B-Corps; What are They?

Kickstarter, a popular crowdsource company that helps new inventors raise money to fund their creative projects, recently announced they are becoming a Benefit Corporation. While many of us may not know what this means, the move by Kickstarter is becoming more popular. Here is what you need to know.

Benefit Corporation defined

Per benefitcorp.net:

A Benefit Corporation voluntarily meets standards of corporate purpose, accountability, and transparency.

Bullet Purpose: Benefit Corporations have a corporate purpose to create a materially positive impact on society and the environment.
Bullet Accountability: Benefit Corporations are required to consider the impact of their decisions not only on shareholders but also on workers, community, and the environment.
Bullet Transparency: Benefit Corporations are required to make available to the public, except in Delaware, an annual benefit report that assesses their overall social and environmental performance against a third party standard.

How is this different?

When a traditional company takes actions that do not maximize their value, they can be vulnerable to owner lawsuits. To solve this problem, some states allow companies to legally organize themselves as B-Corps or Benefit Corporations. The B-Corp formation provides the company legal protection from shareholders while pursuing a social mission. This social mission is made public. Here are some examples;

Arrow Patagonia (outdoor gear): Commitment to the environment
Arrow King Arthur Flour (baked goods and flour): Sustainable living environment; ending child hunger
Arrow Ben and Jerry (ice cream): Advance new models of social justice that are sustainable and replicable
Arrow Kickstarter: Commitment to arts and culture
Click here to see the Benefit Corporation Charter of Kickstarter

Other things to note

Arrow Benefit Corporations can be private OR publicly owned.
Arrow The profits may or may not be as high as a typically organized corporation.
Arrow Benefit Corporations often give part of their profits to a worthy cause.

While an investment in a B-Corp may not be profit maximizing, you may feel a little better about where you put your money. As with any investment, please understand your risks and ask for help before investing.