What is a Benefit Corporation?
Simply put, a Benefit Corporation is a for-profit entity similar to traditional Limited Liability Companys (LLCs) , however, it also includes an emphasis in sustainability, society, employees, and community impact.
Each state defines the legal structure for a Benefit Corporation with nearly 60% of states and the District of Columbia supporting such a framework.
Taxation remains the same as traditional LLCs. Benefit Corporations have additional focus in transparency, accountability, and purpose with the goal of improving the overall well-being of society rather than simply focus on for-profit purposes.
How to Become a Benefit Corporation?
Registering or converting a business to a Benefit Corporation is quite simple and the steps depend on the state in which your business is registered. Benefitcorp.net has a great description for registering in each of the supporting states.
In Oregon, the steps are easy to follow:
- Include a statement in the articles of incorporation or organization that says the corporation or LLC is a benefit company subject to ORS 60.750 – ORS 60.770. This basically means you amend your legal registration stating that you are now a Benefits Corporation.
- Adopt a third-party standard. There are many free standards to follow including: The Global Reporting Initiative (GRI), GreenSeal, Underwriters Laboratories (UL), ISO 26000, Green America, and B Lab. The self-certification provides transparency in the governance and implementation of overall corporate social and environmental performance.
- Prepare an annual benefit report identifying:
- The actions and methods used to provide a general or specific public benefit.
- Any circumstances that hindered or prevented a benefit.
- How well the benefit company met or exceeded the third-party standard.
- Distribute the annual benefit report to the owners and post it on the company’s website. Again, transparency is a key cog in the operating wellness wheel of a Benefit Corporation.
Why Should a Business Register as a Benefit Corporation?
Duncan Farms LLC was set up as a standard LLC. I changed Duncan Farms LLC to an Oregon Benefit Corporation because I wanted to make a clear statement that I put people, planet, and purpose before profit. The change qualified Duncan Farms LLC as the 1,000th registration.
I feel it is important to examine and state my values and Oregon law requires me do that. I want to encourage all people to examine their values in setting up a business. If your only reason for going into business is to make a lot of money, you will make very different decisions. IMHO you will ultimately fail at the very least as a human being.
How does a Benefit Corporations Differ From a Traditional LLC?
I could have included the same documents and stories on my web sites, Facebook, etc. as a standard LLC. I operate my business the same now as I did as a standard LLC. For some folks it may be too easy to revert to the old model when the going gets rough and abandon values. Advertising has numbed us, we expect to be deceived and there are lots of people looking to be fulfill our expectation and deceive us.
I want to operate my business with trust and love. I want to do business with folks that operate with trust and love. I avoid businesses that put profit about all else.
In practicality, a Benefit Corporation is a mirror of traditional LLCs with the exception that Benefit Corporations take into account more than just profits. As noted above, there is a focus on expanding the role of an organization to include how it affects society. From a tax standpoint, there are no advantages, however, from a social and environmental impact standpoint, a Benefit Corporation is head and shoulders above traditional LLCs.
Transparency and Accountability
The “hedge fund” industry (includes private equity, alternative investments, etc.) convinced the Securities and Exchange Commission (SEC) that they could only make above average returns if they operated in secrecy. I believe this was the beginning of “income inequality” as we have today. The world of finance has became so secret that few people understand basic arithmetic any more.
I tell my own story in my own words and according to my own truth. Folks who share my values will be drawn to me and I will have partners, customers, vendors, neighbors, etc. that I want in my life.
Because Benefit Corporations require self-assessment and yearly report publishing, it’s easy to be transparent. Transparency leads to making better decisions and better decisions lead to a more conscious and responsible business.
For Benefit Corporations, the business model is owned by the mission and employees. You can see the self-evolution of performance and communication from to the CEO to the entry level employee. Hopefully, Benefit Corporations will lead to ownership at the top of the house and avoid the blame game when issues arise, like Wells Fargo blaming employees. I call it “Wells Fargo Syndrome” by where employers incentivize their employees to make business decisions that often illicit and often illegal for their own personal gains, regardless of societal impacts. It’s a sick system that surely exists far beyond just Wells Fargo.
How Can You Register a Benefit Corporation?
Go to the BenefitCorp.net “How to become a Benefit Corporation” page, find your state, and follow the steps. It’s easy and inexpensive.
Call to Action
I support Benefit Corporations for all small businesses, especially in Oregon. For me, this replaces advertising. A Benefit Corporation along with a simple web site that declares the organization’s values reflects a new trend in responsible business. When I shop, I always prioritize Benefit Corporations above other businesses. They get my money and my respect.
Curious to see what Benefit Corporations exist in your state? You can use the BenefitCorp tool to look up corporations by state.
Are you a member of a Benefit Corporation? If so, share your story below.