Public Benefit Corporation

What is a public benefit corporation?

For-profit organizations that also benefit the public are aptly named public benefit corporations. Not to be confused with nonprofits, public benefit corporations are not tax exempt because they generate profits. However, they are similar in that they both work to positively impact society, whether through a social or environmental mission. Public benefit companies are legally required to provide some type of public benefit.

Additionally, unlike profit-focused conventional corporations or limited liability companies, public benefit corporations maximize shareholder value while still prioritizing their mission. This means that directors’ liability protection is maintained even if they make business decisions that may affect its financial performance—just one of the advantages of a public benefit corporation.

Companies with a public benefit purpose participate in varied activities, like: 

• Donating a product, for every product purchased, to those in need
• Environmental activism and sustainability
• Sourcing goods and services from socially responsible vendors

FAQs 

What is the difference between a nonprofit and a public benefit corporation?

While both types of business entities have similar missions to benefit the public, a nonprofit is formed solely for this purpose. Other key differences between a nonprofit and a public benefit corporation are that a nonprofit has no shareholders or owners, has tax-exempt status, and cannot generate profits. Any income it generates must be redistributed to the nonprofit itself—or to paying members—to fund its mission.

What are some examples of a public benefit corporation?

Some examples of a public benefit corporation include Patagonia, King Arthur Flour, Kickstarter, Vital Farms, Grove Collaborative, and Warby Parker.

Can you invest in public benefit corporations?

Yes, you can invest in public benefit corporations, an attractive mission-focused investment option for those looking to add businesses other than conventional corporations to their portfolios.

How is a public benefit corporation taxed?

A public benefit corporation is taxed like a traditional corporation that generates profits, like an S corporation or a C corporation. Unlike a nonprofit organization, a public benefit corporation does not enjoy tax-exempt status because it's still considered a for-profit corporation.