B Corp vs Non-Profit: what’s the difference?
In a world where businesses are not just evaluated by their financial success, but also by their impact on society and the environment, two distinct models have emerged as champions of positive change: B Corporations (B Corps) and Non-Profit organisations.
These two entities may share some similarities in their pursuit of social and environmental goals, but they also possess key differences that set them apart.
In this article, we'll delve into the definitions, differences of B Corp vs Non-Profit, and potential intersections of B Corps and Non-Profits to better understand their roles in fostering a more sustainable and responsible world.
What is a B Corp?
A B Corp, short for Benefit Corporation, is a for-profit company that commits itself to meeting rigorous social and environmental standards. These standards are verified by B Lab, a nonprofit organisation that certifies B Corps based on their performance across various categories, such as governance, worker practices, community engagement, and environmental impact.
B Corps pledge to balance profit-making activities with positive contributions to society and the planet, aligning their values with a triple bottom-line approach: people, planet, and profit.
What is a Non-Profit?
Non-Profit organisations, on the other hand, are entities formed primarily for charitable, educational, religious, or public service purposes.
Unlike for-profit entities, Non-Profits do not distribute profits to owners or shareholders; instead, any surplus funds generated are reinvested into the organisation's mission.
Non-Profits often rely on donations, grants, and fundraising efforts to sustain their operations and advance their social or environmental goals.
B Corp vs Non-Profit: what’s the difference?
The distinction between B Corps and Non-Profits lies primarily in their legal structure, ownership, taxes and how they are funded or drive revenue.
Governance
B Corps are governed by shareholders, directors, and officers whereas non-profits are governed by a board.
Ownership
Non-profits exist for public benefit and have no “true” owner. Whereas a B Corp acts as a regular business, whether they are public or private entities, and has owners.
Funding
B Corps are organised as for-profit entities, allowing them to generate income through products and services while integrating social and environmental considerations into their business decisions.
Non-Profits, conversely, are legally required to prioritise their mission over financial gains and are subject to specific regulations regarding their tax-exempt status.
Taxes
In the UK, non-profit organisations are exempt from corporation tax. Whereas B Corps are still considered to be usual businesses and pay the relevant tax associated with their structure.
While both B Corps and Non-Profits aim to create a positive impact, their strategies and funding models differ. B Corps leverage the power of market forces to drive change, while Non-Profits often rely on philanthropy and grants to fuel their initiatives.
Can a non-profit be a B Corp?
No, a non-profit cannot be a B Corp at the time of writing [August 2023]. This is because Certified B Corporations are defined as “for-profit companies that want to consider additional stakeholders, morals or missions in addition to making a profit for their shareholders” by B Lab.
Key takeaways: B Corp vs Non-Profit
In conclusion, the distinctions between B Corps and Non-Profits highlight the evolving landscape of business and social responsibility. B Corps operate within the for-profit framework but commit to ethical and sustainable practices, while Non-Profits focus on advancing their missions through donations and grants.
While each model has its unique strengths, the choice between them ultimately depends on the organisation's goals, values, and desired impact. Both B Corps and Non-Profits play crucial roles in shaping a world where revenue generation goes hand-in-hand with positive societal and environmental contributions.