Real-World Benefit Corporation Examples and How They Operate

Key Takeaways

• Benefit corporations balance profit-making with a public mission.
• Examples include Patagonia, Kickstarter, King Arthur Baking Company, and more.
• These corporations often provide annual benefit reports assessing social/environmental impact.
• Certification as a B Corp is different from becoming a legal benefit corporation.
• Benefit corporations can be used as an alternative to non-profits, offering flexibility to pursue profits while doing good.
• Laws and requirements for benefit corporations vary by state.

Benefit corporation examples include many well-known corporations, such as Kickstarter, Patagonia, King Arthur Flour, and Method. So what exactly is a benefit corporation? It's well-known that consumers today are concerned about social, ethical, and environmental issues, which can greatly influence their decisions about what products to purchase. A 2014 study conducted by Nielsen found that over half of global online consumers would pay more for services and products made by companies with commitments to beneficial social and environmental causes. This is great news for corporations that focus on such causes!

Benefit corporations are still for-profit entities, which, naturally, remain focused on their financial returns. However, their scope of focus also includes taking action and making decisions that result in positive changes in the world. These businesses acknowledge their obligation to their stakeholders, but also to their environment and community, which they can legally pronounce as their objective. Today, many companies express their desire to "do good" in their business operations.

Businesses often provide public pages on their websites or post in social media avenues about their actions for positive change and the ways in which their business provides community services and sustainable production methods. Some companies even provide on-site daycare, yoga and fitness facilities, and numerous other benefits to their employees.

The benefit corporation movement began in the United States in 2007 by 81 companies that sought an alternative to the exclusively profit-driven way of conducting business. Since the first benefit corporation law was passed in Maryland in 2010, many different kinds of companies have become benefit corporations.

Benefit corporations currently operate in a variety of different industries, such as manufacturing, service, private education, retail, and food and beverage production. A benefit corporation can be any size, whether that's a small one-person service, or a large-scale multinational brand with a high number of employees. In both the public and private markets, benefit corporations have been able to increase capital.

Becoming a Benefit Corporation

There are numerous advantages to benefit corporation status, which apply to all participants, from consumers to shareholders and directors. In particular, directors can benefit from decreased directory liability when confronted with decisions that relate to nonfinancial stakeholders, and shareholders are able to hold the company accountable to its objective. All parties benefit from the precedents and protections contained within corporate law. Directors and shareholders can protect their mission via leadership changes, capital raises, and flexible potential sale and liquidity options.

The first step to becoming a legally recognized benefit corporation is to make sure your state recognizes it as a legal and valid business structure. As of January 22, 2016, 30 state legislatures and the District of Columbia acknowledge a legal status for benefit corporations. This number appears to be increasing annually. Interested business owners are recommended to look into their state's laws. If benefit corporation status is not legally recognized there, incorporating in a nearby state could be a viable option.

Should your company choose to become a benefit corporation, your tax status will not change. It will maintain its status as an S corporation or C corporation even while being recognized as a benefit corporation. A corporation that wishes to express further commitment to positive social and environmental changes can apply to become a Certified B Corporation (or B Corp). This requires an extensive assessment by B Lab, which utilized a rigorous survey in order to rate a corporation's employee relations, environmental practices, local community activism, and other factors.

In a 2011 Business News Daily interview, David Murphy, former CEO of Better World Books, explained that the certification is like a Good Housekeeping seal of approval. "If your company is a Certified B Corporation, that really says something. You're there to serve all those stakeholders, and you're willing to prove it." Once a business has been certified by B Lab, it will be audited on occasion to make sure it is keeping up its positive practices.

Except in the state of Delaware, benefit corporations must make an annual benefit report available to the public. This report determines their general social and environmental performance as compared to a third party standard. The report uses the third party standard as an evaluation tool, but need not be certified or audited by a third party.

State-by-State Legal Recognition

The availability and requirements of benefit corporation status vary by jurisdiction. As of now, over 30 U.S. states and the District of Columbia have passed legislation recognizing benefit corporations.

Some differences across states include:

• Delaware: Does not require a public benefit report but mandates that the public benefit purpose be stated clearly in the charter.
• California: Requires annual benefit reports and mandates transparency.
• New York: Demands that directors consider specific stakeholders when making decisions.

Before forming a benefit corporation, it’s critical to understand your state’s specific legal requirements. Business owners may choose to incorporate in a different state if theirs does not currently support benefit corporations.

Annual Benefit Reporting Requirements

Benefit corporations are required to prepare an annual benefit report that assesses their social and environmental performance. While the specific requirements vary by state, this report typically includes:

• A description of how the company pursued its public benefit goals.
• An assessment against a third-party standard (such as B Lab's B Impact Assessment).
• Information on any circumstances that hindered achieving benefit objectives.

Some states, like Delaware, do not require public filing of these reports, while others mandate transparency by making them available to shareholders or even to the public.

Public Benefit Corporations vs. Nonprofit Organizations

A common point of confusion is the difference between public benefit corporations and nonprofit organizations. Though both aim to generate a positive societal impact, they differ significantly in structure and operations:

This distinction is critical for entrepreneurs choosing between structuring their venture as a nonprofit or a benefit corporation. The benefit corporation offers a hybrid approach—combining business flexibility with social impact commitments.

Notable Benefit Corporation Examples

Several well-known companies have adopted the benefit corporation structure to align their business goals with a broader social or environmental mission. Here are some noteworthy benefit corporation examples:

• Patagonia: A pioneer in environmental activism, Patagonia uses its business to promote sustainable practices and environmental stewardship. It donates 1% of sales to environmental causes and uses recycled materials in its products.
• Kickstarter: As a public benefit corporation, Kickstarter prioritizes the creative community and cultural advancement over maximizing profits. It has committed to not using aggressive tax avoidance strategies and ensures transparency through its annual benefit reports.
• King Arthur Baking Company: A 100% employee-owned benefit corporation that emphasizes sustainability, employee well-being, and community outreach.
• Method: Known for its eco-friendly cleaning products, Method integrates environmental consciousness into every aspect of its operations—from ingredients to packaging to carbon footprint.
• Warby Parker: As a B Corp and benefit corporation, Warby Parker donates a pair of glasses for every pair sold and engages in vision-related charitable work.

These companies demonstrate how the benefit corporation model can serve diverse industries—from fashion and food to tech and consumer goods—while maintaining profitability and mission alignment.

Frequently Asked Questions

1. What is a benefit corporation?
   A benefit corporation is a for-profit entity that includes positive social and environmental impact in its legally defined goals.
2. What are some benefit corporation examples?
   Well-known examples include Patagonia, Kickstarter, King Arthur Baking Company, Method, and Warby Parker.
3. How does a benefit corporation differ from a B Corp?
   A benefit corporation is a legal business structure, while a B Corp is a certification given by B Lab based on social and environmental performance.
4. Can a benefit corporation still make a profit?
   Yes. Benefit corporations are for-profit entities that also pursue public benefits alongside financial returns.
5. Is annual reporting required for benefit corporations?
   Yes, most states require benefit corporations to produce annual benefit reports assessing their social/environmental performance, though the specifics vary by state.

If you need help with benefit corporation examples, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.