshit thing to say and you know it. If you can't be fussed to communicate coherently with people, you have nothing to say except mutter to yourself like Foul Ol Ron from Discworld. Instead of a cop-out, why not try and reframe your thesis so people can actually read and understand it? Otherwise you're useless to the conversation.

And I'll add that I *want* you to add to the conversation. You've got something to contribute, but you've got to try harder when formulating your thoughts. Ask for help if you're having trouble. Don't just throw your hand up in the air and get all snooty.

Ahem. A couple points then:

- This is undoubtedly a good thing. I'm happy that we have another legal fiction that people can incorporate under other than being forced to maximize shareholder value. That, I think, is at the root of a great many societal ills.

- I'd also ask people not to forget that Kickstarter isn't just a major game project fundraising site. Before Double Fine blew the doors open, nearly all projects were for small amounts and commonly about music and art. That's KS's roots and from their press release, what they're trying to support. The big ones are the gravy train, but this kind of thing is an avenue to support arts funding well beyond pop culture. I fully agree with DArtagnon that keeping the access as open and welcoming as possible is a good thing.

Apparently the primary benefit of being named a Benefit Corporation is being able to attract capital from social investors because of the associated reputation. It also provides some additional legal protection for the company's directors and officers. But there are no tax benefits and they are held under additional legal duties to ensure they meet their corporate purpose.

Systemic inequality = social justice warriors. They are going to take from some people and give it to others who they think are being discriminated against due to racial, social and sexual orientation etc....

I always knew they were a left wing group. I hope some competitors pop up. I think they should stick to what they do and stay out of the social justice BS.

Saxon1974 said:

Systemic inequality = social justice warriors. They are going to take from some people and give it to others who they think are being discriminated against due to racial, social and sexual orientation etc….

I always knew they were a left wing group. I hope some competitors pop up. I think they should stick to what they do and stay out of the social justice BS.

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I didn't see it like that, but talking about economic inequality which exists everywhere and it is actually most seen in rich countries where difference between have and have nots is biggest.

ChienAboyeur said:

No kidding. What's the point of being located in Delaware if you dont trust that state to provide that kind of services?
Let the Delaware government do their job and collect from the backrow. That should be enough.

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You're kidding, right? The reason everybody and their uncle incorporate in Delaware is that the state has famously weak S-corp/C-corp obligations. Corporations are governed by the statutes in the state where they're incorporated.

A fraction remains a fraction though. They want to do good? They stop their activity. From that point, it is no longer 5 per cent that is available, but the entirety of it.

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100% of $0 in revenue, yes. I suppose your claim is that Kickstarter does more social damage by simply existing than it could ever address via its 5% pledge, but you don't support that in any way.

In other news, Bedwyr is on target here. The biggest benefit of a B-corp (and one not explicitly addressed in this piece) is that "shareholder value" can now be considered among other goals, including social good, rather than it receiving the legal privilege of overriding all other goals. KS had a bunch of angels and even some VC money, so I'm a little impressed that they were all on board with this change.

Archangel said:

I didn't see it like that, but talking about economic inequality which exists everywhere and it is actually most seen in rich countries where difference between have and have nots is biggest.

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Its another wing of the same mentality. Income inequality, evil rich! Raise minimum wage! We should all earn the same! Its the thinking of the left wing socialist groups currently destroying the western world with BS terms like income inequality, white privilege, social justice etc....