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How and Why One Company Chose to Organize As a 'B Corp'

A B corporation designation can help back up a nonprofit's 'doing good' rep. Is it right for your social venture?
How and Why One Company Chose to Organize As a 'B Corp'
Image credit: Photo© Kevin Garrett
Bookseller David Murphy gets an A for earning a B.

Getting a B is usually considered only slightly better than average. For Better World Books CEO and co-founder David Murphy, a B is about as good as it gets. The Atlanta-based bookseller was one of the first to earn the B-corporation designation, which recognizes companies that use "the power of business to solve social and environmental problems."

Better World Books, a for-profit company that raises funds to support literacy programs, launched in South Bend, Ind., in 2002. The company was started after two University of Notre Dame grads raised $20,000--with $10,000 going to a community nonprofit--through a book drive. Their post-drive business plan went on to win Best Social Venture in a Notre Dame-sponsored competition. The judge? Murphy. He was so taken with the company idea and mission that he signed on to work with co-founders Chris "Kreece" Fuchs, Xavier Helgesen and newcomer Jeff Kurtzman. (Fuchs and Helgesen remain with the company; Kurtzman left in 2007.)

The 10-person launch team organized book drives at schools nationwide and beefed up online sales efforts through Amazon and on BetterWorldBooks.com. They also began working with libraries to resell books that would ordinarily be discarded, further benefitting nonprofits and keeping the used books out of landfills.

Behind the Designation
The B-corporation-certifying entity is B Lab, a Berwyn, Pa.-based nonprofit that requires completion of a comprehensive questionnaire for its approval process. The information gathering and review ensures that a company meets measures of social and environmental performance while agreeing, according to guidelines, to "legally expand the responsibilities of its employees, suppliers, consumers, community and environment."

While B corps don't get any tax advantages at the federal, state or municipal levels (except in Philadelphia), B Lab has negotiated a variety of benefits for approved B corps, including discounts on products and services.

B Corporation Stats
B corps in the U.S.: 422
Number of industries that have B corps: 54
States that recognize B corps: 4
States with legislation pending to recognize B corps: 7
Annual revenue of B corps: $1.94 billion

In 2007, when Murphy learned about B Lab's new benefits corporation designation [see sidebar], he decided it was worth investing time to apply for the label as a way to highlight Better World Books' socially focused mission.

"It's credible, third-party validation," Murphy says. "It's a Good Housekeeping seal of approval that when you say you're a green company or an employee-friendly company, that you really are. [B Lab] is validating it so it's more than just a marketing message. It's really the way you run your company."

Murphy says the B-corp designation backs up Better World's commitment to being a "triple-bottom-line social enterprise" that treats its people well, practices green principles and is dedicated to running a profitable company that is equally accountable to its customers, literacy partners, investors and employees, as well as to the environment. The company amended its articles of incorporation to reflect its commitment to supporting these multiple priorities, Murphy says.

That formula has taken Better World Books from a fledgling company with a big mission to an international enterprise that employs close to 400 people in the U.S. and U.K. As of June 2011, the BetterWorldBooks.com counter tallied nearly $9.7 million raised for literacy organizations and libraries and more than 55 million books rescued from landfills.

Murphy is optimistic that as B corps become more widely recognized consumers will seek out companies that bear the designation. "When you're trying to do all this good, you get some skeptical looks. It sounds like a nonprofit but it's not, and people may not believe the goody-two-shoes mission is real," he says. "B-corp certification changes that."

Gwen Moran is a freelance writer and co-author of The Complete Idiot's Guide to Business Plans (Alpha, 2010).

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This article was originally published in the August 2011 print edition of Entrepreneur with the headline: Book Case.

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