Topic: Public Benefit Corporations (Read 616 times)

It is very good, cause it serves the public in many ways.
It can create jobs in the community for those that doesn’t have job and like you have just said, it benefits everyone, the public, though the main purpose of everything is for the shareholders to make profit, but it also benefits everyone also.

That's a good example

But it shows a lot more than what you mention. Basically, you can't really blame these companies as they are looking for profits and that's exactly what their owners (stakeholders) expect. So the question should rather be addressed to the corrupted governments of these "small" countries which allow all this shit to happen in the first place. Obviously, they are being paid by the mining companies to turn a blind eye to the damage the latter make to the environment

It’s my opinion strongly that governments should embrace strategies like public benefit corporations that provide companies with the potential to register as purpose-driven corporations. These corporations are different from traditional for-profit companies and nonprofit organizations because they operate with a three-way rear line, evenly estimating profits, people and the planet.

Benefit Corporations are mainly for-profit entities that look for ways to create social and environmental benefits in addition to the traditional aim of generating profit.

Yes.

One good example is mining. Not the crypto currency mining but the real one where they used dynamites or anything that blows.
I have heard one news that some companies do not even help small counties where they do the mining.
All dust are in their place and almost everyday you here something is exploding. Their water aint clear anymore and their plants are also having dust all over the leaves.

They will need to do something to also benefit the people, specially within the range or the mining site. The county must have something in return for the benefit of them.

To add to my previous post (I think they will be auto-merged, that's my goal at least):

I agree with you here that outcomes are more important than intentions, but I believe that many companies are not appropriately paying for the external costs that society incurs instead of the company, while the company gets almost of the benefit. In other words, there shouldn't be incentives for creating a PBC, but the externalities of many business should be accurately "charged" to those that cause them. A later post talks a bit more about quantifying this, but it seems the science + economics is presently capable of quantifying the external costs and so businesses should be required to pay for the external costs they previously could ignore.

Thanks Lucusfoundation for the response.

I do think being a PBC is a good (read: effective) lever for certain traditional companies, but shouldn't be shoe-horned in. For blockchain projects, at least those which rely on open source software and decentralized governance/operations (which is how most folks would understand the majority of blockchain projects when using it for shorthand), the "beneficial" goal is directly tied to the code in the project if there is in fact that goal. So, I'm not sure if a blockchain company would need to undergo extra hassle of being a registered PBC when there is a stronger method for demonstrating the goals of the project in the code itself. That said, it could be an additive feature for a company to have the open source and decentralized code demonstrate their commitment to the stated public benefit AND ALSO undergo the rigmarole of registering as a PBC. I do not think it is necessary though, as for employees of a company they are high-info consumers of a company's intentions - so the open source/decentralized existence would supersede the PBC designation. If only doing one, I'd make sure the public code aligns with the public statements.

I agree with every word said

And especially with the corruption part as in most cases it is not about regulations at all. These issues (pollution, etc) have been properly studied during the last few decades (indeed, there are still open questions like global warming) and regulations are already in place as the long-term consequences of environmental damage have been revealed (or have revealed themselves)

So it is not about regulations as such but rather about making corporations follow them. And this is where things may get nasty as some corporations can be more equal than others

I believe regulations already cover most of these issues. Regulations are in place to control externalities, e.g., taxes, CSRs, rehabilitation. Thus, if you heard about nasty corporations, the problem is always about corrupt government (not about regulations).

If companies breach the law, the good government will surely punish them: fine, put CEOs to jail, revoke licenses, etc.

The idea of "Green corporation" is equally bad since it's not efficient and most of the time is just a marketing strategy.

I agree, another reason why corporations widen their perspective and being innovative to gain more profit than the normal profit they're gaining. Some corporations are the one who destroys our environment because of industrial factories but some are pro-environment, I think it's more beneficial if their corporation has a project about building our environment.

