Purpose-Based Governance: A New Paradigm

Abstract

The permissibility of corporations pursuing purposes other than profit has been the subject of debate for a number of years. This debate has intensified recently with proposals to allow or mandate the adoption of purposes by corporations. At the same time, purpose is central to governance in the charitable sphere. This article proposes a model of 'purpose-based governance', which offers significant potential advantages in both the charitable and for-profit spheres, as well as forming the basis of a unifying governance paradigm.

Keywords: governance, directors' duties, purpose, nonprofit, company law, charities, stakeholders

JEL Classification: K22, K10