Social Enterprise, B Corps and Public Benefit Corporations

What’s the difference between social enterprises, B Corps and public benefit corporations?

 

While all three terms are used in reference to the “business for good” space, they encompass three distinct (but overlapping) concepts. Social enterprise refers to a business model, B Corp refers to a certification and public benefit corporation refers to a legal incorporation type.

 

Social Enterprise Alliance defines a social enterprise as an organization or initiative that marries the social mission of a nonprofit or government program with the market-driven approach of a business. A hybrid model, social enterprises address critical unmet basic needs in society through business. They can be nonprofit or for-profit organizations. Social enterprise is not a distinct legal entity – it is instead an ideological spectrum marrying commercial approaches with social good.

 

A B Corp, on the other hand, is an organization that has successfully completed the certification put forth by the nonprofit B Labs. B Corps can only be for-profit organizations, and they must meet B Labs’ standards for social and environmental performance, accountability and transparency. The B Corp certification is a distinction for social responsibility, much like fair trade or organic. Though for-profit social enterprises can apply for B Corp certification, B Corps don’t necessarily have to be social enterprises.

 

A public benefit corporation is a legal incorporation available only in certain states that allows organizations to identify a purpose beyond maximizing share value. Becoming a public benefit corporation “protects mission through capital raises and leadership changes, creates more flexibility when evaluating potential sale and liquidity options, and prepares businesses to lead a mission-driven life post-IPO,” according to benefitcorp.net. Public benefit corporation legislation varies from state to state. To learn more about becoming a public benefit corporation, click here: http://benefitcorp.net/businesses/how-become-benefit-corporation.

 

Social enterprises, B Corps and public benefit corporations are not mutually exclusive entities – an organization can be all three if they marry a social mission with a market approach, successfully complete the B Labs certification and incorporate as a public benefit corporation in their state. In the same vein, an organization can be a social enterprise but not necessarily a B Corp or public benefit corporation, and vice versa.

 

What’s the difference between SEA and B Labs?

 

As interest grows in social enterprise, corporate social responsibility and benefit corporations, several different platforms have sprung up to enable organizations to maximize their impact.

 

SEA is a nonprofit membership organization advancing the work of nonprofit and for-profit social enterprises across the United States. SEA’s membership includes social enterprises, nonprofits interested in social enterprise, socially responsible companies, social entrepreneurs, attorneys, consultants, marketing experts, students, professors and other social enterprise enthusiasts. SEA has about 1,000 members across 41 states in the U.S.

 

B Labs is a nonprofit that assesses and certifies for-profit organizations on “rigorous standards of social and environmental performance, accountability and transparency.” B Corps are organizations that successfully complete the B Lab assessment and certification. Today, there are over 1,800 certified B Corps across the world.

 

The comparison isn’t apples to apples. Many organizations are both SEA members and certified B Corps. The two platforms were created with different intentions, audiences and benefit opportunities in mind. To decide which (or both!) distinction is right for your organization, check out the following comparison chart:

 

Organization SEA B Labs
Mission Social Enterprise Alliance empowers social enterprises to address basic needs and create opportunity for all. B Lab is dedicated to using the power of business as a force for good.
Certification focus N/A Social and environmental performance, accountability and transparency
Community SEA B Labs
For-profit organizations? Yes Yes
Non-profit organizations? Yes No
Individuals? Yes No
Vetting process Social enterprises and social enterprise supporters (individuals or institutions). Businesses must meet performance and legal requirements.
Networking opportunities Exclusive access to an online community of affinity groups and forums, chapter events and biannual summit, exclusive access to member contact information. Exclusive access to B Hive platform that allows B Corps to connect, ask questions and join groups, annual B Corp Champions retreat.
Size 952 members across 41 states 1,897 B Corps across 50 countries
Geographic scope United States Worldwide

 

To become a B Corp, businesses need to complete the B Impact Assessment and ensure they meet the legal requirements. More information can be found here. To learn more about the benefits of becoming a B Corp, visit this page.

 

To join SEA, visit our membership page to learn more about membership categories and benefits. Also, take a look at the organization and member directory to get to know what kinds of people SEA attracts.

 

Both B Labs and SEA work to bring together organizations prioritizing social impact in their business operations. We encourage organizations to consider both platforms when considering resources to advance their work. If you have any additional questions, don’t hesitate to contact info@socialenterprise.us.