Kickstarter becomes a Benefit Corporation

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**OrlandotheTechnicoloured**

Kickstarter is now a Benefit Corporation

Kickstarter Inc is no more. We’re now Kickstarter PBC — a Public Benefit Corporation. We’re thrilled to share this news, and we’d love to take a minute to tell you exactly what it means.

Until recently, the idea of a for-profit company pursuing social good at the expense of shareholder value had no clear protection under U.S. corporate law, and certainly no mandate. Companies that believe there are more important goals than maximizing shareholder value have been at odds with the expectation that for-profit companies must exist ultimately for profit above all.

Benefit Corporations are different. Benefit Corporations are for-profit companies that are obligated to consider the impact of their decisions on society, not only shareholders. Radically, positive impact on society becomes part of a Benefit Corporation’s legally defined goals.

Kickstarter is excited to join a growing list of forward-thinking organizations — like Patagonia and This American Life — that have taken the big step to become a Benefit Corporation. While only about .01% of all American businesses have done this, we believe that can and will change in the coming years. More and more voices are rejecting business as usual, and the pursuit of profit above all.

If you want to see what we think is important, you can find a link to our Benefit Corporation charter below. We’ve spelled out a specific list of values and commitments we’ll live by: We renew our longstanding commitment to arts and culture. We declare how we plan to conduct ourselves in situations that are often swayed by profit motives. And we newly commit to donate 5% of annual post-tax profits to arts education and organizations fighting inequality. Every year, we’ll release an assessment of how we’re performing on the commitments we’ve made.

There was not a single dissenting vote by a Kickstarter shareholder to re-incorporate as a Benefit Corporation. We’re once again grateful for the support and partnership we’ve had from this group of friends, investors, and current and former team members. Thank you all!

From Kickstarter’s inception, we’ve focused on serving artists, creators, and audiences to help bring creative projects to life. Our new status as a Benefit Corporation hard-codes that mission at the deepest level possible to guide us, and future leaders of Kickstarter.

To all the creators and backers who have helped make Kickstarter what it is today — we’re excited to keep working with you, and helping new creative projects come to life as Kickstarter PBC.

Thank you,

Blue heart cb9c94d3bf54b071bf8b1d45ee1545f1e1550cc1cff48f4c6a4ff15b6186b5f5

Yancey Strickler

Kickstarter Cofounder/CEO

Blue heart cb9c94d3bf54b071bf8b1d45ee1545f1e1550cc1cff48f4c6a4ff15b6186b5f5

Perry Chen

Kickstarter Founder/Chairman

Blue heart cb9c94d3bf54b071bf8b1d45ee1545f1e1550cc1cff48f4c6a4ff15b6186b5f5

Charles Adler

Kickstarter Cofounder

Kickstarter is a
Benefit Corporation

Kickstarter’s mission is to help bring creative projects to life. We measure our success as a company by how well we achieve that mission, not by the size of our profits. That’s why we reincorporated Kickstarter as a Benefit Corporation in 2015.

Benefit Corporations are for-profit companies that are obligated to consider the impact of their decisions on society, not only shareholders. Radically, positive impact on society becomes part of a Benefit Corporation’s legally defined goals. When a company becomes a Benefit Corporation, it can choose to make further commitments. In our new charter (shown below) we spell out our mission, our values, and the commitments we have made to pursue them.

We will deliver a benefit statement annually that will measure the results of our efforts to promote these public benefits. The first of these will be shared in February 2017. To learn more about Benefit Corporations, click here.

1

Kickstarter’s mission is to help bring creative projects to life

A Kickstarter will create tools and resources that help people bring their creative projects to life, and that connect people around creative projects and the creative process.

B Kickstarter will care for the health of its ecosystem and integrity of its systems.

C Kickstarter will engage beyond its walls with the greater issues and conversations affecting artists and creators.

2

Kickstarter’s operations will reflect its values

A Kickstarter will never sell user data to third parties. It will zealously defend the privacy rights and personal data of the people who use its service, including in its dealings with government entities.

B Kickstarter’s terms of use and privacy policies will be clear, fair, and transparent. Kickstarter will not cover every possible future contingency, or claim rights and powers just because it can or because doing so is industry standard.

C Kickstarter will not lobby or campaign for public policies unless they align with its mission and values, regardless of possible economic benefits to the company.

D Kickstarter will not use loopholes or other esoteric but legal tax management strategies to reduce its tax burden. Kickstarter will be transparent in reporting the percentage of taxes it pays and explaining the many factors that affect its tax calculation.

E Kickstarter will seek to limit environmental impact. It will invest in green infrastructure, support green commuting methods, and factor environmental impact when choosing vendors. Additionally, Kickstarter will provide recommendations and resources that help creators make environmentally conscious decisions on tasks, like shipping and packaging, that are common to the use of its services.

3

Kickstarter supports a more creative and equitable world

Kickstarter will annually donate 5% of its after-tax profit towards arts and music education, and to organizations fighting to end systemic inequality as further defined in sections 4(c) and 5(c) below (the “5% pledge”).

4

Kickstarter is committed to the arts

A Kickstarter will always support, serve, and champion artists and creators, especially those working in less commercial areas.

B Kickstarter will foster a supportive environment for employees to work on their own creative projects, including time off to pursue them.

C Half of Kickstarter’s 5% pledge will be devoted to arts and music programs for children and young adults, with a primary focus on underserved communities in New York City. Funds will be distributed to 501(c)(3) organizations, public schools, or via programs developed by Kickstarter.

5

Kickstarter is committed to fighting inequality

A Kickstarter will provide opportunities and paid time off for employees to provide professional mentorship and skills training to people from groups underrepresented in the worlds of art, business, or technology.

