benefit corporation (B corp)<\/h3>\r\n
The purpose of a benefit corporation is to create general public benefit, which is defined as a material positive impact on society and the environment. A benefit corporation\u2019s directors and officers operate the business with the same authority as in a traditional corporation, but they are required to consider the impact of their decisions not only on shareholders but on society and the environment, too.<\/p>\r\n<\/section>\r\n\r\n[caption id=\"attachment_8218\" align=\"alignright\" width=\"350\"]![\"The](\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2016\/11\/01225746\/9403769706_c6db2857a6_k.jpg\")
Figure 1. Kickstarter became a public benefit corporation in 2015.[\/caption]\r\n\r\n
In a traditional corporation, shareholders judge the company's financial performance; with a benefit corporation, shareholders judge performance based on the company's social, environmental, and financial performance. Transparency provisions require benefit corporations to publish annual benefit reports of their social and environmental performance using a comprehensive, credible, independent, and transparent third-party standard.\u00a0Some well-known examples of benefit corporations are Kickstarter, Patagonia, and King Arthur Flour.<\/p>\r\n
Forming a Benefit Corporation<\/h2>\r\n
New companies can incorporate as a benefit corporation in any state where benefit corporation legislation has been passed. Instead of recognizing benefit corporations, the state of Washington created social purpose corporations in 2012 with a similar focus and intent. The process varies by state, but many states require benefit corporations to do the following:<\/p>\r\n
- \r\n\t
- declare a commitment to creating general public benefit<\/li>\r\n\t
- adopt a third-party standard<\/li>\r\n\t
- prepare an annual benefit report<\/li>\r\n\t
- distribute the annual benefit report to the owners and post it on the company's website<\/li>\r\n<\/ul>\r\n
As far as taxes, benefit corporations are treated like all other corporations for tax purposes. B corps can choose to be taxed either as a C or S corp.<\/p>\r\n
B Corp Certification<\/h2>\r\n
Businesses that want to take their social and environmental commitment even further can become a Certified B Corporation. This involves a rigorous assessment process by B Lab, which uses a survey to\u00a0rate a company's environmental practices, employee treatment, activism within its community, and other factors. Businesses that surpass a certain score are certified by\u00a0B Lab, which then audits them from time to time to ensure that they are living up to the movement's standards.<\/span><\/p>\r\n
\r\n \u00a0<\/div>\r\n\"[B Lab certification] is like a Good Housekeeping seal of approval,\" said David Murphy, former CEO of Better World Books<\/a>. \"If your company is a Certified B Corporation, that really says something. You're there to serve all those stakeholders, and you're willing to prove it.\"[footnote]Fallon, Nicole. \"Becoming a Benefit Corporation: Is it Right for Your Business?\" Business News Daily. January 22, 2016. http:\/\/www.businessnewsdaily.com\/8734-benefit-corporation.html<\/a>[\/footnote]\u00a0<\/span><\/p>\r\n<\/section>\r\n
Disadvantages of a Benefit Corporation<\/h2>\r\n
- \r\n\t
- Transparency and Reporting Requirements<\/strong>. Benefit corporations must provide\u00a0an annual benefit report according to a third-party standard (such as B Lab) and make the report available on their company websites. The purpose of this is\u00a0to assess the company\u2019s performance with regard to its public purpose(s).<\/li>\r\n\t
- Annual Fees to Retain Certified B Corp Status.<\/strong>\u00a0If a B corp elects to receive certification from a third party, such as B Lab, fees for \"certified\" B corp status are\u00a0based on annual sales, with a minimum of $500. To keep certification, the company must pay a renewal fee each year and recertify every two years.<\/li>\r\n\t
- Compliance and Governance Obligations<\/strong>. Most states require publicly traded companies with a\u00a0B corp designation to have a \u201cbenefit director\u201d who is responsible for ensuring that the corporation meets its stated public purpose.<\/li>\r\n<\/ul>\r\n
Advantages of a Benefit Corporation<\/h2>\r\n
- \r\n\t
- Protection of Mission<\/strong>. Becoming a benefit corporation gives companies more options and protections if they decide to sell the\u00a0business to someone else or take it public, because other factors besides price (e.g., the public benefit mission) must also be taken into account.<\/li>\r\n\t
