Benefit Corporations vs. B-Corporations

Benefit vs B-Corporation Social Enterprise from The Startup Garage
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With the new era of Social Enterprise upon us, we are seeing more and more companies blend their business structures between for-profit financial efforts and philanthropic social returns. This rise in social awareness and communal benefits has led to rise of Benefit Corporations and B-Corporations across the nation. Often confused, these two types of enterprises contain many similarities yet key differences that are outlined below.

1. Benefit Corporations are corporate structures. They are legal state entities that are similar to those of S-Corps, C-Corps, or LLCs. Not all states have passed Benefit Corporation legislation; as of 11/14/11, only 6 states have legally recognized them.

2. B-Corporations are regular enterprises that have received “B-Corp” certification. By filling out an Impact Assessment, meeting established requirements, and passing an advisory board review, a non-profit organization by the name of B-Lab distributes “B-Corporation Certificates.” B-Lab then requires the company to alter their bylaws and structure to that of similar legal Benefit Corporations. There are currently a little under 500 recognized B-Corps across all 50 states.

3. A company may be both a Benefit Corporation and B-Corporation. This may only be done in states that allow Benefit Corporation entities and if the company in question has met B-Lab certification requirements.

4. B-Corporation certificates are mostly applied for in states that currently do not have legal Benefit Corporation structures.

5. Although Benefit Corporations must produce and publish annual Benefit Reports, it is not required that a third party assess or audit their performance and verify their procedures. In comparison, B-Corporations must first pass B-Lab’s B-Impact Assessment with a minimum score and are then liable to be randomly reviewed on-site every two years to make sure standards are being met.

In general, both Benefit Corporations and B-Corporations have the same objective: to further their social aims through a for-profit driven business. They are both held accountable for their decisions in regards to their customers, shareholders, and the environment as well as for their transparency in their publically published reports on social and environmental performance.

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About Tyler Jensen

I work with entrepreneurs who are looking to attract investment and get out of the "Garage". I am passionate about helping entrepreneurs start companies that matter. I helped launch over 100 Companies, Non-Profits and Social Enterprises. I consider myself a serial entrepreneur, startup coach & trusted advisor. * Launching New Companies (For Profit, Non-Profit and Social Enterprise) * Expert Business Plan Writer * Extensive Network of Business Relationships focused on Launch & Rapid Growth of New Companies * Startup, Growth, Marketing, Technology, Web, Business Systems * Trusted Advisor to CEO’s & Entrepreneurs * Capital Raising Strategy Development * Startup Team Development The first company I started and sold is VAVi Sport & Social Club which grew to over 25,000 members in six years, was recognized as San Diego’s 30th fastest growing private company in 2006 by the San Diego Business Journal and 32nd fastest in 2007, and sold for over 25X the capital investment.