FAQ

General Questions

What is a benefit corporation?
A benefit corporation is a new legal tool to create a solid foundation for long term mission alignment and value creation. It protects mission through capital raises and leadership changes, creates more flexibility when evaluating potential sale and liquidity options, and prepares businesses to lead a mission-driven life post-IPO.
 
Benefit Corporations: 1) have an expanded purpose beyond maximizing share value to explicitly include general and specific public benefit; 2) are required to consider/balance the impact of their decisions not only on shareholders but also on their stakeholders; and 3) are required to make available to the public, except in Delaware, an annual benefit report that assesses their overall social and environmental performance against a third party standard. Such report does not need to certified or audited by a third party, but use the standard as an assessment tool.
 
Becoming a benefit corporation gives entrepreneurs and investors an additional choice when determining which corporate form is most suitable to achieve their objectives.  
What businesses have already become benefit corporations?

Many different types of businesses have become benefit corporations since the first law was passed in Maryland in 2010. The benefit corporations currently incorporated in the United States come from many different industries, including retail, manufacturing, tech, service, professional services, private education, and food and beverage production. Benefit corporations also come in all sizes, from small one-person service companies to large-scale international brands with many employees.

A few examples of well-known benefit corporations include Method, Kickstarter, Plum Organics, King Arthur Flour, Patagonia, Solberg Manufacturing, Laureate Education and Altschool. You can see B Lab’s best attempt to track the number of benefit corporations here.

In what states is legislation effective?

Benefit corporation legislation is effective in over half the country and numerous states are working on it. For state by state information, click here.

Why are benefit corporations important?
In the United States, directors of for-profit companies are required to act solely for the ultimate purpose of maximizing the financial returns to shareholders. While corporations generally have the ability to engage in any legal activities, including those that are socially responsible, corporate decision-making must be justified in terms of creating shareholder value. Mission driven and other socially conscious businesses, impact investors and social entrepreneurs are constrained by this inflexible legal framework that does not accommodate for-profit entities whose mission and impact is central to their business model.
 
Benefit corporations expand the obligations of boards, requiring them to consider environmental and social factors, as well as the financial interests of shareholders. This gives directors and officers the legal protection to pursue a mission and consider the impact their business has on society and the environment. 
Can I teach my students about benefit corporations?

Benefit corporations feature in many curricula, from sustainable MBA programs to high school business classes. Learn more about how educators teach about benefit corporations and the broader business movement surrounding them using our Resources for Educators.

If you are an educator hoping to connect with peers teaching about benefit corporations, consider joining the B Corps on Campus LinkedIn group.

Are benefit corporations hybrid nonprofits?

No. Benefit corporations are neither nonprofits nor hybrid nonprofits. They are for-profit companies that want to consider additional stakeholders, morals or missions in addition to making a profit for their shareholders. Nonprofits cannot be benefit corporations, but they could create one. Because of the public benefit purpose provisions, expanded fiduciary duties of directors, and additional shareholder rights created within the model benefit corporation legislation, this structure could be useful to operate and scale the earned-income activities of a nonprofit.

Does being a benefit corporation affect a company’s tax status?
It doesn't. A company still elects to be taxed as a C or S corp. Benefit corporation status only affects requirements of corporate purpose, accountability, and transparency; everything else regarding corporation laws and tax law remains the same.
Do benefit corporations have to be audited or certified?

No. Benefit corporations do not have to be audited or certified. Not by B Lab; not by anyone. Benefit corporations and Certified B Corps are different. You can learn more about that here.

Investing

Does being a benefit corporation affect a company’s ability to raise capital?

Benefit corporations have raised capital from many different types of investors in the private markets from traditional to impact focused funds. An increasing number of investors are also supporting their own portfolio company’s adoption of benefit corporation status. To see case studies of benefit corporations raising capital and a non-exhaustive list of investors that have a benefit corporations in their portfolio click here. To investigate some of the reasons why investors might like benefit corporations click here. For an investor FAQ click here. 

Benefit corporations are also moving into the international and public markets. In October Laureate Education, the largest degree-granting higher education institution in the world, announced that it was filing an S-1, and that it would do so as a benefit corporation. Laureate's 88 institutions across 28 countries graduate on average nearly 60% of their 1 million students (roughly the same graduation rate as for all U.S. higher education institutions), at least 34% of whom are from underrepresented populations. With over $4 Billion in revenue, Laureate is also the largest benefit corporation in the world. Italy also made news in December when they became the first country outside the US to pass benefit corporation legislation. 