- Reputation<\/strong>. Incorporating\u00a0as a benefit corporation allows companies to stand out\u00a0as businesses that have a\u00a0social conscience and aspire to a standard they consider higher than maximizing profit\u00a0for shareholders. For investors and consumers who are committed to social and environmental responsibility, benefit corporations provide additional\u00a0choices.<\/li>\r\n\t
- Creation of Value<\/strong>. Because it's committed to considering other stakeholders' interests, a benefit corporation may create value via employee engagement and customer loyalty, thereby improving results for all stakeholders\u2014including the owners\/shareholders. As well, certain profit-making opportunities may not be available without an assured commitment to other stakeholders.[footnote]\u201cAbout B Corps.\u201d B Lab U.S. & Canada, https:\/\/usca.bcorporation.net\/about-b-corps\/<\/a>. Accessed 20 Dec. 2022[\/footnote]<\/li>\r\n<\/ul>\r\n
[ohm2_question height=\"400\"]3910[\/ohm2_question]<\/section>","rendered":" B Corporation<\/h2>\n
Over the past few decades, the boundaries between the public (government), private (business), and social (nonprofit) sectors have become blurred, as many pioneering organizations merge social and environmental aims with business approaches. There are many expressions of this trend, including corporate social responsibility, microfinance, venture philanthropy, sustainable businesses, social enterprise, privatization, community development, and others. There are also new forms of corporate entities. One of the most widely established is the benefit corporation (B corp)<\/strong>. In the U.S., a benefit corporation is a type of for-profit corporate entity, authorized by thirty U.S. states and the District of Columbia,\u00a0that includes positive impact on society, workers, the community, and the environment\u2014in addition to profit\u2014as its legally defined goals. Benefit corporations differ from traditional C corporations in purpose, accountability, and transparency, but not in taxation.<\/p>\n
\n benefit corporation (B corp)<\/h3>\n
The purpose of a benefit corporation is to create general public benefit, which is defined as a material positive impact on society and the environment. A benefit corporation\u2019s directors and officers operate the business with the same authority as in a traditional corporation, but they are required to consider the impact of their decisions not only on shareholders but on society and the environment, too.<\/p>\n<\/section>\n
Figure 1. Kickstarter became a public benefit corporation in 2015.<\/figcaption><\/figure>\n In a traditional corporation, shareholders judge the company’s financial performance; with a benefit corporation, shareholders judge performance based on the company’s social, environmental, and financial performance. Transparency provisions require benefit corporations to publish annual benefit reports of their social and environmental performance using a comprehensive, credible, independent, and transparent third-party standard.\u00a0Some well-known examples of benefit corporations are Kickstarter, Patagonia, and King Arthur Flour.<\/p>\n
Forming a Benefit Corporation<\/h2>\n
New companies can incorporate as a benefit corporation in any state where benefit corporation legislation has been passed. Instead of recognizing benefit corporations, the state of Washington created social purpose corporations in 2012 with a similar focus and intent. The process varies by state, but many states require benefit corporations to do the following:<\/p>\n
- \n
- declare a commitment to creating general public benefit<\/li>\n
- adopt a third-party standard<\/li>\n
- prepare an annual benefit report<\/li>\n
- distribute the annual benefit report to the owners and post it on the company’s website<\/li>\n<\/ul>\n
As far as taxes, benefit corporations are treated like all other corporations for tax purposes. B corps can choose to be taxed either as a C or S corp.<\/p>\n
B Corp Certification<\/h2>\n
Businesses that want to take their social and environmental commitment even further can become a Certified B Corporation. This involves a rigorous assessment process by B Lab, which uses a survey to\u00a0rate a company’s environmental practices, employee treatment, activism within its community, and other factors. Businesses that surpass a certain score are certified by\u00a0B Lab, which then audits them from time to time to ensure that they are living up to the movement’s standards.<\/span><\/p>\n
