Benefit Corporation

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Wikis > Benefit Corporation


A Benefit Corporation is a legal corporate structure (similar to LLCs or C and S Corporations) that generates benefits for its shareholders, as well as society as a whole. Benefit Corporation legislation has been passed in multiple states and has varying legalities and nuances across the board; however, the root of the enterprise remains the same: that companies focus on public benefit. As of 11/15/11, only 6 states legally recognize Benefit Corporations.


Although differing from state to state, two main requirements of founding a company with the Benefit Corporation structure are as follows:

1. Purpose – corporation will focus on creating public benefits

2. Accountability – decisions made by chief officers shall be in the best interest of their shareholders, customers, community, and environment. They will deliver transparent Benefit Reports to their shareholders and to the general public that describe and explain their social and environmental performance.

In California, taking effect January 1, 2012, Benefit Corporations are subject to third-party standards for the evaluation of their annual reports

Read about Patagonia’s pursuit of Benefit corporation status here

Be sure to contact your State’s officials for rules and regulations regarding benefit corporation status.

Confusion with B Corporation

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.

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.

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.

See Benefit vs B Corporation