Kickstarter’s Reincorporation and What it Means for DesignersSeptember 23, 2015 by Jennifer A. Diffley
Kickstarter has changed its status to a public benefit corporation and joined a very select number of companies dedicated to serving the public good instead of the interests of shareholders.
Kickstarter rebrands itself as a charitable organization.
On September 20, 2015, Kickstarter announced its reincorporation as a public benefit corporation, joining the likes of Warby Parker and Patagonia as businesses focused more on the furthering of creative efforts than the wealth of their shareholders.
Kickstarter's founders Yancey Strickler, Perry Chen, and Charles Adler.
The move is peculiar, but a reevaluation of noble priorities amid a sea of companies focused on going public and raking in millions. Public benefit corporations have only been in existence for two years and are so far only recognized in 31 states. The status is a necessary middle ground between nonprofit corporations and for-profit businesses focused on contributing to the public good. Kickstarter outlined its new focus in its charter, which clarifies--among a host of other promises--its commitment to visibility, the arts, paying its fair share of taxes without seeking loopholes, sustainability, and privacy.
There's no doubt the move has garnered spectacular publicity for the company and cast a positive light on a platform that has had its share of trouble (Unsung Story the latest in a string of Kickstarter controversies).
For builders though, the Kickstarter reincorporation is a mixed bag. If you successfully fund your project on Kickstarter, 5% of your profits will go to Kickstarter fees, but that cost is alleviated by Kickstarter's commitment to donate 5% of their profits to "organizations addressing systemic inequality." That makes a sometimes large decrease in profits a lot easier to swallow, knowing that part of that money is going to charitable organizations.
Kickstarter also carries limited liability for projects it hosts, so designers shoulder the brunt of risk for their own projects. On the other hand, that's good practice for designers who need to learn early in the design process how to navigate the tumultuous road of bringing products to market. And, though a project going viral carries a strong allure, that kind of attention can often lead to tremendous scrutiny that for which idealistic designers are often unprepared.
The good news, however, is that Kickstarter remains the best option for novice electric engineers to launch their products. And the company's commitment to altruism provides a welcome precedent for designers looking to accomplish something other than pure monetary profit.