B Corps vs. Benefit Corps.

We’ll be the first ones to admit it — the world of mission-driven business can get a little confusing. B Corps, Benefit Corps, non-profits (not to be confused with not-for-profits), for-profits and we haven’t even begun to scratch the surface of traditional charitable organizations. 

Understanding the nuances behind using business as a force for good is a major step in the right direction of inspiring others to do the same.  

B Corps

Certified B Corporations are defined as “businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.” 

To become B Corp certified, a business must be graded by B Lab (a nonprofit organization) on a scale that rigorously assesses their impact; their relationship with the environment, how they treat their employees, and their value for non-shareholding stakeholders. Once a business achieves the minimum score of 80 out of 200, they must post their Impact Report on bcorporation.net, and amend their legal documents to requiring their board of directors to balance profit with purpose.

Benefit Corps

The primary difference between certified B Corporations and a Benefit corporation, is that a Benefit corporation is a legal designation by the state and has no relationship to B Labs, other than B Labs requires you to be Benefit corporation if you are able. Where certified B Corporations are 3rd party certified (by the non-profit B Labs). Often, Benefit Corps are also certified B Corps, but you could be just a benefit corp, or just a certified B Corp. 

While both types of business quantify and measure their performance, Benefit Corporations self-report as opposed to going through a B Impact Assessment. B Corps also need to recertify every three years to be considered a business that meets the high standards of “verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.” 

Think of a Benefit Corporation as a slightly-more-autonomous version of a B Corp; both look to B Lab for guidance but ultimately it’s the company that provides oversight in lieu to an outside party. 

There’s also fees! B Corps members pay an annual fee of anywhere from $500 to $50,000, while Benefit Corporations only have to worry about $70 – $200 filing fees. 

Another distinguishing factor that separates Benefit Corporation from B Corps is how they’re defined in the eyes of the law.

 In terms of  legal designation, Benefit Corporations work in a similar manner to LLCs or S-Corps, meaning they must make evidence of their public benefit (along with their annual impact report) available to the masses. Currently, 37 U.S. states have passed Benefit Corporation Legislation with a full list of sponsors and key supporters. Find out how your state stacks up with this helpful drop-down menu. 

Want to hear a conversation about the differences? Listen to this podcast episode all about it.

By Jeremy Glass, September 21, 2021