B Corp Vs. Benefit Corp: What you Need to Know

B Corp Vs. Benefit Corp: What you Need to Know

You want to start a company in which the core idea you’re working with solves a very big problem. It feels like a nonprofit because your technology can alleviate physical pain for those in need. You feel like you don’t want to be a sellout, but you want to be knowledgeable when it comes to what type of business entity would best reflect your new venture.

You’ve heard about nonprofits and how it takes a long time to get the proper status.

Then there are B Corporations, which has something to do with filing and the fact that you can still be a for-profit company yet have nonprofit status.

You also see articles on Benefit Corporations, and those have to be the same as a B Corporations, right?


It all seems a bit jumbled in your head. You want to make sure you know what to tell early enthusiasts and potential investors, so they know you’re planning ahead and structuring things properly for your new sustainable and philanthropic idea.

The B Corporation concept has been creating quite a buzz in the marketplace as of late, and I have heard people use it interchangeably with a Benefit Corporation. No matter what type of tech company you are starting, understanding this landscape before you start might help. Worst case scenario, you are able to eliminate what is not correct for you, and best case scenario it might help give you a site on the horizon for a type of entity that creates status that may help you differentiate yourself in the marketplace.

Before you read further, I’m not a lawyer. I’m an entrepreneur who sees value in this topic. I’ve done some research in hopes of giving you a valuable oversight of the B Corporation and the Benefit Corporation structures.

Here’s what you need to know about each:

B Corporation

B Corporation is a term used for any company that is certified by the Nonprofit B Lab as voluntarily meeting higher standards of transparency accountability and performance. It’s similar to the LEED Certificate for green buildings or the USDA certification for organic products.

Unlike the other two certificates, however, B Lab Certification evaluates the whole business, including quality, worker treatment, and environmental accountability, rather than just the specific product.

B Corporation businesses have to apply for membership, as well as renew their membership every two years. Benefits include an extensive network with other B Corporations, support among investors, and access to many other things.

There are over 1,000 Certified B Corporations in 35 countries across 80 industries. They all work towards the common goal of making businesses the best in and for the world.

A Benefit Corporation

A Benefit Corporation is a new type of corporation that voluntarily meets higher standards of higher purpose, accountability, and transparency. Sounds just like the B Corporation, right?

Not entirely.

The Benefit Corporation originally arose because many entrepreneurs felt that the B Corporation Certification cannot provide the kind of legal protection government-recognized forms could provide.

Like a certified B Corporation, a Benefit Corporation has to consider the impacts of any action not only to shareholders but also to its employees, its customers, its community, and the environment.

Evaluated by an independent third-party to ensure the overall social and environmental performance is acceptable, a Benefit Corporation must provide a general public benefit. Particularly, it provides a material positive impact on society and the environment as a whole.

Some examples would include providing low income individuals or communities with beneficial products or services, preserving the environment, promoting economic opportunity, and improving health in the community.

Four key differences.

1. B Corporation can be any for-profit entity – Benefit Corporation is an actual corporation.

2. B Corporation has to be certified by B Labs – Benefit Corporation is free to use any third party assessment tool to evaluate its impact on employees, customers, the community, and the environment.

3. B Corporation has no reporting requirement – Benefit Corporation is required to provide a report of its overall social and environmental performance to its shareholders and the public in an annual benefit report.

4. Benefit Corporations can only be recognized by specific countries that have passed benefit corporation legislation.

I would encourage those of you who are serious about the topic to take a deeper dive online or via other resources to fully understand all of the intricacies between the two.

#BCorp #BenefitCorp

Which do you think is better and why? I would love to hear your comments.