Recognizing the limitations and restraints posed on socially conscious for-profit organizations, several states have begun to develop a legislative model that blends attributes of traditional for-profit and not-for-profit entities into “hybrid” organizations. Chief among these states is California, which has emerged as a leader of this new social enterprise reform. California is the only state to allow a business to incorporate as a Benefit Corporation or a Flexible Purpose Corporation. Additionally, the state legislature has proposed a third type of hybrid entity—the Low-Profit Limited Liability Company. By addressing the limitations of the traditional corporate structure, California’s new hybrid entities afford directors, founders, and officers not only with increased legal protection, but also promote confidence to pursue social and environmental causes. This Article explains why California is the preferred choice for social enterprises and how an influx of social enterprises could benefit the state.

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