Get All Access for $5/mo

5 Reasons to Become a Benefit Corporation Benefit corporations aspire to use the power of markets to solve social and environmental problems.

By Karim Abouelnaga Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

Maskot | Getty Images

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.

Related: 6 Ways to Take Your Company From Profit to Purpose

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.

1.Shared beliefs

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.

Related: Why Should Your Business Care About Social Responsibility?

2. Community

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.

Related: 3 Tips for Making Social Responsibility a Priority at Your Startup

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?

Karim Abouelnaga

Founder of Practice Makes Perfect

Karim Abouelnaga is the founder of Practice Makes Perfect, a benefit corporation that works to narrow the achievement gap for low-income public schools. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

Some Car Dealerships Are Selling Cars the Old Fashioned Way Following Massive Cyberattack

CDK software services an estimated 15,000 dealerships in the U.S.

Business News

50 Cent Once Sued Taco Bell for $4 Million. Here's How the Fast-Food Giant Got on the Rapper's Bad Side.

The brand suggested that 50 Cent change his name to match its "Why Pay More?" value menu promotion prices. The rapper was not amused.

Business News

Jack Dorsey Says It Will Soon Be 'Impossible to Tell' if Deepfakes Are Real: 'Like You're in a Simulation'

Dorsey said we will "not know what is real and what is fake" in the next five to 10 years.

Business News

Apple Is Working on Making Its $3,499 Vision Pro More Affordable — and Mainstream. Here's How.

Apple's product is at least three times more expensive than Meta's version.

Business News

Mark Cuban's Google Account Was Hacked By 'Sophisticated' Bad Actors

The "Shark Tank" star said someone "called and said I had an intruder and spoofed [Google's] recovery methods."