One of the example here is, our bay here in my country was full of trash but because of the people and some sponsored corporate, they help to clean the bay. I really like corporation who has a lot of projects and wanted to grow profit but didn't forget our mother nature.

it is possible for all of them to advance all aspects of the economy in the progress and development of the era and technology which of course also requires an increasingly advanced economic development as well

If the government will not give PBCs some sort of advantage compared to other corporation types, the only ones that can encourage more PBCs would be us consumers. If they see that peopel might be willing to pay extra for products if the manufacturer is a PBC, then they might choose to incorporate as such. At the very least, the other non-PBC corps might take the hint and start acting more responsibly.

I think the solution already exists

As you seem to refer to quantitative measures, the "solutions to the environmental crisis" can be assessed pretty easily. Almost every mass production out there causes some damage to the environment, but it is not some abstract damage but very specific one depending on the type of production, like CO2 emissions (aka greenhouse gases). And these can be quantified, so if a certain company reduces them, it can be said that it produces cleaner products with less damage to the environment

Yeah, figured it would probably not be easy to accomplish both at the same time. Are the guidelines for the "social purpose" goals usually clear enough? Coz with profits, it's very easy to see if the company is making enough for the stockholders and still have plently left for operations and wages.

But what if you have a mission statement like  “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis," like Patagonia? I suppose every company is required to follow certain environmental guidelines but how would they measure that Patagonia is "implementing solutions to the environmental crisis"?

I believe in outcome rather than intention. I don't care if people are greedy as as long as their actions benefit society as a whole. We can't always rely on people being philanthropic. I'm not sure what would be the best way to encourage people to get into these PBCs but there should be some sort of incentives.

Support this view

Besides, all this bullshit about public benefit, social responsibility, flashy philanthropy is used exclusively to cover the ruthless nature of capitalism (but socialism is not much better, just in case) as in today's world it is not considered a good thing to go for profits only. It is the same with creating foundations by extremely wealthy people (think Bill Gates here) which are often created to avoid heavy taxes on inheritance, for example

much of what is happening to such a benefit to public corporations is often profitable but im not really sure to earn huge profits, that's because usually in open operation I can not say it legit, because most of the people who are going to get the benefit are public means to me it is worthless and at times most of those who are in public benefit earn, but not much.

Well, maybe because just having money doesn't make you happy. And helping humankind and the environment does.
That's the whole point.

People can go from poor to rich and from rich to poor in matter of seconds. Money comes and goes.

But the satisfaction you get when creating real change, that's priceless, and that's the mindset we believe is needed to address our current and future problems.

What do you think?

One problem is public benefit corporations are only a small piece of the corporate landscape. We're talking about institutions like colleges and hospitals that have a clear community or society-driven mission.

You'll always see the occasional philanthropist (or government authority) who wants to throw money at public benefits, but I don't see how we could upend capitalism and make the entire system purpose-based. Most industries are purely driven by profit motive and I don't see any way around that. Rationally, why would most capitalists want to give away their profits to public benefit missions?

The only way is to use tax incentives and things like that to encourage this behavior from private capital. That's usually a dead end because corporations and legislators work together to create loopholes that keep the profit motive and large shareholder dividends intact.

You can't just expect the hyper rich to give away their riches. Most rich people don't operate that way.

Thats understood and agreed Theb, companies pay taxes and they are, lets say, "indirectly helping".

But a mining company, that is destroying an entire region naturewise and an entire population by polluting their resources, even if they pay taxes, are they really helping?

Balances need to be made... Are they destroying more than helping?

There are similar websites in almost any country but the money is not there for those places. Usa and Canada and even UK could do this because the people who live there have enough money to cover for someone else expenses for a while or pay places like kickstarted to get together and allow them to make new stuff because the economy is not as bad as other countries.

USA is not doing that well economically in macro sense but if you look at how much people are making they are still ahead of many countries. That is why when you look at a third world country or even a not high end first world country people are barely living themselves so its hard for them to spend 20 bucks on some game that may or may not come out in 2 years. Don't get me wrong they all exist in all countries but its just not popular like it is in USA.