At the recent launch of B Lab UK, B Lab announced that it is establishing a Multinationals and Public Markets Advisory Council (MPMAC) to address a number of systemic, institutional and practical barriers that have made it hard for multinational private and publicly listed companies to earn B Corp Certification and to adopt benefit corporation status. Both Danone and Unilever have recently announced that they will be joining the MPMAC along with representatives from Bancolombia, Campbell Soup Company, C&A, Deloitte, Ernst & Young, Generation​ Investment Management​, Grant Thornton, Hain, Harvard, Linklaters, Prudential, SASB, Suncorp, and Telus.
 
What happens if we want to sell the company?
Becoming a benefit corporation gives companies increased options at the point of sale because they can: 1) encourage competition based on commitment to mission in addition to price; 2) consider other factors besides price when making the decision of whether and to whom to sell; and 3) retain or relinquish its benefit corporation status directly prior or after a sale depending on the current and new owners’ preferences and typically a two-thirds shareholder vote.
Can benefit corporations go public?

Yes, the benefit corporation form was designed to protect the mission of a company when it goes public. There are currently no public benefit corporations. However, in October 2015 Laureate Education, the largest degree-granting higher education institution in the world, announced that it was filing an S-1, and that it would do so as a benefit corporation. Laureate's 88 institutions across 28 countries graduate on average nearly 60% of their 1 million students (roughly the same graduation rate as for all U.S. higher education institutions), at least 34% of whom are from underrepresented populations. With over $4 Billion in revenue, Laureate is also the largest benefit corporation in the world. Natura, a public company traded on the Sao Paulo Stock Exchance with a $12B market cap, amended it's articles to include stakeholder comittments similar to the commitments found in the benefit corporaiton statute. Natura's instiatutional shareholders, including T.Rowe, Lazard and Oppenheimer approved this legal amendment by voting in favor. You can ready Laureate's S-1 here.

How are shareholders’ financial interests protected?

Shareholders retain all the protections that they have in a traditional corporate model. First, they have all their corporate governance rights. They elect the directors and vote on major corporate transactions such as charter amendments or mergers. Conflict transactions will still be subject to a searching entire fairness analysis whenever challenged, so that directors cannot pursue their own interests ahead of the interest of shareholders. Shareholders will retain the ability to bring the same types of lawsuits they can bring against a traditional corporation, including demands to review the company’s books and records, election review proceedings to make sure elections are being conducted fairly, and derivative suits to pursue corporate claims against directors for breach of fiduciary duty. The only change under the benefit corporation model is the value proposition: the idea that true long-term value is built by aligning all stakeholder interests, including the interests of shareholders. 

In addition to the traditional rights, benefit corporation shareholders have three additional rights:
  • High vote into and out of form gives shareholders “mission insurance” over the long-term
  • Private right of action allows shareholders to enforce mission
  • Annual benefit report provides transparency regarding progress towards mission
  • In the absence of applicable case law, director decisions will be treated with similar deference to that afforded other business judgements under current law.

Business Operations

Is there risk of lawsuits by third parties like environmental or labor groups?

No. Third parties do not have legal standing to sue a benefit corporation, unless granted by the shareholders.

Do directors have increased monetary liability?
The model act, which over half the country’s benefit corporation laws are based upon, has a liability protection built into the statute. The Delaware benefit corporation statute gives companies the option to restrict potential liability to specifically exclude director, officer and corporate liability for monetary damages.
Will it be more difficult for benefit corporations to get D&O insurance?

No. B Lab is has not been told by the more than 3000 existing benefit corporations across the country that they have had difficulty obtaining D&O insurance or been asked to pay a higher premium.

This experience is corroborated by meetings with brokers at Marsh McLennan and underwriters from several major D&O (director and officer) insurance carriers, including ACE, Chubb and Zurich.

Some say that over time benefit corporation might enjoy reduced rates as a result of their enhanced governance regime and stakeholder engagement.

What are the new director duties under the model benefit corporation act?
Duties of Directors: The duties of a director of a benefit corporation are the same as those for a general corporation, except as they relate to the specific benefit corporation provisions concerning corporate purpose, accountability, and transparency.
 
A director of a benefit corporation, like a director of a general corporation, has a duty of care and a duty of loyalty. In order to satisfy the duty of care, a director must become fully informed. For directors of benefit corporations, this means considering the impact of decisions on a broad array of the corporation’s stakeholders, rather than just the interests of its shareholders. In order to satisfy the duty of loyalty, a director must put her own interests before the interests of the corporation. The duty of loyalty is the same for both benefit and traditional corporations.
 
