Previously, I’ve discussed the effort to create a new species of corporation – the flexible purpose corporation. To this end, Senator Mark DeSaulnier has introduced SB 201. The Senate Judiciary Committee heard and passed the bill yesterday afternoon. However, some interesting opposition has surfaced.

Charities Fear Diversion

At the Committee’s hearing, witnesses from the California Association of Nonprofits, the Blood Centers of California, the California Society of Association Executives each argued that the formation of flexible purpose corporations could siphon off much-needed resources from effective existing nonprofits by redirecting donor dollars from charitable contributions to flexible purpose corporation investments.