Yes public benefit corporation is a good way of having a double development platform in this way the economy get developed and also the environment where the company operates get developed also and any corporation who don't comply to this get a legal suit.

I don't know if all countries have a "public benefit" requirement for their country but I know our laws are strict enough that on either way the rest of the citizens gets to benefit something out from both domestic and foreign corporations running in their country. For example taxes are set which in now way they can escape without paying, having corporations will also produce job availability for that country which would boost the economy, and of course if they do want to get less taxes corporations usually donate money in form of charity in order to lessen their burden.

Aside from the economical standpoint there are also laws that limit on what they can do and also require them on what they should do. For instance some countries require car manufacturers to have their cars at a EURO 4/5 standard which is good standard if you want the cars running in your country with less emissions.

Thanks Mu_Enrico for your reply!

It's hard to consider what corporations have benefited the community by paying their taxes.

An agriculture company that uses toxics to take care of their plantations, giving jobs to the community but creating terrible long term health issues. Are they benefiting the community? What is more important? The jobs or the long term's population health?

Same with oil companies, mining companies, etc.


Thanks Mometaskers for the reply.
It would be wonderful for more companies like these to exist, indeed. This would mean that we have a capitalism where profit is as important as positive social and environmental impact. Humans shouldn't design economies without thinking the issues that their operations can create. In order to think in long term, we need to think on what the impact of decisions and operations is.


Thanks Ranly123 for the reply.
It's very logic and we agree with you. Zero profit companies don't exist.

I also believe that there is no zero profit institute or companies. They should also benefit from the services they offered likewise their customers benefited from them. Saying they have zero profit is just a propaganda to lure customers on their services if there is.

If only these would be more common. I've checked and it seems it's mostly US, Australia and Canada that have these companies. If they'd be successful then that can inspire more entrepreneurs to register their businesses as PBC.

If the shareholders are philantrophists anyway, they probably wouldn't mind just getting small dividends. I think the big benefit compared to non-profit NGOs is that PBCs should be able to sustain themselves rather than relying on charity.

Corporations are always profit-seeking in nature, some that claim "sustainable" or "green" are just simply marketing effort to make it look good.
Profit-seeking will lead to efficient corporations. However, businesses always generate externalities. Thus, as long as externalities are lower than compensations (i.e. taxes, CSR, etc.), it is safe to assume that the corporations have benefited the community.

I think it's absolutely normal for any company to seek for profits as high as possible because thats in the first place why most people open businesses, but in the same time also aim to help the environment to grow and modernize. Also this kind of companies need to create as many work places as possible to make sure they are helping the community even more while their profits grow.

Unfortunately, I don't seem to understand vividly what OP means but from response, I think we are talking about social benefits from corporations to locals if I'm correct.

In other words, I would briefly submit that it is nice for corporatios to perform their duties to locals as signed in the memorandum of understanding (MOU).

Thanks for the reply Dothebeats.

Following your line, how do you think we could bring this approach you are talking about to the industry? Is it necessary for our sector? Yes? No? Why?


Thanks TheCoinGrabber for your answer.
Yes, sued indeed. The same way a normal C-Corp can get sued if they start misusing the money, which is not good according to for profit purposes.
The PBCs have a great PRO, the intrinsic value they provide to their customers and partners.
But they have a downside; they need to attend for profit and for purpose goals.


Thank you Bdlflt for your answer.
Indeed Patagonia is an incredible example of what this kind of entreprises/corporations can achieve.
Following in the line of your argumentation, do you believe this like something necessary or that it should be taken into consideration amongst the crypto space? If yes, how do you imagine it and why do you think it's important? If no, Why?


