4 Reasons Your Organization Should Become a Benefit Corporation

Benefit corporations (“B Corps”) are a unique corporate entity that can provide a variety of potential benefits. Like C corporations, benefit corporations are designed to create a profit for their shareholders. But unlike C corporations, benefit corporations are designed to have a positive impact on their community as well. These corporations currently exist in 33 states (plus Washington DC) and are becoming increasingly popular as time goes on.

Benefit corporations are unique in the sense that they hold themselves to more rigorous transparency, social, and environmental standards than their counterparts. Though running a benefit corporation requires a stronger commitment to the pursuit of perfection than running an ordinary corporation, the many benefits associated with choosing to do so make these corporations undeniably worth the effort.

1. Public Good

The most obvious reason you might choose to create a benefit corporation is that you want to help create a better world. Benefit corporations are, by definition, committed to creating a positive impact on their community, promoting better business standards, and also taking voluntary actions to minimize any negative impact on the environment.

Running a benefit corporation and making a reasonable profit are not mutually exclusive endeavors.

If you choose to create a benefit organization, that doesn’t mean you cannot also make a profit. What it does mean, however, is that you will need to make a profit in a way that is objectively moral. Though at first, imposing additional moral standards on your organization may marginally increase certain costs, doing so can really pay off. Benefit corporations often have much happier employees, can save costs over time by operating sustainably, and are also recognized by the public for the positive impact they have created.

2. Community Marketing

Knowing that you have made the world a better place ought to be reason enough to convert your organization into a benefit corporation. But even if all you are concerned about it making a profit, creating a benefit corporation may still be a lucrative decision.

Corporate social responsibility (CSR) is one of the most accessible ways to market your business. In a world that is overwhelmed with media exposure, traditional marketing methods (namely, blatant ads) may not be as effective as they once were. But if you can show your potential consumers that your organization is willing to act in their best interest, you can immediately distinguish yourself from the surrounding noise.

When has #CSR convinced you to use a particular brand? Would you be willing to pay more for something that is #moral?

In essence, choosing to operate your business for the benefit of the world around you is an effective form of free advertising. When you can organically tell potential consumers that you give back to the community, actively care about the environment, and take care of your employees, they will have real reasons to choose your business over the competition.

3. Investor Confidence

Investors are more likely to invest in companies that are transparent, operationally sustainable, and entrenched in their community. Benefit corporations, by definition, hold themselves to a higher standard than their counterparts—any long-term investor will inevitably see this and realize that your decision to “go beneficial” may also have a positive impact on your organization’s bottom-line.

By demonstrating your business’ ability to think about things with a big picture perspective will lead investors to believe that your organization is inherently responsible.

4. Building a Talented Team

Choosing to create a benefit corporation will additionally be extremely useful when it comes to the employee recruitment process. Benefit corporations attract talented individuals that are excited about the prospect of making the world a better place while also earning a living.

The very idea of working for a benefit corporation gives potential employees a lot to get excited about.

Additionally, because of the commitment to employee wellness that is inherent to creating a benefit corporation, employees are generally much happier than those working elsewhere. Having happier employees makes it possible to decrease turnover, decrease the cost of recruitment, and increase each employee’s experience working with the company.

Each of the benefits mentioned above ultimately serves to enhance the others. For example, with lower employee turnover rates, you can increase investor confidence. With increased investor confidence, you will can raise more money to create public good. This cycle of positive outcomes is seemingly endless—the better your company does, the better off it will be in the long-run (and vice versa). Though benefit corporations may impose additional standards on your organization, accepting these standards and striving for perfection can help push your organization to better than you ever imagined.