Benefit Corporations

Establishing your business as a Benefit Corporation offers many benefits for a socially conscious enterprise, but there are several legal and administrative requirements to be aware of before taking the leap.

First, much like a nonprofit, Benefit Corporations in California have a “general public purpose” baked into their corporate DNA. They can also have a specific purpose – which can include concerns like preserving the environment, promoting economic opportunity, or improving human health.

Benefit Corporations must go regularly before a third-party validator like B Lab, the visionary 501(c)(3) alliance of more than 400 B Corps across the country, to prove that they are not only meeting their goals but treating their employees, customers, communities and local environments with the same respect as their shareholders. Benefit Corporations can lose their B Corp title and their legal status for not doing right by these standards.

In addition to this third-party review, they must also report annually to detail how they have pursued their public benefit purpose. Within 120 days after the end of each fiscal year, a Benefit Corporation is required to publish a Benefit Report, which states how the Benefit Corporation performed that year on a social and environmental axis.