Some business owners want to merge profit and mission by, for instance, making money while also helping low-income people, repairing the environment, advancing human health, promoting the arts or contributing to human knowledge.
A relatively new type of corporate structure, the public benefit corporation (PBC), can help owners win at both.
Jonas Clark knows a lot about PBCs. He’s co-founder of Tuckerman & Co, a New Haven, Connecticut-based men’s dress shirt manufacturer that incorporated as a PBC in Delaware in May 2014.
Incorporating as a PBC “allows you to write a set of social or environmental goals into your legal charter,” Clark explains. “It doesn’t sound like a big deal, but legally, it is.”
If the additional goals conflict with the profit motive, owners have an obligation and opportunity to make what Clark terms “well-reasoned decisions” that balance both goals.
A PBC isn’t a nonprofit, which operates only for a charitable or beneficial purpose. Nor is a PBC a profit/nonprofit hybrid. Rather, it’s a for-profit, plus.
Clark says the plus “requires more thought” to establish.
“If you’re going to add something in addition to making a profit as a goal of your business, it requires a bit of introspection on what that means and why,” he says.
PBC, B-corp or Both
A PBC isn’t the same as a certified B-corp, and the two structures are often confused.
A PBC is a company that is legally organized as a public benefit corporation.
A certified B-corp is a company that has received certification as a beneficial entity from B Labs, a nonprofit organization in Wayne, Pennsylvania.
A company might be a PBC only, a certified B-corp only or, like Tuckerman, both a PBC and certified B-corp.
Currently, 31 states allow companies to incorporate as PBCs, and more may be added, according to B Labs, which tracks this data.
Tuckerman’s owners initially found that many business people didn’t know what a PBC was.
Today, when they tell people about their company’s structure, “there are a lot of nods in the room,” Clark says.
That new knowledge has made it easier for companies that want to adopt this new structure to find experts and advisors to help them make it happen.
And while it might be easier for a startup to organize as a PBC, there’s no bar to established companies that want to convert to this structure and adopt their own beyond-profit mission.
Because PBCs are relatively new, it’s too soon to tell how well they’ll perform on profitability and their other objectives. It’s also not clear what will happen if they fall short or how they’ll be viewed by large numbers of investors.
Lofty Goals, Bottom Line
Clark says Tuckerman hasn’t experienced any downside to being a PBC. Rather, the company has received positive feedback even from those who might not understand the nuances.
“It’s a real benefit being able to communicate to your customers, suppliers and other stakeholders that this is something you care about and are committed to,” Clark says. “I think that’s a good thing. Our customers get what we’re trying to do.”
Photo Credit: SAI_SHYAM, Twenty20