If you’re running a nonprofit, one of the most important things to do is make sure that you are operating in ways that are legally compliant with state regulations and federal tax codes. For example, if your organization makes money from selling its services or products, then it needs to be registered as a 501c3 charity with the IRS. But what if you don’t want to be a public benefit corporation? Is there any reason why an organization would choose not to become a Public Benefit Corporation (PBC)? The answer is yes: sometimes it’s better for your mission—and easier on your budget—if you don’t have to file as such.
Charities, Foundations, and 501c3s are not the only way to benefit the world.
Charities, Foundations, and 501c3s are not the only way to benefit the world. While many people believe that a nonprofit must be a non-profit, there is in fact another option: the Public Benefit Corporation (PBC).
What’s a PBC? It’s an innovative form of organization that combines traditional corporate structure with a mission to serve the public good. This allows you to create a new type of business entity—a profit-making company that puts social impact at its core and public interest ahead of shareholder interests.
Why would anyone want to be a for-profit organization?
But what about other organizations that aren’t founded with the intention of making money? For example, do you know who owns 1-800-FLOWERS? It’s a good bet it isn’t a nonprofit.
Nonprofits and for-profit companies have different missions and business models, but they can also be very similar. Nonprofits are typically considered to be “not for profit,” which means that the main purpose of their work isn’t primarily financial in nature—they exist to serve a mission or cause rather than make money. But not all of them are actually non-profit! Some nonprofits choose to register as Public Benefit Corporations (PBCs). This means that they’re legally required to pursue some type of public benefit—like engaging communities or promoting education—and can continue doing so while earning profits from their revenue and assets.
What is a Public Benefit Corporation?
A public benefit corporation is a new type of corporation that’s legally obligated to pursue a specific public benefit purpose in addition to its traditional goals. The idea behind this new structure is that it gives corporations more protection from lawsuits if they don’t fulfill their public benefit purpose.
Public Benefit Corporations (PBCs) can be either non-profit or for-profit and must have a written commitment to serve the public good as part of their articles of incorporation. The main difference between PBCs and regular corporations is that PBCs are subject to fiduciary duties—in other words, PBC directors must consider the interests of everyone affected by their decisions when making them (including workers and shareholders).
In addition to being legally obligated to pursue a specific “public benefit purpose”, these organizations are also required by law not only for profit but also for any profit made under normal circumstances goes back into achieving that goal instead of being distributed among shareholders as dividends – which means less money spent on marketing campaigns promoting useless things like soda pop just so they can get paid more money than anyone else who works there too!
How do I know if my organization should have been a Public Benefit Corporation?
Public Benefit Corporation status is not available for nonprofits. If you’re an existing nonprofit, you can’t become a Public Benefit Corporation. But if you’re a for-profit company, there are many reasons why becoming a PBC could be beneficial—and it’s worth looking into.
If you are considering creating or joining an organization that provides health care services to low-income individuals, state aid programs may offer financial support to organizations with PBC status. This means that your organization would have access to more financial resources than those without PBC status—which could make all the difference when it comes time to start operating on a larger scale or expanding operations into new locations across the country.
So I can’t just start serving a public benefit right now, right?
The short answer is no. Many people think that it’s possible to start serving a public benefit immediately, but this isn’t true. You can only serve a public benefit once you’ve become a for-profit entity.
The reason for this is simple: it’s impossible to create an LLC or corporation without first having an operating business. Without the presence of an established company, there would be no legal entity through which to hold assets or conduct operations—so creating one would be pointless!
Furthermore, if your nonprofit has not been incorporated yet and you want to pursue being recognized as a Public Benefit Corporation (PBC), then we strongly recommend that you do so before submitting your application with the state government agency responsible for approving new PBC applications in your area. This will ensure that any issues with your application are resolved quickly before moving forward with any additional requirements necessary after being approved as either type of PBC by them.*
So should I move over to being a Public Benefit Corporation?
If you do, there are several factors to consider:
There’s no need to apply for nonprofit status unless you think it’s the best way to serve your mission.
You may have heard about Public Benefit Corporations (PBCs). These are for-profit companies that serve the public good. PBCs can be structured as traditional corporations, limited liability companies, or partnerships. They must also follow certain rules to ensure they serve their mission and meet the requirements of being a PBC.
If you’re wondering whether your nonprofit should become a PBC, keep in mind that there’s no reason to apply for nonprofit status unless it’s what’s best for your organization’s mission. You can still serve the public good without becoming a nonprofit—and as we’ve discussed above, there are many ways to do so! If you want to convert into a Public Benefit Corporation because it seems like the right fit for your organization but aren’t sure if it makes sense legally or financially (or both), talk with an attorney who specializes in nonprofits and/or corporate law before making any decisions about this change!
In this day and age, when the question about whether you’re for-profit or nonprofit is no longer an either/or question, it’s important to know that your organization doesn’t have to be a 501c3 charity or foundation. There are a lot of other ways to do good in this world—and if you’re looking at how you can make an impact without having your organization lose its social mission, we hope these resources will help you get started!
If you need assistance creating the structure, strategic planning, & financial projections of a Public Benefit Corporation then feel free to contact us at MyFreedom@DiasporaLtd.com.
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