Being the Change
On July 1st of this year, Blue Dot Advocates converted from a corporation owned solely by me to a workers cooperative and benefit corporation. This change had been in the works for a long time, and on my heart and mind for even longer. The most fulfilling aspect of the process for me was that we took the time to craft a legal structure that embodies our most deeply held values as an organization. This blog focuses on those values and how our structure advances them.
Over the almost decade of working in the fields of social enterprise and impact investing, I’ve heard many people say that companies must necessarily prioritize financial sustainability over mission considerations. Profit, I hear, is a company’s lifeblood. While this is true, blood does not support life without a heart to circulate it through the body. The two depend on each other for the body to survive.
The heart of our firm is our commitment to operate for the benefit of our global community. If Blue Dot ceases to operate with this sense of collective responsibility, then Blue Dot dies. None of us is interested in showing up for work unless we feel like our work is making a positive impact on the world.
We encoded this global collective social and environmental commitment in our organizational DNA by organizing our cooperative as a statutory benefit corporation. In addition to the general public benefit purpose, which is common to all benefit corporations, we also agreed to specific benefit purposes, which represent the distinct social and environmental outcomes that we target with our work. Our entire certificate of incorporation, including these purposes, can be found here.
Very early in my life I encountered the saying “it’s not personal, it’s just business.” Sourced to a mobster and immortalized in the movie “The Godfather,” I have found that these words actually reflect a widely-held belief of how business should work. We are taught the universality of the “golden rule,” but many in our global society use legal constructs such as contract and property rights and fiduciary duty to justify actions that harm people in ways that we would never wish for ourselves or our loved ones.
To counteract the societal gravitational pull towards performance over people, we at Blue Dot designed a decision-making process that requires us to build consensus both at the board and member levels. An up or down vote is permitted as a last resort only if the consensus process fails. This can be slow and cumbersome and inefficient, but we decided that we valued inclusivity more than expediency.
Even without consensus decision-making, the cooperative, by its nature, is more oriented toward shared power. By law, for example, every worker-member in the cooperative must have a vote, and worker-members must always control the board. The benefit corporation form is also inherently more people-centric, as directors owe fiduciary duties to employees and community members in addition to financial stakeholders.
It seems that experts, academics, and the conventional business elite most often identify the “market” as the force driving wage and profit sharing decisions. Company leaders fear paying more than “market” wages because of investors “market” profit expectations. The “market” dictates that CEOs of public companies make outrageous sums of money. In law firms, the “market” arguably grants the highest economic reward to partners who control the most business and who possess the best socio-political skills.
We decided that we wanted our values of fairness and transparency to form the foundation of our internal economic system, rather than the invisible hand of the “market.” As a cooperative, we share the fruits of our collective labor based on a predetermined, objective formula in the company’s bylaws. We all know exactly how the firm determines our compensation and profit distributions each year, and consensus exists among the members as to how the firm values our different contributions.
* * * * *
I have often complained of suffering from the proverbial “Cobbler’s Children Syndrome,” or “vocational irony,” in which the cobbler’s own children suffer from a lack of shoes. In the past, I’ve struggled to apply the same skills in legal matters for myself that I offer to my clients. I failed, for example, to keep up with all of the corporate formalities of the former Blue Dot corporate entity, even though I regularly lecture clients about the importance of those formalities.
With this conversion to a cooperative and benefit corporation, however, I feel like my teammates and I showed up for ourselves with thoughtful, creative, and technically world-class lawyering. We have designed a legal structure that is aligned – and alive — with our values, which is the same experience that we seek to offer to our clients. We’re wearing custom-tailored shoes now, and we’re excited to walk the world with them!
If you’re interested in more, here is the full story and history of Blue Dot Advocates as a mission-driven company.
Special thanks to Jason Weiner for his generous support of this project.