B Kickstarter will report on team and leadership demographics, executive and CEO pay ratios, and programs and strategies employed to build a diverse, inclusive, and equitable organization.

C Half of Kickstarter’s 5% pledge will be devoted to organizations addressing systemic inequality. Kickstarter will primarily focus such contributions on 501(c)(3) organizations fighting to end prejudices against and increase opportunities for people of color, women, and LGBTQ individuals.

this will probably have no real effect for pledgers, but it might just make it easier to shame KS into providing refunds (of their cut) where projects have been shown to be scams?

**Joyboozer**

What legal/ financial liabilities does this help them avoid?

**RiTides**

Joyboozer wrote:
What legal/ financial liabilities does this help them avoid?

Exactly... by emphasizing the arts so much, they position themselves much more as a generous patron, than as a middle man / toll both for consumer products, which is where the vast majority of their funds come from.

I've backed 20 art Kickstarters, so I love that aspect, but if they really wanted to help the greater good (rather than limit liability) they'd be instituting measures to help limit / protect against fraud. Or at least pledge to refund their own cut from clearly fraudulent campaigns. I still think some sort of escrow is needed for campaigns that massively overfund, or at least that have been reported by a certain number of users as a scam, etc.

I think it's clear Kickstarter wants to present itself this way, but it's like McDonald's saying they qualify as a public playground. While they have a play space, their business is from selling unhealthy food. Similarly, Kickstarter could not survive on the arts, they take in millions upon millions from consumer products. But to mention increasing backer safety would expose them to legal action, so they're continuing to speak as if it's not their prerogative / there's nothing to be done about it, when there are so many things that could be!

It's disappointing to me and I hope one day Kickstarter will take a more active role in protecting its users. I even had my credit card compromised on the site (a few years ago, along with many others) and they refused to recognize the incident. If they're going to take in such profits, they need to take some responsibility for ensuring a relatively safe environment to back projects! Ultimately, the creator is responsible for completion, but they could do so much more than they are now to prevent obvious fraud, and will eventually have to imo (even if forced by a regulatory agency).

**coelomate**

Joyboozer wrote:
What legal/ financial liabilities does this help them avoid?

Not much. Basically it allows what would otherwise be profit returned to shareholders to instead go towards charitable endeavors (however defined) with less risk of shareholders complaining - or suing.

Plain old for-profit corporations can absolutely still undertake an unlimited amount of charitable endeavors. But if the shareholders get cranky, they can probably demand the focus return to them. For a PBC, shareholders won't really be able to pursue that option.

I don't believe it will make a huge difference in the real world. Shareholders in PBCs still expect to earn a profit and will still appoint board members and vote on transactions to that end, and normal corporations don't really lack flexibility to behave like PBCs.

**RiTides**

I think it's more of a PR move - there was a popup banner linking to this announcement on KS today.

First report of their activities in this regard isn't due until February 2017...

**Forar**

RiTides wrote:
First report of their activities in this regard isn't due until February 2017...

That makes sense. FY2015 may be ending soon, so FY2016 would be where it'd take effect, meaning it wouldn't be until FY2016 is over that there'd be a thorough accounting of how that went down.

I guess their FY ends in Dec or Jan? My company's FY ends in October, they can be weird like that.

**the_Armyman**

Joyboozer wrote:
What legal/ financial liabilities does this help them avoid?

I'm sure it allows them to take some advantage of the tax code or reap some benefit from the government. Or maybe it's code language to make people feel better that they're not supporting an evil corporate entity. Either way, I seriously doubt it's purely out of the goodness of their heart.

Honestly, I wish corporations would just setup their own charitable agencies and provide goods and services to worthwhile causes in their own neighborhoods than give millions of dollars to over-arching, global organizations that I may or may not support.

**AlexHolker**

the_Armyman wrote:
Honestly, I wish corporations would just setup their own charitable agencies and provide goods and services to worthwhile causes in their own neighborhoods than give millions of dollars to over-arching, global organizations that I may or may not support.

I don't think there's anything wrong with a corporation just giving money to people who presumably know what they're doing rather than trying to do it themselves, but I would rather see 2.5% of their profits go to someone like the Electronic Frontier Foundation - or just some random soup kitchen - than charities whose defining feature is apparently that they don't help heterosexual white males.

**solkan**

In a for-profit company, if the share holders don't like a decision because it would reduce profits, they can sue the board. Especially if it's an American company.

That's probably enough reason on its own.

**Grot 6**

Joyboozer wrote:
What legal/ financial liabilities does this help them avoid?

Taxes.

That and pushing away from legal liability for .... people like Bob " Dwarf King" Nystul

https://www.kickstarter.com/projects/2063410154/axes-and-anvils/comments

On my end, I'm done with KS projects. Wish them luck being Bruce Wayne's grab bag, but from my POV they are still crap.

Still waiting on Judge Dredd to finish, one of these days before I'm a day over 350.

Their take is that they can do no wrong. Yuppie mutts in hipster sweaters reaping more then millions, then can't figure out why Johnny Law is looking at them hard for a piece...

"yeah, we're going to.. give it away... yeah."

**Adam LongWalker**

Grot 6 wrote:
Joyboozer wrote:
What legal/ financial liabilities does this help them avoid?

Taxes.

That and pushing away from legal liability for .... people like Bob " Dwarf King" Nystul

https://www.kickstarter.com/projects/2063410154/axes-and-anvils/comments

On my end, I'm done with KS projects. Wish them luck being Bruce Wayne's grab bag, but from my POV they are still crap.

Still waiting on Judge Dredd to finish, one of these days before I'm a day over 350.

Their take is that they can do no wrong. Yuppie mutts in hipster sweaters reaping more then millions, then can't figure out why Johnny Law is looking at them hard for a piece...

"yeah, we're going to.. give it away... yeah."

Thinking in a similar fashion.