BENEFIT CORPORATIONS:
Boston College Graduate School of Social Work
A NEW STRUCTURE FOR CORPORATIONS WITH
SOCIAL MISSION
Benefit Corporations are a type of
corporate structure that allows companies to
earn a profit while still operating under a social
or environmentally responsible mission. Benefit
Corporations are for-profit ventures; the
distinction has no impact on their tax status.
Responsibility to Mission
Benefit Corporations follow a legal structure
which requires the corporation to adhere to
their fiduciary responsibilities to its
shareholders and to its social or environmental
mission. They are ideal structures for socially
driven corporations that want to consider nonfinancial interests in decision-making.
Social entrepreneurs seeking to charter their
organization as a benefit corporation must
consider that generating a substantial amount of
revenue is required. The corporation has to
generate enough income to remain financially
self-sufficient, while remaining mission focused.
Shareholder Responsibility
Corporations pursue a wide range of activities to
create financial benefit for their shareholders.
Shareholders in Benefit Corporations determine
if the corporation has achieved its fiduciary
responsibilities and in doing so has produced
public benefit. Similarly to for-profit
corporation, fiscal accountability remains the
responsibility of the shareholders. Organizations
who are not in a position to profit from their
social impact may want to consider alternative
corporate structures that better fit their social
venture.
New Opportunities for Innovation
There are three exceptions that differentiate
Benefit Corporations from traditional forprofit corporations:
Higher
Standards of
Purpose
Accountability
Transparency
In order to be considered a Benefit
Corporation, the corporation must position
itself to reach a higher standard of purpose.
This is measured by the corporation’s ability
to generate public benefit. Examples of public
benefit include: promoting economic
opportunity for individuals or communities,
preserving the environment, improving
human health, promoting the arts, sciences,
and enhancing the educational systems.
They are accountable not only to
shareholders, but also to the non-fiduciary
interests of the public, the environment, and
their employees. Benefit corporations must be
transparent with public annual benefit reports
to document social benefit. This transparency
provision mandates that the report be
produced using a comprehensive, credible,
and independent rubric applied during
financial reporting.
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www.bc.edu/csi
Policy Status in the United States
Traditionally in the United States there has
been no legal structure that allows for
mission driven business to consider nonfinancial interests in decision-making.
This responsibility to shareholder interest
prevents corporations from pursuing
additional venues for improving
environmental or social factors.
The passion generated into fostering a
service product that will answer a social
need is not only innovative but also
replicable across the United States.
Currently there are fourteen states have
enacted legislative policies allowing for
the formation of Benefit Corporations.
Legislation as of May 2013
State
Bill
Date
Arizona
Arkansas
California
SB1238
HB1510
AB361
April 30th, 2013
April 5th, 2013
October 9th, 2011
Hawaii
SB298
July 8th, 2011
Illinois
SB2897
August 2nd, 2012
Louisiana
HB1178
May 31st, 2012
Maryland
Massachusetts
HB1009
H4352
April 13th, 2010
July 31st, 2012
New Jersey
New York
S2170
S00079
March, 7th 2011
December 12th, 2011
Pennsylvania
S433
October 24th, 2012
South Carolina
S1405
June 14th, 2012
Vermont
S0263
May 19th, 2010
Virginia
HB2239
March 26th, 2012
For more information on Benefit
Corporations...
Benefit Corporation Information Center
www.benefitcorp.net
Should Your Business Be “For Benefit”?
http://blogs.hbr.org/cs/2010/08/should_your_business_be
_for_be.html
Authors:
Kyle Smith
Stephanie Berzin, Ph.D.
Marcie Pitt-Catsouphes, Ph.D.
The Rise of Benefit Corporations: The Nation
http://www.thenation.com/article/161261/rise-benefitcorporations#
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