Understanding B Corporations and Benefit Corporations

Elle McPherson is a recent MBA/MA graduate from the Heller School for Social Policy and Management at Brandeis University, where she focused on nonprofit management and international development. She has seven years experience working with nonprofits such as Oxfam America, Outward Bound, Heifer International, and Save the Children, and extensive travel experience.

Are you confused about ‘B Corporations' and ‘Benefit Corporations' in the news lately? What are they, and how do they differ? In a world where companies increasingly claim to be socially responsible and green, both designations formalize socially responsible business. Both were created by B Lab, a nonprofit organization dedicated to using the power of business to solve social and environmental problems. In short, ‘B Corp' is a certification; a ‘Benefit Corporation' is a legally recognized corporate designation -- more details below.

‘B Corp' is a certification made by B Lab. It is largely a marketing and investing tool verifying an organization meets specified standards of social and environmental focus. For a company to be certified, it must achieve a minimum score of 80 out of 200 on the B Impact Assessment (initial self assessment available online at Once certified, an entity can use the B Corp logo in marketing and participate in the B Corp network. More than 460 entities are certified B Corps.

A 'Benefit Corporation' is a new type of legal entity legally recognized in several states, thanks to new state level legislation. A Benefit Corporation, by law, must create a material positive impact on society. It allows for-profit, socially minded businesses to pursue the interests of their environment, employees, suppliers, and community, relieving them of the demand of the traditional corporate pursuit of maximizing profit for shareholders.

Maryland was the first state to pass such legislation, in 2010. It has been followed by Vermont, New Jersey, Virginia, Hawaii and California. Legislation is currently under consideration in New York, Pennsylvania, Michigan, North Carolina, and Colorado (as of 11/2011). Look for more good news soon.


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