Rise of the B Corp (and What It Means for Nonprofits)
For-profit companies often have sought to generate goodwill through charitable donations and a combination of environmental and social advocacy. For some companies, however, the occasional goodwill gesture isn’t enough. That’s what B Corporations are for: These for-profit companies intend to make money, of course, but doing good also is one of their goals.
B Corporations are certified to be totally dedicated to social and environmental goals. More than 1,700 of these companies are spread across 50 countries. Their numbers are on the rise, up from 1,400 in 2015. These companies often are structured like normal businesses, but typically redistribute much of their profits to worthy causes or are environmentally conscious with their products.
Like nonprofits, certified B Corporations have to be transparent about the impact they’re making and regularly disclose their business practices for outsiders to see.
For traditional nonprofit companies, B Corporations represent a big opportunity for growth if the right kind of partnership can be found.
Making a Difference
Nonprofits and B Corporations might have some overlap, but they aren’t competing against each other. If anything, B Corporations represent another avenue for nonprofits to raise funds or receive in-kind donations.
Take, for example, the work being done by Patagonia. This outdoor clothing and gear company generates revenues of more than half a billion dollars annually, yet it isn’t driven purely by profit. The company is known for using environmentally friendly materials and giving its money back to nonprofits. Patagonia’s founders have created several nonprofits, yet it isn’t shy about helping outside nonprofit groups.
The company provides grants to more than 700 environmental organizations annually. In the company’s own words, “we recognize our impact on the environment and feel a responsibility to give back. For us, it’s not charity or traditional philanthropy. It’s part of the cost of doing business. We call it our 'Earth Tax.'”
Another well-known B Corporation is the Ben and Jerry’s ice cream company. This division of the global conglomerate Unilever helps out nonprofits in a number of ways. One of the ways it does this is through its “PartnerShop” program, which allows community nonprofit organizations to open up ice cream shops without paying franchise fees. Additional support is given to help those shops become successful ways for the nonprofits to raise funds and offer entrepreneurial training. The company’s foundation provides grants to organizations throughout the U.S.
Cynically, one can say that B Corporations are doing this to win over customers and make some money. That might be a fringe benefit of such a business model, but there’s no denying the positive effect a B Corporation can have on a nonprofit organization.
Companies like Patagonia and Ben and Jerry’s are reaching new audiences that might not otherwise have donated money to a nonprofit organization. You could call it a trickle-down effect, as that’s exactly what’s happening.
When nonprofits look for ways to grow, they should take a look at what B Corporations are doing and seek partnerships when it makes sense.
A partnership between a B Corporation and a nonprofit organization is mutually beneficial. The nonprofit organization has the chance for heightened visibility and extra funding, while the B Corporation benefits from the nonprofit’s proven success and good name.
For that to happen, nonprofit organizations need to keep their eyes open for partnerships that are the right fit. Smaller B Corporations might reach out first, but it pays to be proactive. The profit motives might be different between nonprofits and B Corporations, but the underlying goals of helping people and the environment often are the same.