Difference Between a Benefit Corporation and a Nonprofit Organization

While both may have social or environmental goals, Delaware Public Benefit Corporation are not the same as Nonprofits. A Delaware Nonprofit Organization typically operates for a charitable purpose without generating profits and, therefore, qualifies for a tax-exempt status from the IRS.

Legal Structure

One of the key differences between a public benefit corporations and non-profit corporation that is legally required to pursue a positive impact on society or the environment while generating profit for shareholders. A nonprofit organization, on the other hand, is an entity formed for purposes other than making a profit. Nonprofits are not owned by shareholders and do not distribute profits to individuals. This means that a public benefit corporation will generate profits and distribute dividends to shareholders, while a nonprofit will reinvest any surplus revenue back into its own programs.

Tax Treatment

One of the main benefits of a nonprofit is that they're typically exempt from federal taxes and may also be exempt from state and local taxes. Public benefit corporations are taxed as traditional for-profit corporations, and shareholders are taxed on any dividends they receive. However, the public benefit aspect of their operations may provide certain tax incentives or advantages.