What Are Benefit Corporations? And Should Ethical Investors Consider Them

If you’re an ethical investor, you’ve undoubtedly heard about benefit corporations and wondered what all the fuss is about. Are they really as good as everyone says? Should you be investing in them or avoiding them like the plague? 

Let’s look at what benefits corporations are and how investors can decide if they’re worth their money.

What Is A Benefit Corporation? 

A benefit corporation is a type of for-profit entity that has been legally established to pursue goals that have both social and financial benefits. 

The company’s mission must include positively impacting society, such as reducing poverty and protecting the environment, All while making a profit. Benefit corporations are required to produce an annual report which details the progress they have made towards meeting their social and financial goals.

Benefit Corporation Advantages 

  1. Make a Difference: Investing in benefit corporations is a great way to make a difference. Because these companies are legally required to pursue positive social and environmental impacts alongside profits, you can rest assured knowing that your money will improve the world. 
  2. Fulfilling Investment: Investing in benefit corporations can be very fulfilling because you can see first-hand their positive impact on society and the environment. It’s not just about profits. It’s also about making a real difference in people’s lives. 
  3. Long-Term Success: Investing in benefit corporations can lead to long-term success. Why? because these companies tend to be more resilient and sustainable than traditional businesses. They often have loyal customer bases that will stick with them through thick and thin, which leads to consistent returns over time. 
  4. Tax Benefits: Investing in benefit corporations can also come with tax benefits. That includes deductions for certain types of investments made in certain areas or regions of the country. This can help offset some of your capital gains taxes. This makes it even more attractive for ethical investors looking for ways to reduce their tax burden while positively impacting society and the environment. 
  5. Support Local Businesses: Investing in benefit corporations can be a great way to support local businesses doing good work in your community. You do that by providing jobs, paying taxes, and contributing positively to society and the environment as a whole.
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Should Ethical Investors Consider Benefit Corporations? 

The answer depends on the individual investor’s needs and preferences. Investing in benefit corporations may be a great option for those who want to make money with a conscience. 

However, if you’re looking for higher returns but don’t care as much about social responsibility, investing in traditional companies might be more beneficial. Ultimately it’s up to each investor to decide which route is best for them based on their own personal values and beliefs.

Benefit Corporations- Balancing Profit with Purpose

Benefit corporations offer ethical investors an opportunity to positively impact society while still making a profit. This investment strategy has numerous benefits for the investors and the society alike. 

By investing in these companies or funds that support them, you can support businesses that prioritize people and the planet alongside profits. However, it’s important to do your research before investing in any company or fund and weigh the potential drawbacks as well as benefits.