June 15, 2011

B Corporations: What do they mean for nonprofits?

B Corps use the power of business to solve social and environmental problems.


A company either makes money or does good, right? Think again

Target audience: Social enterprises, nonprofits, NGOs, foundations, businesses, educators.

By Lindsay Oberst
Socialbrite staff

Lindsay OberstAnew type of corporation has come along that makes money and does good for society and the environment. They’re called B Corporations, for benefit corporations.

Nonprofits can smile about these dual-focused companies because they make great like-minded partners, and they may help fund and support their social good goals.

A new sector of the economy

B Corporations for social good B Corporations first appeared four years ago. Today, more than 400 companies across 50 industries and several countries have achieved certification by B Lab, the nonprofit that recognizes for-profit companies as being ethical, socially aware and eco-conscious.

Basically, B Corps have to do more than report to their shareholders; they have to consider the people around them and the world they work in. Being able to stand out in the social enterprise sector is a benefit for them.

I first learned about B Corps at a meeting in Atlanta and thought they sounded like a great idea for the increasing numbers of consumers seeking good companies. Of course, people at nonprofits are often seeking out companies behaving ethically as well.

Companies know that people want to be green. B Corps cut past the marketing hype and greenwashing as companies that are truly committed to policies that promote the social good.

One thing for nonprofits to consider about B Corps

Some nonprofit leaders have come out against B Corps. They say that nonprofits might now get as much money because people will choose to back B Corps rather than nonprofits.

Others argue that B Corps will in turn fund nonprofits as well as social benefit initiatives. Jordan Chazin, a B Lab Ratings Associate, says, “Many B Corps are incorporated as C or S Corps or LLCs and are technically designated as for-profit ventures, but elect to give up to 100 percent of their profits to charity.”

A few examples of B Corporations

Freeworld Media, a B Corp, is a digital marketing group that helps companies raise awareness with social and emerging media. Sean Wood, founder and CEO, described his company becoming a B Corp in a statement earlier this year: “We are proud to be a leader in the use of social media to foster corporate social responsibility. What matters to your customers matters to your business.”

Freeworld Media, social media for social good

Many companies that serve mainly nonprofit customers are deciding to become B Corps, including PhilanTech, Care2 and PICnet.

“Nonprofits need tools and services to support the pursuit of their missions,’ ” says Dahna Goldstein, founder of PhilanTech. “With B Corporations, nonprofits can be confident that their service providers are also committed to social and environmental responsibility.”

Nonprofits that want more information about the relationship between nonprofits and B Corps should visit bcorpsfornonprofits.com.

As a nonprofit, what do you think about B Corporations?


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