State establishes new classification for ‘benefit’ corporations
There is a new way to do businesses in Connecticut.
As of October 1, state law allows companies to elect to be classified as a “benefit” corporation, meaning they voluntarily strive to meet higher standards of accountability and transparency and provide a “public benefit.”
More than 20 states now allow companies to incorporate as benefit corporations. Connecticut became one of those states when it passed legislation in the General Assembly’s February session; the bill became law October 1.
The designation signifies that companies strive to create a general public benefit, which the legislation defines as “a material positive impact on society and the environment.” The benefit must be assessed by a third party. There is no material incentive such as tax breaks to achieving the designation, but has obvious PR value.
According to the bill, companies can create a general public benefit in one or more of the following ways: providing low-income or underserved communities with beneficial products or services; promoting economic opportunity for people “beyond the creation of jobs in the normal course of business”; protecting or restoring the environment, improving human health; promoting the arts, sciences or advancement of knowledge; or increasing the flow of capital to other benefit corporations.
An existing company that is not currently a benefit corporation can become one by amending its certificate of incorporation.
All benefit corporations are required by law to publicly publish an annual report that assesses their overall social and environmental performance against a third-party standard. Among other things, the annual report must include a narrative description of how the company pursued a general public benefit as well as an obstacles that arose during that process.
The bill that led to the state law was introduced by State Sens. Donald Williams Jr. (D-29) of Brooklyn and Majority Leader Martin Looney (D-11) of New Haven and State Reps. Brendan Sharkey (D-88) of Hamden and Joe Aresimowicz (D-30) of Berlin.
Firm positioned as ‘one-stop shop’ for charities and individual givers
NEW HAVEN — The law firm of Wiggin and Dana has announced the formation of a new Philanthropy Practice Group comprising a team of lawyers from several of the firm’s practice areas. The team will be led by Wiggin partner Karen Clute.
“The laws and regulations are continuously changing, complicating charitable giving,” explains Bob Benjamin, who chairs Wiggin and Dana’s executive committee. “This practice group brings together attorneys with an intimate knowledge of tax, fiduciary and compliance issues governing charitable organizations. Their ability to analyze an issue from both the individual donor and charitable organization’s perspective makes this practice a tremendous asset for those trying to navigate the complexities of charitable giving. The group also benefits from being able to draw on the experience and insights of several of our litigators who have represented charitable organizations and trustees in complex fiduciary matters.”
“Our goal with the formation of this practice group is to be a one-stop resource for individual donors, public charities and private foundations,” explains attorney Clute. “As donors look for opportunities to increase their charitable giving, they often confront challenges in crafting solutions to best realize their charitable goals and intentions. We can help them structure and implement their plans in tax-efficient ways.”
Wiggin and Dana’s Philanthropy Practice Group brings together estate planning attorneys famliar with the intricacies of the tax laws relating to charitable giving with colleagues who regularly counsel operating charities, private foundations and other tax-exempt organizations. Members of the practice group routinely assist those who are interested in establishing charitable remainder trusts, charitable lead trusts or private foundations in navigating the labyrinth of income and estate tax charitable deduction issues, as well as tax exemption and compliance issues. Attorneys in this practice group also advise trustees and foundation managers on gift acceptance policies, the interpretation of gift restrictions and on compliance and operational issues.
The Philanthropy Practice Group will operate in conjunction with Wiggin and Dana’s Tax Exempt Organizations Practice Group, which focuses on the unique needs of operating charities, and the firm’s Education and Tax Exempt Health Care Organizations Practice Groups, which represent numerous schools, colleges and universities and dozens of hospitals and other tax-exempt health-care organizations.
State takes control of financially troubled Amistad America
NEW HAVEN — Amistad America Inc., the financially distressed non-profit that owns and operates the Freedom Schooner Amistad, has been placed into receivership.
The 79-foot sailing ship Amistad, which is Connecticut’s official flagship, makes its home port at Long Wharf in New Haven. The vessel is a replica of its 19th-century namesake, made famous for the mutiny of its African captives en route to America to be sold into slavery. The event became the subject of a renowned legal battle in Connecticut in 1839-40 that became the subject of a 1997 Steven Spielberg film.
Launched in 2000, the schooner had served as a floating classroom in New Haven Harbor, Long Island Sound and beyond, and the non-profit that operates it has been the beneficiary of millions of dollars in state aid.
Under a court order sought by state Attorney General George Jepson, an independent receiver was appointed August 21 to take control of Amistad America’s precarious finances. The order strips Amistad America’s leadership of control over the non-profit and places it in the hands of New Haven attorney Katharine B. Sacks.
According to financial audits released last month, Amistad America’s net assets declined from more than $1 million in 2008 (the year the most recent audit of the group had been performed) to negative assets three years later. The state has since frozen all grants to the non-profit.
“There remain substantial challenges ahead for the Amistad – not least of which are designing an appropriate governing structure for the organization and identifying consistent and adequate sources for its operational funding,” said Jepson in a statement. “Success is not guaranteed, but today’s action is a necessary first step and one that can give the state the confidence needed to continue expending funds allocated for the ship’s operations.”