Public benefit corporations (PBCs) are entities recognized by state law as for-profit organizations. What sets them apart from traditional companies is their commitment to charitable and public-benefit purposes. PBCs don’t exist simply to generate profits for shareholders — they exist to benefit society.
Public benefit corporations are hybrid legal structures that combine aspects of traditional for-profit organizations with non-profit purposes. This allows them to pursue a variety of goals that may not be possible with other corporate forms. PBCs are responsible for generating a public benefit and measuring its progress. They also need to remain transparent and accountable to their stakeholders. The exact requirements can vary depending on which state the PBC is registered in, but all come with the same social mission.
Legal Requirements for Public Benefit Corporations
Each state has their own set of laws governing the formation and operations of public benefit corporations. Generally speaking, PBCs are required to provide detailed information about their activities and strategies to achieve the public good. They must also include a provision in their organizational documents that clearly states their purpose.
All PBCs must also be required to issue periodic reports that document their progress towards meeting their public benefit goals. These reports must be available to the public and the shareholders of the corporation. Also, states may require a certain percentage of a company’s profits to be allocated towards achieving the public benefit.
Examples of Public Benefit Corporations
Public benefit corporations can range from small, local organizations to large, international corporations. Some examples include sustainable and renewable energy companies, healthcare providers, educational institutions, and businesses that promote diversity and equal opportunity. Ben & Jerry’s, Etsy, and Unilever are just a few of the companies that have incorporated as public benefit corporations.
The rise of public benefit corporations is part of a larger trend towards sustainability and impact investing. Companies are becoming aware of the need to make an impact beyond financial gain. This is reflected in the increasing number of investors that seek out companies with a social agenda and an eye towards a better future.
Conclusion
Public benefit corporations are a type of for-profit entity that seeks to improve society and the world through their business operations. They combine aspects of traditional for-profit companies and non-profit organizations in order to pursue charitable and public-benefit goals. PBCs are held to higher legal and ethical standards than other corporations, and must remain transparent to their stakeholders. Ben & Jerry’s, Etsy, and Unilever are all excellent examples of public benefit corporations.