Definition

benefit corporation

Contributor(s): Kristen Lee

Benefit corporation is a type of corporate structure recognized by some state governments in the United States. In addition to being profitable, a benefit corporation assumes the legal responsibility of considering its impact on society and the environment. The goal of the corporate structure is to encourage for-profit companies to identify social missions and demonstrate corporate sustainability efforts. In exchange, the corporation may be eligible for certain types of legal protection, bidding protection or tax benefits.

As of this writing, almost half the state governments in the United States allow a business to incorporate or re-incorporate as a benefit corporation. Although each state provides its own specific guidelines for incorporation, the general intent of the benefit corporation form is to allow a business to define non-financial goals in its founding documents. Such goals may include quantifiable levels of acceptable community involvement, sustainability efforts or charitable donations.

Benefit corporation as a corporate structure in the United States has been promoted by B Lab, a not-for-profit company that promotes the use of business to solve social and environmental problems internationally.  B Lab promotes the triple-bottom-line approach to business, placing equal emphasis on people, planet and profit. B Lab also offers a B Corp certification for companies that wish to be identified as being a benefit corporation; while the certification can provide public relations benefits, it does not affect the organization’s legal status.

This was last updated in September 2014

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