Director Accountability Provisions: In order to ensure accountability for the broader purpose of benefit corporations, the statutory provisions list the considerations a board must take into account when making decisions. Some statutes provide a list that includes:
 
"the shareholders; (ii) the employees; (iii) customers; (iv) communities; (v) the local and global environment; (vi) the short-term and long-term interests of the benefit corporation, and (vii) the ability of the benefit corporation to accomplish its general public benefit purpose and any specific public benefit purpose. Other statutes require a tripartite balancing of the (i) stockholders, (ii) the interests of those materially effected by the corporation’s conduct and (iii) the specific public benefit adopted by the corporation."
 
Benefit Director Obligations: Some states require that a benefit corporation designate a “benefit director,” who must prepare the corporation’s benefit report. For a description of the Report, see here. A benefit director has the same duties with respect to the report that she has with respect to other actions as a director.
What are the new director duties under Delaware and Colorado benefit corporation status?

Directors must manage the corporation in a responsible and sustainable manner.

Directors must manage or direct the business and affairs of the benefit corporation in a manner that balances the pecuniary interests of the stockholders, the best interests of those materially affected by the corporation’s conduct, and the specific public benefit or public benefits identified in its certificate of incorporation.

Directors must also provide a biennial, annual in Colorado, report to the shareholders on the corporation’s promotion of the public benefit identified in its certificate of incorporation and of the best interests of the stakeholders.

What are the duties of the benefit director?
For private companies, the benefit director is required in some states and optional in others. However, in most states public companies are required to have a benefit director. The benefit director must be an individual who is independent from the benefit corporation. The benefit director may serve as the benefit officer at the same time as serving as the benefit director. The benefit director’s role includes preparing the annual compliance statement portion of the annual benefit report. This includes the director’s perspective on whether the corporation has been successful in pursuing its general and any named specific public benefit purpose, which will be an important source of information for the shareholders as to whether the directors have adequately discharged their stewardship of the benefit corporation and its resources. In many states, the annual compliance statement must include a statement from the benefit director about whether the following:
  • The benefit corporation acted in accordance with its general public benefit purpose and any specific public benefit purpose in all material respects during the period covered by the report.
  • The directors and officers created general public benefit.
  • If, in the opinion of the benefit director, the benefit corporation or its directors or officers failed to act or comply in the manner described above, a description of the ways in which the benefit corporation or its directors or officers failed to act or comply.
What are the business benefits from electing benefit corporation status?
Becoming a benefit corporation has advantages for every stakeholder in your business, from consumers and talent to shareholders and directors.
 
Reduced Director Liability: Benefit corporation status provides legal protection to balance financial and non-financial interests when making decisions—even in a sale scenario or as a publicly traded company.
 
Expanded Stockholder Rights: Investing in a benefit corporation gives impact investors the assurance they need that they will be able to hold a company accountable to its mission in the future. This could aid companies in attracting impact investment capital.
 
A Reputation For Leadership: Your business will join other high profile, highly respected companies as a benefit corporations (e.g. Patagonia in California), and be at the forefront of a growing movement.
 
An Advantage in Attracting Talent and Retaining Talent: "Millennials will grow to 75% of the workforce by 2025, 77% say their “company’s purpose was part of the reason they chose to work there.” Benefit coporation status gives prospective employees confidence that a company is legally committed to their mission.-Deloitte Millennial Survey
 
Increased Access to Private Investment Capital: Benefit corporation status can make your company more attractive to investors as a company with increased legal protection, accountability and transparency around its mission. Benefit corporations can also speed up investor due diligence since they produce an annual benefit report, which describes their qualitative activities aimed at producing general public benefit.
 
Increased Attractiveness to Retail Investors and Mission Protection as a Publicly Traded Company: Benefit corps create an attractive investment opportunity for the same conscious consumers that have fueled organics, fair trade, and “buy local” movements, while enjoying a form of inoculation from the short-termism that plagues public equity markets.
 
Demonstration Effect: Benefit corps show investors and entrepreneurs from every industry what the future Fortune 500 looks and acts like. 
How does benefit corporation status affect liability?
Benefit corporation status does not change the duties of directors; instead, it expands the set of constituencies to be considered in making decisions. For a discussion of director duties, click here. In essence, the benefit corporations attempt to limit director liability by protecting board decisions that include consideration of the interests of groups other than stockholders. Thus, in a benefit corporation a director cannot be liable simply for taking into account social or environmental factors when making a decision. In contrast, such considerations could lead to liability under traditional corporate law.
 
