Impact investing is entering a new phase as innovative corporate structures redefine how businesses align financial success with social and environmental responsibility.
Models such as public benefit corporations, perpetual purpose trusts and sidecar public charities are transforming traditional governance by embedding purpose directly into corporate strategy. These emerging frameworks offer a compelling solution to the widening gap between limited philanthropic resources and the mounting urgency of global challenges, proving that profit and purpose no longer have to be at odds, according to Suz Mac Cormac (pictured), partner at Morrison & Foerster LLP.
Morrison & Foerster’s Suz Mac Cormac talks with theCUBE John Furrier about impact investing.
“My thesis is, what are the things we could do in the mainstream capital markets that could actually help alleviate or help address some of those issues?” Mac Cormac said. “For me, corporate form and governance, it’s kind of like the scaffolding. The scaffolding around the non-profits, the scaffolding around funds, the scaffolding around small business, entrepreneurs, the scaffolding around large business, public companies and sort of playing with that scaffolding.”
Mac Cormac spoke with theCUBE’s John Furrier at the Forward Global Summit, during an exclusive broadcast on theCUBE, SiliconANGLE Media’s livestreaming studio. They discussed how innovative corporate structures, such as public benefit corporations, perpetual purpose trusts and sidecar public charities, are transforming traditional governance by embedding social and environmental responsibility into financial strategy, offering a scalable solution to align profit with purpose in impact investing.
Innovative corporate structures reshaping impact investing
One innovative structure discussed prominently is the public benefit corporation, which uniquely balances shareholder returns with a defined public benefit mission. For startups and early-stage ventures, adopting a PBC structure allows founders to embed a clear mission alongside shareholder value creation. Entrepreneurs can retain significant control, ensuring their vision remains intact even as the company scales or goes public, Mac Cormac explained. This approach provides founders with tools to legally protect their company’s social and environmental mission from dilution or deviation.
“Using a public benefit corporation where you have dual fiduciary duties and as a founder you can have more control because you can set a mission or a public benefit that is equal to driving shareholder value,” Mac Cormac said. “That’s huge. You have more control over your destiny.”
Additionally, sidecar public charities represent another effective method for companies to pursue high-impact activities. These entities are structured so they can directly engage in transactions with their host businesses, providing services or generating revenue while simultaneously fulfilling charitable missions. Such structures enable companies to directly integrate charitable activities into their commercial models, enhancing both profitability and societal impact, according to Mac Cormac.
“That public charity, as long as you have disinterested governance, can engage in commerce with the host,” she said. “What does that mean? It means it can buy the services, the IP from the main company that’s accretive to the evaluation.”
To further solidify the efficacy of these approaches, entrepreneurs and institutional investors must adopt these innovative structures. Asset owners, such as pension funds and large institutional investors, need to exert influence on asset managers to ensure ESG goals are integral to investment strategies and linked explicitly to financial performance incentives, Mac Cormac explained. Encouraging the adoption of these novel structures at the investment level can significantly enhance their mainstream acceptance and effectiveness.
“You have a whole legion of bankers and lawyers and business people who think we have to set up as a corporation, that’s the right thing to do,” Mac Cormac said. “Yet you still have people who believe that you’ve got to use the existing scaffolding or it’s actually wrong. They can’t see how the existing scaffolding is actually contributing to the issue because there’s not enough funds off of capital.”
By aligning impact-focused benchmarks directly with financial outcomes, corporate governance innovation presents a clear pathway for meaningful, scalable change in addressing pressing global challenges. It represents a practical, transformative approach to embedding societal goals into the core strategy of businesses, ensuring long-term sustainability, according to Mac Cormac.
“If you take how they are making money and if their carried interest is dependent on certain specific [benchmarks] … that’s a game changer,” she said.
Here’s the complete video interview, part of SiliconANGLE’s and theCUBE’s coverage of the Forward Global Summit:
Photo: SiliconANGLE
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