A Quest for Hybrid Companies That Profit, but Can Tap Charity

A new type of company intended to put social goals ahead of making profits is taking root around the country, as more states adopt laws to bridge the divide between nonprofits and businesses.

...Frontline SMS took another route and organized as a community interest company, or C.I.C.’s, the British corporate designation that has inspired many of the new hybrid in corporation laws passed in the United States. C.I.C.’s are required to have a social purpose like health care and their assets are locked, limiting what can be distributed to shareholders, employees and others.

Frontline was spun out of Kiwanja.net, a California nonprofit whose mission is to develop technology to help nonprofit groups deliver services. “The value proposition is inherently defined in terms of social benefit,” said Sean Martin McDonald, executive director of Frontline. “That reduces a lot of concerns you might normally have from traditional financial investors by making it clear that your mission is primarily social, not primarily about making profits.”