5 Reasons to Become a Benefit Corporation
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In 2016, my team had the unique opportunity to shift our company’s legal status from a 501(c)3 non-profit to a for-profit company. In short, the advantages of being a for-profit trying to achieve our mission of creating high-quality academic summer programs outweighed the advantages of being a nonprofit. In the process of making that conversion, we learned that not all for-profits are created equal. After several discussions with our leadership team, our board and our lawyers, we decided to become a benefit corporation.
Benefit corporations, like B Corps, are for-profit companies that meet rigorous standards of social and environmental performance, accountability and transparency. In essence, benefit corporations aspire to use the power of markets to solve social and environmental problems. When we were inspired to incorporate as a benefit corporation, here were our five reasons.
B Lab, which is the non-profit group that holds benefit corporations and B Corps accountable, shared our belief that businesses should exist to do more than just turn a profit. We both believed that businesses should be used as a force for social good. At Practice Makes Perfect, one of our four core values is conscious capitalism, which is all about the triple-bottom line. We know business principles could be used appropriately as a very powerful tool to address social inequities.
Every entrepreneur knows that building a business is hard work. It’s even harder work when you’re doing it alone. Today, there are over 2,000 B Corps around the world. B Lab aggregates learnings, shares case studies, provides professional development and creates opportunities for CEOs to convene and engage in meaningful conversations.
3. Public accountability
The B Lab team spent years tweaking and figuring out what matters. The standards that benefit corporations and B Corps need to adhere to are the gold standard for how businesses should operate. As a company that worked directly with our public education system, we wanted to hold ourselves to the highest available standard of public accountability. B Lab’s incorporation and certification process keeps companies honest.
4. Ability to put money second to what matters
This was one of our top reasons. We didn’t get in the business of eliminating the summer learning loss and working with low-income children just because we wanted to make a profit -- otherwise we would’ve incorporated as a for-profit from day one. In situations where a company could turn a bigger profit because of its fiduciary obligation to their investors, we can put mission first as a benefit corporation. This truly allows us to think about what is in the best interest of our kids and our school partners.
5. Attracting the right people
Being a benefit corporation or a B Corp gives you the opportunity to make a very public declaration that you care about more than profit. This is a signal to your investors, your customers and your employees (both current and future) that you are more than just your numbers. You’re committed to something bigger. This signal will keep people away who don’t subscribe to these views on business. Being a benefit corporation or a B Corp is a public declaration that you’re subscribed to a movement that uses business to do good.
Being a benefit corporation or a B Corp isn’t a walk in the park. The assessments take time and they require a sincere commitment to doing right by all of your people -- employees, customers and shareholders. It also isn’t free, but it’s well worth the value if you take advantage of the 2,000-plus member community that spans 42 countries and over 120 industries. Will you join the movement?