At its core, benefit corporations blend the altruism of nonprofits with the business sensibilities of for-profit companies. These hybrid entities pay taxes and can have shareholders, without the risk of being sued for not maximizing profits. Companies can consider the needs of customers, workers, the community or environment and be well within their legal right.
It’s a new legal designation for socially responsible businesses. Ethical or environmental requirements would be written into the company’s charter, and the company has to report annually on its progress and undergo a third-party audit. A business decision like opting for more expensive but local suppliers wouldn’t necessarily be penalized.
Registration as a benefit corporation started in Maryland in October; 12 businesses applied for it the first day. “Fifteen benefit corporations have been created in the three months since new legislation … took effect,” says the Washington Post. Companies applying range from Taharka Bros., a Hampden ice cream shop, to a shared office space company to a network of organic farms. Benefit corporations don’t get special tax breaks, but it’s good PR and shoppers like products associated with good causes.
Companies can register as a benefit corporation in Maryland and Vermont, and potentially New York and California before too long, the Post says.
Would you be more likely to shop at a benefit corporation?
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