Image by: Blue Pylons
By Josie Alexander
Benefit businesses are officially the next big thing. They’ve only been around for the last couple of years but they are making a big impact in entrepreneurship these days by bridging the gap between for-profit organizations and non-profit organizations.
So you may be thinking, “What the heck is a benefit business?” It is a business that provides an intrinsic benefit to the public. While it may seem like a non-profit business, these “labels” are actually for-profit corporations. Have I piqued your interest?
#1) What Are YOUR Benefits to Being a Benefit Program?
Benefit corporations (or B corporations) provide a “tangible, positive impact” on society or the environment. You have to dedicate a section of your business for a cause. When you say that 50% of your proceeds of specific products go to breast cancer research, you have to actually prove that when the government sends people to your business to do a double check.
That is one of the great things about being registered as a B Corp. While a lot of companies may just say that they try to be socially active, regular checks are done with B Corps in order to verify their benefit(s) for the public. So when you show your clients that you are registered as a B Corp, they know that you’re legit because B Corps are always held accountable to their claims.
You could possibly make a lot more money because more people are likely to buy products knowing that a chunk of the profits go to charity. I will often shop in stores which give me the option of rounding my total purchase up to the next dollar (with the extra proceeds going to a specific charity). I always say yes, and so does about 90% of the rest of their customers. I will often give them an extra couple of dollars as well.
Image by: Nuclear Regulatory Commission
It could also help you impress your clients or your customers. If you are in a business which sells a service, you could really impress your clients by declaring your B Corporation status. As I said, more people are more giving with their money when some sort of social or environmental service is being done by the business.
It could also help you appear to be more socially or environmentally conscious. If you have full intention of being socially conscious when you go into this business, registering and declaring that you are a benefit corporation will put your money where your mouth is.
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In addition to these benefits, there is also your sense of purpose. If you started a corporation or business with a sense of purpose in your mind (for example, you wanted to help the illiterate in your county and wanted to open a used book store for that purpose), you can register as a benefit corporation and know that your vision or purpose is safe.
If there is a change of hands in your corporation (whether you retire, quit, get voted out of your position, etc.), you can have peace of mind knowing that your business will still continue with your initial mission.
As a benefit corporation, you’re not going to save anything on your taxes. I’m sorry to say that but it is true. You will have to file like any other business and you will not receive any addition stipulations.
#3) What Must You Do To Be Considered A B Corp?
In order to be considered a benefit corporation, you must go through a verification process. Luckily, the initial registration process can be done via internet (how convenient is that!). However, there will be follow-ups which will be done with an actual person.
You are also held accountable by a number of provisions including:
- A Sense Of Purpose
You must create a public benefit of some sort.
You may name a specific benefit purpose (for example, 50% of the profits of this product to go breast cancer research).
You may create a public benefit that serves your business as well (for example, creating a literacy program based out of your used book store)
Be Held Accountable
You must declare a director that makes decisions based on the interests of the corporation and the interests of the share holders, employees, community, environment, etc.
Changes In The Purpose/Structure
If you make changes in the purpose of your corporation or the benefit that you choose, the structure of your corporation, or any control issues, you must get a 2/3 vote (in most states — check with your state) from your stakeholders.
There used to be a weird stigma that went with being a for-profit organization. While non-profits may seem like angels in their field, being for-profit made you appear as though you didn’t care about social issues. This is due to the fact that a number of for-profits lie about how much money they donate to charity. But B Corporations are changing that stigma, one registration at a time.