BC approves “Community Contribution Company” to benefit social causes

Last month, Prince Charles and his wife Camilla, the Duchess of Cornwall, paid a visit to Canada as a part of celebrations honouring the Queen’s Diamond Jubilee, during which they highlighted the importance of service rendered to communities by Canadians across the country. As if on cue for the red carpet arrival, the province of British Columbia a few days earlier invoked royal assent in order to amend the BC Business Corporations Act and make way for the funding of a new business model known as the “Community Contribution Company” (C3).

This new model – hitherto unseen in Canada – is roughly based on the structure of “community interest companies” (CIC) found in the royals’ homeland, the United Kingdom. As the pet project of Surrey-White Rock Liberal MLA Gordon Hogg, this novel concept is meant to fuse aspects of both for-profit and non-profit ventures together in an effort to produce a commercially successful enterprise that is aimed at rendering socially beneficial services to a diverse range of communities across the country.

Understanding the concept

In a sign of the times, C3 companies will not only focus on providing services and products that are specifically tailored at assisting communities with social issues, but they will also be required to “devote a portion of [their] profits to community purposes”. While traditional for-profit enterprises are not always organized with business ethics and social responsibility in mind, the C3 model represents an emerging generation of commercial ventures led by progressive-minded entrepreneurs who are aware of societal problems, and who seek to establish organizations in the interests of both making money and also giving back to their communities.

Although the C3 is a first in the world of Canadian business, similar commercial set-ups exist around the world which mirror this new arrangement including the aforementioned British CICs, “Low-Profit Limited Liability Companies” (L3Cs) in the United States, “Flexible Purpose Corporations” (FPCs) in California, and “B Corporations” which have been endowed through legislation in Vermont, Maryland, and New Jersey. Alex Wood, the Senior Director of policy and markets at Sustainable Prosperity (SP), notes that “the economic crisis has plainly demonstrated that the corporation, as currently designed and structured, has its limitations with regards to society’s broader interests…the emergence of the ‘B Corporation’ [and other such companies] may in fact be the beginning of a process through which capitalism is reinventing its constituent element.”

Sharing is caring

As an idea born out of the sector known as “social-enterprise” or the “social-innovation sphere” – which represents an innovative new wave of both social and corporate responsibility – most of the revenues generated by C3 companies will be allocated for the purposes of community development, while stakeholders will also receive a return on their investments. The creation of C3s in British Columbia is an important step towards encouraging increased investment and interest in social-enterprise, especially at a time when global economic turmoil is disenfranchising more and more people both around the world and here at home.  In keeping with the themes of responsibility and accountability, C3 companies will be required to report regularly on their social and community investments and they will be subject to an ‘asset lock’ which ensures that “profits are retained…or directed to the community benefit” upon the dissolution of a C3.

Moving forward

The adoption of legislation paving the way for the creation of C3s is an exciting step for the areas of business ethics and corporate as well as social responsibility in Canada. After two years of political manoeuvring and negotiations, British Columbia will now open a new chapter in social-enterprise initiatives with the passing of Bill 23 – the act of the BC Legislative Assembly which allows for the creation of this new legal entity – setting the stage for other provinces to follow suit. According to at least one source, discussions focused on the C3 model will take place at the next Council of the Federation meeting, wherein the premiers of all Canadian provinces and territories gather to discuss issues of intergovernmental importance.

For Canadians, the inception of the C3 model in BC and its potential introduction across Canada opens the door to a whole new stratum of socially-responsible and community-conscious enterprises, presenting a significant leap in the evolution of capitalism as Alex Wood describes it. With these Community Contribution Companies, conscientious investors will be able to join purpose-savvy entrepreneurs in supporting initiatives that promote ethical, moral, and social sustainability and which are sure to be commercially successful while at the same time promoting the development and modernization of Canadian communities.

Tell us what you think! What are your thoughts on this new business model that looks set to spread across Canada? Will social-enterprise ventures such as these C3s make a big splash in contributing to community development in the future, or will investors and entrepreneurs opt to remain with a traditional business model wherein they can reap more profits for themselves and personally invest in charities or initiatives of their choice?