Most people are familiar with both for-profit corporations and non-profit corporations; the names are pretty self-explanatory. But, a newer type of corporation is emerging: the public benefit corporation (PBC).
What is a public benefit corporation?
A PBC is a specific corporation that allow for decisions to hold a purpose beyond just maximizing value for shareholders, which would be a typical goal of a for profit organization. This specific designation allows for a company to make decisions that will contribute to general public benefit, hence the name.
The biggest difference between a PBC and a non-profit is ownership. PBCs have shareholders, who expect the company to make a profit and give some of that money to them as dividends. By having investors, a PBC can attract capital and focus on innovation.
What other companies are public benefit corporations?
Kickstarter originally started as a for-profit and decided in 2015 to become a PBC. Kickstarter sites its core values as a driver for changing their status. “We renew our longstanding commitment to arts and culture…And we newly commit to donate 5% of annual post-tax profits to arts education and organizations fighting inequality.”
In 2012, Patagonia was the first California company to sign up for B certification, joining over 500 certified B Corporations in 60 different industries.
“Patagonia is trying to build a company that could last 100 years. Benefit corporation legislation creates the legal framework to enable mission-driven companies like Patagonia to stay mission-driven through succession, capital raises, and even changes in ownership, by institutionalizing the values, culture, processes, and high standards put in place by founding entrepreneurs,” announced Founder Yvon Chouinard.
Why is Kaleidoscope a public benefit corporation?
More often than not, a software or tech company registers as a for profit company, which is not a bad thing by any means. But, we did not feel that this was the best decision for us. At Kaleidoscope, we want to ensure that we assist as many students with their education as possible. Being a public benefit company only helps us further progress with that goal. To learn more about Kaleidoscope and how we can benefit your scholarship or grant management, get a demo.