On the other hand, the benefit corporation statutes are drafted to limit director liability for failing to properly balance or consider these other constituencies. The statutes specify that only stockholders with a certain minimum amount of stock may challenge the balancing, and, most importantly, allow for there to be no monetary liability for directors for doing so when they otherwise satisfy their duties of care and loyalty. As a result of these provisions, lawsuits attempting to hold directors accountable for public benefit must be brought by stockholders in the form of requests for injunctive relief, that is, by lawsuits asking the board to reconsider the benefit in question, rather than by lawsuits seeking monetary damages.
How do I become a benefit corporation?

If you are starting a new company, you can simply incorporate as a benefit corporation in any state where legislation has been passed. The procedure for incorporation is nearly identical to that followed for any other corporate structure with the addition of a statement that the company is a benefit corporation. For state by state instructions click here.

If you have an existing company, you can elect to become a benefit corporation by amending your governing documents. Amendment requires a 2/3 super-majority vote of all shareholders in most states. The procedure for filing amendments with the state is identical to that followed for any other corporate structure with the addition of a statement that the the company is a benefit corporation. For state by state instructions click here.

How do I create an annual benefit report?

Consult state requirements: The specific requirements for benefit reports differ slightly from state to state. More information on requirements for your state is available here.

Follow best practices: B Lab believes that there is a best practice for benefit reporting, which are reflected in the model legislation. More information on best practices is available here.

Choose a third-party standard: Benefit corporations are required to use a third party standard to assess their creation of general public benefit over the course of the previous year, but do not need to be certified or audited by this third party standard. B Lab believes that the B Impact Assessment is the best available standard for benefit corporations. The B Impact Assessment is available for free for those that do not wish to have a verified or certified report. More information on choosing a third-party standard can be found here.

Check out examples of benefit reports.

Are there attorneys with whom I can talk about the pros and cons of adopting benefit corporation status?

Yes. To see a listing of these attorneys, click here.

In states with a constituency statute, can’t companies already do this?

Some states have passed, “constituency” statutes, which permit directors of traditional corporations to consider the same type of non-financial interests that directors of benefit corporations can consider, However, constituency statutes do not commit directors to considering these other interests, and thus do not create the accountability created by benefit corporation statutes. For a discussion of accountability under benefit corporation law, see here. Moreover, constituency statutes do not provide for any transparency with respect to the board’s consideration of the non-financial interests. For a discussion of transparency requirements under benefit corporation law, see here.

Why not simply use LLCs to achieve these objectives?

An LLC could currently amend its membership agreement to incorporate any of the benefit corporation provisions. However, because LLC law is based on contract law institutional investors prefer the corporate structure, which is constructed in statute and case law, over LLC’s. Any company with plans to raise outside capital or go public is better off with a corporate rather than an LLC structure. The benefit corporation thus provides the most effective corporate structure for scaling social enterprise and innovation.

Can’t companies already do this?
Traditional Corporate Law Requires that Directors Place Profit Above All Else: In the United States, directors of for-profit companies are required to act solely for the ultimate purpose of maximizing the financial returns to shareholders. While corporations generally have the ability to engage in any legal activities, including those that are socially responsible, corporate decision-making must be justified in terms of creating shareholder value. This concept of “shareholder primacy” was recently reaffirmed in which the Delaware Chancery Court, which stated that a non-financial mission that “seeks not to maximize the economic value of a for-profit Delaware corporation for the benefit of its stockholders” is inconsistent with directors’ fiduciary duties. As the Chief Justice of Delaware has written: “American corporate law makes corporate managers accountable to only one constituency—the stockholders.”
 
Mission driven and other socially conscious businesses, impact investors and social entrepreneurs are constrained by this inflexible legal framework that does not accommodate for-profit entities whose mission and impact is central to their business model.
 
The Business Judgment Rule Does Not Provide an Exception to the Rule of Shareholder Primacy: In the ordinary course of business, decisions made by a corporation’s directors are generally protected by the business judgment rule, under which courts are reluctant to second-guess operating decisions made by directors. This deference however, only operates if directors are making decisions for the purpose of maximizing shareholder value. No deference is given if the directors’ purpose is to promote any other interest. Moreover, in a r change of control situation, courts do not give business judgment deference , but instead require directors to show that they acted reasonably to obtain the highest price in order to maximize shareholder. Thus, regardless of its mission, a corporation may not consider social and environmental factors in a change of control: the Delaware Supreme Court stated, in its pivotal Revlon ruling, that “concern for non-stockholder interests is inappropriate” in the sale context.
 