\n \u00a0<\/div>\n“[B Lab certification] is like a Good Housekeeping seal of approval,” said David Murphy, former CEO of Better World Books<\/a>. “If your company is a Certified B Corporation, that really says something. You’re there to serve all those stakeholders, and you’re willing to prove it.”[1]<\/sup><\/a>\u00a0<\/span><\/p>\n<\/section>\n
Disadvantages of a Benefit Corporation<\/h2>\n
- \n
- Transparency and Reporting Requirements<\/strong>. Benefit corporations must provide\u00a0an annual benefit report according to a third-party standard (such as B Lab) and make the report available on their company websites. The purpose of this is\u00a0to assess the company\u2019s performance with regard to its public purpose(s).<\/li>\n
- Annual Fees to Retain Certified B Corp Status.<\/strong>\u00a0If a B corp elects to receive certification from a third party, such as B Lab, fees for “certified” B corp status are\u00a0based on annual sales, with a minimum of $500. To keep certification, the company must pay a renewal fee each year and recertify every two years.<\/li>\n
- Compliance and Governance Obligations<\/strong>. Most states require publicly traded companies with a\u00a0B corp designation to have a \u201cbenefit director\u201d who is responsible for ensuring that the corporation meets its stated public purpose.<\/li>\n<\/ul>\n
Advantages of a Benefit Corporation<\/h2>\n
- \n
- Protection of Mission<\/strong>. Becoming a benefit corporation gives companies more options and protections if they decide to sell the\u00a0business to someone else or take it public, because other factors besides price (e.g., the public benefit mission) must also be taken into account.<\/li>\n
- Reputation<\/strong>. Incorporating\u00a0as a benefit corporation allows companies to stand out\u00a0as businesses that have a\u00a0social conscience and aspire to a standard they consider higher than maximizing profit\u00a0for shareholders. For investors and consumers who are committed to social and environmental responsibility, benefit corporations provide additional\u00a0choices.<\/li>\n
- Creation of Value<\/strong>. Because it’s committed to considering other stakeholders’ interests, a benefit corporation may create value via employee engagement and customer loyalty, thereby improving results for all stakeholders\u2014including the owners\/shareholders. As well, certain profit-making opportunities may not be available without an assured commitment to other stakeholders.[2]<\/sup><\/a><\/li>\n<\/ul>\n
- Reputation<\/strong>. Incorporating\u00a0as a benefit corporation allows companies to stand out\u00a0as businesses that have a\u00a0social conscience and aspire to a standard they consider higher than maximizing profit\u00a0for shareholders. For investors and consumers who are committed to social and environmental responsibility, benefit corporations provide additional\u00a0choices.<\/li>\n
- Annual Fees to Retain Certified B Corp Status.<\/strong>\u00a0If a B corp elects to receive certification from a third party, such as B Lab, fees for “certified” B corp status are\u00a0based on annual sales, with a minimum of $500. To keep certification, the company must pay a renewal fee each year and recertify every two years.<\/li>\n
- Transparency and Reporting Requirements<\/strong>. Benefit corporations must provide\u00a0an annual benefit report according to a third-party standard (such as B Lab) and make the report available on their company websites. The purpose of this is\u00a0to assess the company\u2019s performance with regard to its public purpose(s).<\/li>\n
- Reputation<\/strong>. Incorporating\u00a0as a benefit corporation allows companies to stand out\u00a0as businesses that have a\u00a0social conscience and aspire to a standard they consider higher than maximizing profit\u00a0for shareholders. For investors and consumers who are committed to social and environmental responsibility, benefit corporations provide additional\u00a0choices.<\/li>\r\n\t
- Annual Fees to Retain Certified B Corp Status.<\/strong>\u00a0If a B corp elects to receive certification from a third party, such as B Lab, fees for \"certified\" B corp status are\u00a0based on annual sales, with a minimum of $500. To keep certification, the company must pay a renewal fee each year and recertify every two years.<\/li>\r\n\t
- Transparency and Reporting Requirements<\/strong>. Benefit corporations must provide\u00a0an annual benefit report according to a third-party standard (such as B Lab) and make the report available on their company websites. The purpose of this is\u00a0to assess the company\u2019s performance with regard to its public purpose(s).<\/li>\r\n\t