The third thing is about alternatives to both nonprofits and cooperatives. And the latest innovation, which is getting some traction in the United States, is the benefit corporation. This is a new corporate form, first created in the state of Maryland. They understand that securities law has a federal component, but corporate law still resides in the states, so any change in corporate law has to be replicated over 50 states. The first benefit corporation was created in Maryland in 2010. I have to update this. It says now 11 states have it, I think it's getting close to 30 states, it's sweeping the nation. This is, like I mentioned before, workers' compensation or as they said workman's compensation swept the nation in a progressive era in the teens, one state after another were adopting laws that required corporations to buy insurance for employees' accidents at work. Similarly, we are going right now through a similar revolution, where state after state is creating benefit corporation. So what is it? It's a new kind of corporate charter than you can adopt, either as a new company or as an existing company. You can change your charter so that you become a benefit corporation. So what is a benefit corporation? It's something half way between for-profit and nonprofit. It has profits, it makes profits, but it has a dual objective. It's for profits and for some social or environmental purpose that is stated in the company's charter. So, an example is Grower's Secret. Grower's Secret is a fertilizer company and their statement of purpose is to restore the NPK balance of the planet. Anyone know what NPK stands for? Nitrogen, phosphorus, potassium, right. Those are elements on the periodic table. And the oceans of the world have had a certain balance of those three elements but they are getting off from their old balance and it's a potential environmental hazard if it gets much worse. So this environmental hazard, as apparently known somewhat, [LAUGH] One of you knows about it. It's not attracting a lot of attention. But it's attracting the attention of some people, like Grower's Secret, which is selling its fertilizer. So the problem is farmers put tons of fertilizer for their crops. Rains come and washes the some of the fertilizer, it ends up in rivers and then the rivers take that down to the ocean and this fertilizer then contaminates the oceans of the world, and it stays there for a long time. So Grower's Secret sells fertilizer that don't cause this problem. Now, in a sense, all companies might be thought of as benefit corporations, but not quite. Because they don't have a statement in their charter. In some countries there are laws that reflect a demand that companies be kind to their communities, the US is less likely to have laws like that. But these are laws and requirements, the benefit corporation asks the company to come up with its own idea as to what it will do to help the world. And so it changes the atmosphere of a company. I think that the atmosphere, the corporate spirit, is really important. Having worked at nonprofit almost all my life [LAUGH] I think that the spirit is different here. So you do things because it's the right thing to do more than you would in a for-profit company. So these are growing rapidly, it's still too soon, it's only at six years now. It's still soon to see whether they'll be a success. I'm thinking that they may well be a success. So I think there'll be a lot more changes like this in the future. Once again, one of the themes of this course is that finance is a technology, it thrives on invention. I think that we're making big steps forward now with a broader concept of finance than we had 20, 30 years ago. We recognize that human beings are part of a society, that human beings are psychological. They're sometimes rational, they're not always rational. They have quirks of judgement. We have to try to design our financial instruments around all of these. So I think that if you take a kind of human psychology and realities of human nature better, there will be a big future for some of these alternative forms. Which in the past have had significance, like non-profits or cooperatives, or the other forms we just discussed and this will have important, new dimensions in the future.
