Q: What is a public benefit corporation?

A: There are two main types of public benefit corporations. First (and more traditionally), the government creates entities like public hospitals and educational institutions to serve specific public needs. The federal government also establishes organizations for specific public purposes, such as the Postal Service.

Second, in recent years, more than half the states passed public benefit corporation laws. These laws establish a new type of business entity for the private sector. Under these laws, a business that chooses the public benefit corporation form (instead of a regular corporation or limited liability company) may include positive impacts on society or the environment as one of the company’s goals. Including Minnesota, over 30 states now have public benefit corporation laws, while several other states are considering their own versions.

The new form appeals to both new and established businesses. It allows a business to work on a societal or environmental benefit alongside financial goals. While corporate boards of directors necessarily focus on creating value for shareholders, a public benefit corporation (sometimes called a “B corp”) takes both shareholders and the public good into consideration. Many entrepreneurs prefer this dual focus, while a business that commits to doing good may attract employees and investors.

Minnesota law defines a general public benefit as a material positive impact on society, the environment, or current or future human well-being. The beneficial goals of the business may be exercised in any of these areas. But Minnesota B corps may select a specific benefit instead, such as promoting the rights of senior citizens or improving groundwater quality. If a B corp names a specific benefit, then the company will stay focused on that particular project as its public benefit.

A public benefit corporation is not a nonprofit organization. Unlike a nonprofit, a B corp intends to make a profit in addition to making a positive difference.


Stacey Supina is on faculty in the ethics and business law department at the University of St. Thomas Opus College of Business.