For-profit corporations are operated to make money for the shareholders. Not-for-profit corporations are operated to benefit society.  Now we have a Benefit corporation, a for-profit entity that has voluntarily and formally committed to creating social and environmental benefit, in addition to its traditional for-profit motive.

Benefit corporations have no tax exemptions, and most will have neither members nor dues. Benefit corporations also known as B Corps are a new class of corporation that voluntarily meets higher standards of corporate purpose (must provide a “specific public benefit”), accountability (subject to “third party standards”), and transparency (must report to the shareholders via an annual benefit report).

One source of confusion surrounding Benefit corporations arises from an entity known as B-Lab, which spawned the movement. This is a nonprofit public-benefit organization, which has established a brand-name certification called “Certified B Corporation.”

The significant difference between a Certified B Corp and a Benefit Corporation is that one is a certification, and the other is a legal status.

A Benefit corporation is a corporation. This means that it is incorporated just like any other corporation. There are three major differences between a For-profit corporation and a Benefit corporation:

The corporate purpose

The directors’ duties

The annual reporting obligations.

In its incorporation documents, a Benefit corporation must state specifically that its purpose is “to create a general public benefit,” which means having a significant impact on society and/or the environment. Some states (only 27 have Benefit Corporation statutes with more introducing proposed legislation) also allow a corporation to claim a specific public benefit, such as providing services of a low-income community.

Annual reporting obligations are also more extensive. Rather than merely updating corporation information, a Benefit Corporation must make a report on how it is doing in achieving its stated purpose.  To find a list of third party companies that perform assessments go to and click on “Rate the Raters” report.

The benefit corporation is the most comprehensive yet flexible legal entity devised to address the needs of entrepreneurs and investors and, ultimately, the general public. Benefit corporations offer clear market differentiation, broad legal protection to directors and officers, expanded shareholder rights, and greater access to capital than current alternative approaches. As a result, the benefit corporation is also attracting broad support from entrepreneurs, investors, legal experts, citizens, and policy makers interested in new corporate form legislation.

It is important to understand that a Benefit corporation is a legal status administered by the state. Benefit corporations do NOT need to be certified. Certified B Corporations have been certified as having met a high standard of overall social and environmental performance, and as a result have access to a portfolio of services and support that benefit corporations do not. B Lab certification has no legal standing.

If you are interested in learning more, contact Sage International, Inc. at 1.800.254.5779