Thanks Merchantofzeny for the reply.
It's sad or weird, you put the name, but Public Benefit Corporations get no type of special benefit. They stand under the same regulations and taxations as normal C-corps, with the only difference that they have impact purposes at the core of their business which they need to attend. This is not a minor detail as if normal C-Corps took this kind of approach, they could get sued by stakeholders for going against the for profit purposes.

The incentive for investors is nothing more than create a more sustainable value and bring real benefits to future generations and the environment. What is money for if to be spent in ethic, money making but also impact creating businesses? There's a whole movement of for purpose/philanthropic/impact investors movement.
People are tired of just having money, they want to create real change in the world. It's the ultimate way to feel like you're actually doing something for humanity.

Let's not even talk about the new generations starting from Millenials!

We've been talking about benefits to the public but is there any benefit for the shareholders in addition to what they might have got from being in a regular corporation? I tried looking up the subject but can't seem to find any, either I must have missed something or this is because this is uncommon and not usually written about. I'm assuming there's a perk for going through the trouble. Maybe additional government assistance?

Patagonia is a great example of what PBC's can be and accomplish, but very few companies (and founders) are as successful for profits and the stated benefit.

One aspect here that I believe will be impactful but is hard to measure is how this type of signal - being a Public Benefit Corp instead of a standard S Corp or C Corp - can impact employee productivity. For one, it should make it very clear, from the top, what are some of the additional goals of the company beyond profit, and this can help in recruiting like-minded individuals and provide additional intrinsic motivation for them, especially if it's a grand goal like Patagonia's environmental aims. The passion a potential candidate would have for the stated goal could be the difference-maker if that candidate is trying to choose between multiple companies/job offers, and that type of selection from an employee I believe will improve their productivity at their chosen company (I chose this over that, so I'm going to try to confirm I made the right choice by working harder and believing I'm enjoying my work more).

There are other nuances at play too, but having the benefit codified in this manner I believe will help overall productivity.

I think they do serve a proper purpose to the world, they are not the norm and neither they will ever be but they are definitely a new thing people tend to like. Look at things like gofundme as well, they are basically making money off other peoples misery but they are still needed and loved because at least it gives a reason for us to donate directly instead of using a charity.

Basically all I am saying is they are not a "must" in business but they are getting their place in the world as a needed thing. I do not see them get any bigger and they are definitely good to have category but its just not enough for a business to be a billion dollar business. Something like instagram that barely makes money can go for billions of dollars on a startup exit while kickstarter can't because it requires to trust for people to keep on funding stuff.

Wait, sued? This is the first time I've heard about PBCs. Not a thing in my country I suppose. I've heard about Patagonia before and their environmental advocacy but I had no idea that they are compelled by law to pursue that.

This is interesting nonetheless though I don't think it can apply to most type of businesses.

Yes, considering that this world is trying to slip up on chaos and disarray everyday, we need more companies that not only take profits for their own benefit but also give back to the people and the environment as well. There really isn't much you can do about money when you have an environment with irreparable damage and people constantly making rounds spreading fear and causing trouble everywhere. It's about time that companies do something for the world, not just one-time charity works and fund raising events that would only benefit a handful of people with short-term effects. We need more of these PCBs; economy would still grow and thrive even if companies are allocating some resources to help build a better world.

of course that is not included in logic it can be abandoned. because it is certainly fraudulent, where the tip ends scam. therefore we must be careful to determine the steps. because the business can run continuously is the main thing

BitBustah, thanks for the reply!

A correction must be made, we're not talking about non profits, none of the mentioned companies are non profits and this is not a non profit scheme.

They are for profit for impact businesses.

Patagonia is not a non profit, Kickstarter is not a non profit, Etsy is not a non profit, etc.

They are all for profit for purpose companies that have both profit as impact goals at their business core.

Do we need more of these in the economy? Yes? No? Why?

A lot of these "non profits" are still scams because they give themselves millions in salary and use very little of the actual funds for charity.  They are quick to pull on people's heartstrings.  We have many psychopaths running companies like this.

