The Oregon Public House combines two distinctive and thriving Portland cultures—craft brewing and nonprofits.
Oregon Public House claims to be the first nonprofit brewpub. It is run by a completely volunteer board that donates 100 percent of its profits to charity. (Employees of the pub are paid.)
Other nonprofits legally can and do pay officers a salary. As the Small Business Chronicle points out, civic-minded entrepreneurs might consider starting a nonprofit and still make a decent living.
Would you drink to that?
Image via Ideate & Create
There are advantages to forming your start-up or small business as a nonprofit if you’re looking to both do good and make a living doing it. If you have a passion for a cause, if you have a product or service you think might make a difference, a nonprofit may be the best way to structure your business.
There are disadvantages to forming a nonprofit besides limiting your income potential, though. Perhaps the biggest drawback for those with an entrepreneurial spirit is lack of ownership. You have absolutely no equity stake in the company you form.
Related Article: Can You Make a Profit and Be Socially Responsible?
The B Corp Alternative to Nonprofit Status
There is a way to do your bit for a social cause and still retain an equity stake in your company. It’s called a B Corp, which is a certification conferred by the nonprofit B Labs. There are more than a thousand certified B Corps operating in 33 countries in over 60 different industries.
Becoming a B Corp requires completing an impact assessment that determines how your company performs against other company best practices for employee treatment, community involvement and environmental impact. The results of this self-assessment help you determine a plan to improve your company’s best practices and implement those you might not already have.
The next step is to take the full B Impact Assessment (reviewed by B Labs) and achieve a minimum score of 80 points out of 200 to get B Corp certified. Certification may also require certain legal changes in your governing structure if you choose to convert, say, an S-Corp into a B Corp.
Image via B Impact Assessment
B Corp certification:
- Distinguishes you as a socially and environmentally concerned company with positive business practices that benefit the community
- Provides access to technologies, talent and services that provide partner discounts
- Connects you to other entrepreneurs with shared goals and ambitions
- Attracts investors and talent that share your values
- Generates favorable press
Related Article: 6 Signs from Childhood You’re a Born Entrepreneur
B Corp vs Benefit Corporations
While the terms are used interchangeably, a B Corp is not to be confused with a Benefit Corporation, which is a legal status of incorporation conferred in 26 states and the District of Columbia. As Forbes explains, forming as a Benefit Corporation legally mandates that directors and stakeholders adhere to certain social goals for the company besides making a profit. It’s a way to differentiate your company and demonstrate your commitment to social values.
However, one drawback is expanded reporting requirements and uncertainties regarding the exact legal status of Benefit Corporations from state to state. As the Benefit Corp Information Center points out, while B Corps are required to publish an annual report assessing how well they’ve achieved their stated social goals, there is no legal auditing or certification required. Moreover, B Corp certification is available not only throughout the United States, but around the world.
If your intent is to serve a high social purpose as well as earn profits for your company, B Corp certification may be a sufficient way to state your case to potential investors, employees, stakeholders and customers. You can immediately benefit from taking the self-assessment offered by B-Labs, just to see how your company makes a positive impact.
If changing your corporate structure is too scary a thought, remember this: you can implement pro-social and pro-environmental benchmarks into the bylaws of any corporate structure. B-Lab certification and B Corp structure are two benchmarks to compare your company's positive impact to others.