Constituency Statutes Do Not Commit Corporations to Sustainability: Some states have passed, “constituency” statutes, which permit directors of traditional corporations to consider the same type of non-financial interests that directors of benefit corporations can consider, However, constituency statutes do not commit directors to considering these other interests, and thus do not create the accountability created by benefit corporation statutes. For a discussion of accountability under benefit corporation law, see here. Moreover, constituency statutes do not provide for any transparency with respect to the board’s consideration of the non-financial interests. For a discussion of transparency requirements under benefit corporation law, see here.
 
The Nutshell: Benefit corporations expand the obligations of boards, requiring them to consider environmental and social factors, as well as the financial interests of shareholders. This gives directors and officers the legal protection to pursue a mission and consider the impact their business has on society and the environment. The enacting state's benefit corporation statutes are placed within existing state corporation codes so that it applies to benefit corporations in every respect except those explicit provisions unique in the benefit corporation form. 

Policymakers

What should I do if I’d like to pass benefit corporation legislation in my state?

Before embarking on an effort to pass benefit corporation legislation, please contact B Lab. We have been the spearhead of advocacy and education in the passage of legislation in all 27 states and also working on passing legislation in 16 more states. We can provide a wealth of experience, information and materials that can aid in your the legislative and advocacy process. B Lab also works with attorneys from Drinker Biddle & Reath who can draft legislation specifically for your state. You can find more detailed information on B Lab’s recommended best practices for the benefit corporation legislation legislative process here.

Why should I use the Model Legislation to create my state’s benefit corporation statute?

B Lab recommends using the model legislation for the basis of any new legislation. B Lab and the pro-bono attorneys at Drinker Biddle & Reath are available to draft a version of the legislation tailored to your state’s specific corporate law. Using the model legislation has several important advantages:

  • Expertise. The Model Legislation was drafted by Bill Clark from Drinker, Biddle, & Reath LLP and has evolved based on input from state legislatures, state bar associations, Secretaries of State offices, Attorneys General offices, associations, nonprofit groups and businesses in the states in which the legislation has been passed or introduced. It reflects the expressed needs of business leaders and investors interested in using the power of business to solve social and environmental problems, and has been conformed to local corporate codes by local corporate attorneys.
  • Consistency. Using the model legislation ensures that your state remains consistent with the other states that have passed the legislation. This is particularly important for investors who rely upon this consistency to reduce their due diligence requirements when evaluating a company. The ability to recognize that a benefit corporation is the same in Illinois as it is in Florida allows the free market to function effectively.
  • Conformity. The Model Legislation has been drafted so that the existing corporation code applies to benefit corporations in every respect except those explicitly stipulated in the Model Legislation. This drafting approach avoids the potential legal and administrative issues that will arise in keeping a new corporate form in conformity to the corporation code as changes to the corporation code occur over time. 
Will investors want to invest in benefit corps in my state?
Benefit corporations have already raised capital from many different types of investors in the private markets from traditional to impact focused funds. An increasing number of investors are also supporting their own portfolio company’s adoption of benefit corporation status. To see case studies of benefit corporations raising capital and a non-exhaustive list of investors that have a benefit corporations in their portfolio click here. To investigate some of the reasons why investors might like benefit corporations click here.
 
B Lab's Mission Alignment Team has also been actively engaging with public market investors and influencers like BlackRock, CalPERS, CalSTRS, Fidelity, T.rowe, Credit Suisse, Morgan Stanley, ISS, CII, ICGN, regulators like the SEC, and many others. The responses we have received are neutral to positive with many of the large institutional investors saying they cared more about management and good governance and that benefit corporation status would not pose a barrier to investment. In addition, we’ve targeted high profile VC funds and private equity investors like Andreessen Horowitz, Founder's Fund, Kleiner Perkins and KKR. 
Does benefit corporation legislation cost the state?

It doesn't. Benefit corporation legislation is cost-neutral or low cost and in some states has been a revenue generator. Benefit corporations are still taxed as a C or S corp and so state tax revneue should not change.

Why does the legislation require companies to use a third party standard to create their benefit reports?