I'm not sure about the impact in the economy as well, I think there might be cases that PBC has somewhat has a positive effect, but its not that huge, perhaps.

I read that Delaware is a good use case as they are more friendly to PBC's, but I can't find any study that says the impact is drastic, so for now we don't have any data to gauge, or if there are data, if might be too small at PBC is still in its infancy, I believed.

You mentioned that income is everything and money is the thing you are most looking for. then how do you think about the economic sustainability intended by the OP?
do you agree that it must still be done?

Governments themselves instilled us that not thinking other things than earnings, the money is everything, and now I do not think anything will change about public benefit. Because capitalism is here for it and wants it from us. What do you expect from people who kills seal and rhino for money today? 

There is no such thing as zero-profit or profit-only businesses, but everyone tries to make gains using glamorous slogans such as community development, renewable resources, the ozone layer, and other things.
Cooperative companies create for benefit and benefit.
I believe that the personal motivations towards issues we are experiencing are stronger than the companies' offers or innovative ideas.

PBCs are not zero profit businesses.

They are businesses that by constitution seek both for profit as for social/environmental impact.

Patagonia is one of the biggest, most profitable clothing companies in the world and they are a PBC.

Grameen bank is one of the biggest, most profitable and with highest payback rate bank in the world and its a PBC.

It's important that we don't confuse a PBC with a not for profit or NGO.

PBCs MUST seek for profit AND commit to positive change/impact.

Same as above

End of the day everyone expect something for the efforts put forth to support development of a system. As in the Opening Thread very few companies operate as public benefit corporations. This is purely possible with the support from governments and other organizations that have got financial freedom earning big revenue from the public who are the key people for any success. As in the above quote volunteering falls under this and this isn't found in large number these days as the mentality of humans have shrunk.

I think the concept of zero profit is founded upon legal loopholes and public misinformation.

There are many "zero profit" charities, religious enterprises and business organizations whose founders are millionaires / billionaires. I don't think there are many in the world who would be happy investing virtually all of their precious time and energy into something without being rewarded for it. The idea that large private enterprises are "working for free" for the "public benefit" and not being monetarily rewarded in the process is more a marketing campaign than something a person is likely to encounter in the real world imo.

This observation holds true not only for capitalism but socialism as well. People all over the world generally want to be paid and have something to show for their efforts.

Perhaps an exception to this rule may be found in volunteer efforts like doctors without borders as well as humanitarian or environmental activism like greenpeace which are manned by volunteers to a good degree. Everyone else wants to get paid.

I think it has been still about profit with the shareholders. The traditional corporations were built to have maximized profits and also dependent on what the government stated/signed in that public benefit. It has always been to seek profits whether it's private or public entities.

I think they are essential to the economy on the fact that it serves the public and benefitted by the public. Additional work can also be generated, employing those who don't have a job.

Companies with profit-only purposes have been the rule for the XX century.

With the rise of the XXI century, we are seeing a growing number of Public Benefit Corporations (PBCs) in the US or Community Interest Companies in the UK.

By constitution, they are FOR PROFIT but they MUST have public benefit (social/environmental) impact goals or objectives and be compliant with them.
In case they don't fulfill their Public Benefit Statements, they can get sued and fined both by clients as shareholders in the same way they can get sued if they DON'T address the PROFIT purposes.

The goal is to create a purpose based capitalism where profits and sustainable growth both socially as environmentally are achieved.

Examples of PBCs are:
Patagonia: One of the biggest clothing brands in the world, that address environmental issues.
Grameen Bank: One of the biggest and most profitable banks in the world, that address social issues.
Triodos Bank: One of the biggest and most profitable banks in Europe, that address social issues.
Kickstarter: One of the biggest fundraising/crowdfunding platforms.
Etsy: One of the biggest e-commerce and public (Gone through IPO) platforms.


Do you believe they are important to build a sustainable economy? Yes? No? Why?