Help or Hype: With All These New Concepts Are We Just Being Duped?

Due to the litany of emails, posts, articles, tweets etc. I’ve seen on crowd-funding and new legal (formation) structures I couldn’t help wondering whether there was some dialogue I could be adding to the conversation. So I’ve spent the last few weeks researching and speaking with various individuals…and have found myself wondering…

Are we all being duped?

For example, the L3C “phenom”. I have yet to cross a truly convincing argument for the need to institute them (yes I’m team LLC).  In fact, I’ve seen first hand how much easier it will be for nonprofits to fall into a trap. That trap being the inclination to believe that by becoming an L3C all  legal qualifications and requirements have been met for things such as Program Related Investments (PRI’s) . Whelp,  that likely is not the case. In almost all instances there are still protocols and/or filings that organizations will have to adhere to. Just as there are with LLC’s.

And B Corporations?  Fully understand wanting the flexibility to use social responsibility and environmental impact as considerations in major decision making. But what keeps us from making the case-law dealing with corporations and duties (fiduciary duties) commiserate with  this? Matter of fact, in what code-book does it state that environmental considerations and one’s bottom line must always be perclusive of one another?

Ultimately, I guess I feel we’re all being duped (or perhaps just me) because we’re being kept in the dark.

Who is discussing how national organizations will handle the new entity structure laws differing markedly from  state to state? Where are we talking about the onerous filings, and annual fees, associated with becoming and staying a B Corporation? Not to mention the less than “illustrious” manner in which the law came to be in California? Who is discussing the possibly negative impact the new laws expanding crowd-funding could have?  When will we sit down and address how crowd-funding platforms were widely popular several years ago, until the increased regulation caused many of the fraudulent, or ill operated, platforms to close. Who is pointing out the dozens of ancillary laws associated with investment, such as those dealing with investors and social media, that investors will need to understand and comply with? Where are we addressing how non-profits will cope with ensuring multi-state registration requirements are being met when soliciting funds? Have we talked about whether non-profits will have to deal with more onerous, not to mention expensive, record-keeping and filing requirements by virtue of crowd-funding being available to everyday investors? Will there be increased  costs for administration and dispute resolution due to the reality that investors will be far less sophisticated?

Never the one to be a negative nancy, let me say I’m definitely excited about the entrepreneurial spirit sweeping the country right now. But this isn’t a pep rally. There should be serious discussion as to whether the laws being proposed/enacted could possibly hurt the organizations they were meant to help. Not just in Congress, but on the blogosphere as well.

One harm might be a higher barrier of entry. Many organizations already have a hard enough time understanding the difference between an unincorporated association and a corporation. Now there’s this smorgasbord of options being offered that people will have to trudge through. Making an attorney almost a necessity. Similarly, organizations could find themselves defrauded out of money (arguably public money) via crowd-funding scams with little to no recourse. And those that can’t afford to hop aboard the crowd-funding bus will have to run the risk of becoming obsolete.

I just find it ironic that in the age of reduce, reuse and recycle we consistently implement new concepts instead of taking the time to fully understand those that already exist. More importantly, rather than fully educating the PUBLIC on those that exist.

Perfect example, the LLC . A concept that is still kind of in its infancy. Many states have little to no case law on it. Why couldn’t we study this concept a tad more before bringing another one into the fold?  When viable topics such as crowd-funding are brought to the table why do publications immediately laud them before taking a step back and asking, “What should my demographic really understand about this? Is there another way this could be addressed? Do we have a current mechanism that can be adapted to achieve the desired result?” Because I doubt very seriously that simply opening the flood gates is the way to go. Don’t we as content creators, curators and publishers owe more to our readers than to fall into that type of hype? What happened to the age of editing down?

But alas, these things are here. So they need to be discussed. Which I plan to do.

I just hope that when nonprofits are reading on these topics they are thinking about what isn’t being said just as much as they are contemplating what is. Who knows.  One or all of these concepts could be the break-through of the century. But lest we keep in mind; just because we find an answer, doesn’t mean its the solution.

As a side-note, I think this all holds true for non-profits and small businesses alike.