Many benefit corporations are required to publicly publish an annual benefit report that includes "an assessment of [its] overall social and environmental performance against a third party standard." In most states, the statutes simply require the use of a third party standard as a rubric for producing the report, similar to how we use the third party created Generally Accepted Accounting Principles (GAAP) for financial reporting.

The transparency requirement is intended to help the benefit corporation, directors, shareholders, investors and the general public determine whether the benefit corporation has met its expanded corporate purpose to create general public benefit.

In the model legislaiton, a third party standard is defined as "a standard for defining, reporting, and assessing overall corporate social and environmental performance".

Importantly,

  • Government has no role in determining whether a selected third party standard is acceptable or whether the benefit corporation has met its benefit corporation purpose to create a material positive impact;
  • Benefit corporation legislation does not require benefit corporations to adopt any particular third party standard in preparing its annual benefit report; and
  • Benefit corporation legislation does not require the annual benefit report to be audited or certified by the standards organization.

It is up to the benefit corporation, the directors, and ultimately the shareholders, to judge whether any particular third party standard fits the statutory definition.

Why require the creation of ‘general public benefit’ rather than simply require the creation of one or more ‘specific public benefits’?

Most importantly, the primary objective of this legislation is to create a new corporate form that can not otherwise be achieved under our current laws and case law. This objective requires the legislation to consider society and the environment, in whatever way the company wishes, and not simply to consider one-off safe harbors that can arguably be done already under law.

The ‘general public benefit’ purpose helps prevent abuse of this legislation by corporations interested in green-washing. Without the ‘general public benefit’ purpose, a corporation could name a single, narrow ‘specific public benefit’ purpose (e.g. keeping the river in back of the factory clean from toxic effluents) and then ‘consider’ and dismiss all other non-financial interests when making decisions, which would not meet the primary objective of this legislation to create a new corporate form whose corporate purpose requires it to create benefit for society generally. Additionally, without the continual consideration of society and the environment a company could choose a short-term safe harbor and still be considered a benefit corporation after the consideration is completed. The legislation prevents this and allows the company flexibility to change with the dynamic forces of the market.

Why should I include reporting requirements in my state’s draft legislation?

To meet the transparency provisions of model benefit corporation legislation, all benefit corporations are required to create a benefit report. The transparency provisions serve not only to inform shareholders so they are better able to exercise their rights, but also to inform directors so they are better able to meet their duties and finally the public about the overall social and environmental performance of the benefit corporation.

In a benefit enforcement proceeding, judges may also look to a benefit report, or series of annual benefit reports, to determine if the benefit corporation has met its statutory requirement to meet its general, and any named specific, public benefit purpose.

Does benefit corporation legislation cost the state?
It doesn't. Benefit corporation legislation is administered like any other corporate form, it is simply another corporate option, therefore there is no cost to the state. However, some states have evaluated it as a revenue generator due to the potential in business growth in their state. Taxwise benefit corporations still elect to be taxed as a C or S corp. Benefit corporation status only affects requirements of corporate purpose, accountability, and transparency; everything else remains the same.
Will benefit corporations reduce philanthropic giving to nonprofits?

No. Benefit corporations are for-profit entities and do not offer philanthropists the same tax advantages as donating to a nonprofit organization. Benefit corporations seek equity or debt investments that presume a return on investment for the investors, while nonprofits seek charitable donations that presume no return. Benefit corporations simply expand the range of opportunities for individuals or institutions to use their investment capital – not just their philanthropic dollars - to create a positive impact on society and the environment.

Chronicle of Philanthropy, 'Businesses with a Social Conscience' by Phillip Henderson, President, Surdna Foundation

How might nonprofits be helped by the existence of benefit corporations?

Based on our analysis of mission-driven businesses, and because they are legally obligated to create a material positive impact on society and the environment and to consider the impact of their decisions on all stakeholders, there are three primary ways benefit corporations help nonprofits: more charity; more volunteerism; and fewer problems. Due to the imperative to create general public benefit, benefit corporations will be more likely to donate a higher percentage of their profits than ordinary corporations to support nonprofits. Benefit corporations are also more likely create opportunities for their employees to volunteer for nonprofit organizations and are less likely than ordinary corporations to create or exacerbate social or environmental problems as a result of their business practices.

Certified B Corporations (see explanation of the difference between Certified B Corporations and benefit corporations above), are very similar to benefit corporations and empirical data shows they give significantly more than the market average to charities and volunteer more of their employees’ time to charitable causes than their traditional corporate counterparts.

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