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.
- Kickstarter: a global community dedicated to supporting artists of all kinds and helping them find the resources and support they need to create their original projects. Kickstarter, one of the leading crowdfunding platforms, recently amended its Charter page when it reincorporated as a Public Benefit Company.
- Laureate Education, Inc.: Laureate purports to be "the largest global network of degree-granting higher education institutions and the largest company to become a Public Benefit Corporation." Laureate offers an array of undergraduate and graduate degrees via online, on-campus and hybrid programs, and is dedicated to serving not only its students across the world but also the world in which they live by becoming a Delaware Public Benefit Corporation.
- Method: the environmentally-sound, cruelty-free, pet-safe, child-safe, fuel-efficient, green-sourced soap and cleaning product company called method reincorporated as a Delaware Public Benefit Corporation in August of 2013, the first month it was legal to do so. The company, which is the most dominant ecological cleaning supply company in America, embraced this corporate structure so it could "balance profits with environmental and social responsibility."
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