Illinois to Join Ranks of States Recognizing B Corporations

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August 5, 2012; Source: Chicago Tribune

Gov. Pat Quinn (D-Ill.) recently signed a bill creating the incorporation status of a benefit corporation (also known as B corporations or B-corps) in the state. B corporations have been voluntarily certified by a Pennsylvania nonprofit, B Lab, and NPQ has kept tabs on their rise to recognition in eight other states. Illinois has been playing with the legal standards that separate nonprofits and business for a few years, having allowed the LC3 status for low profit (or social enterprise) organizations in 2009.

In contrast to the LC3 bill, with this new legislation, nonprofit certifiers will be the arbitrators of benefit, not the state. This represents another level of legitimization of the nonprofit certification of business. Businesses often utilize nonprofit certification in their marketing in order to garner the attention of consumers, but now corporations are not only branding their products with the certifier label, but they are able to say that they are recognized as a different type of corporation, at least in a handful of states.

A whole sub-sector of nonprofit organizations that certify corporations currently exists with varying standards and monitoring practices. Dating back to the early 90s, Rainforest Alliance led the way, establishing some of the first certifications for timber and then bananas. Their green frog has become synonymous with the environmental certification of cash crops. Fair Trade certification, granted by Fair Trade USA, which was established by Paul Rice, has become a household brand. In contrast, B Lab certification is likely still less known to the general public, but it crosses various types of activities, including environmental stewardship, community engagement, public accountability, and employee treatment. Certification takes approximately six to nine months for a business that employs more than 100 people. –Michelle Shumate

  • Barry Letzer

    This is great news for B Labs and probably the state of Illinois…
    After all, this is the home state of the “Hull House” and its recent demise may have been able to have been averted had they had the ability to withstand market forces a bit longer and possessed the foresight to consider switching models

    What is not made clear through this analysis however, is the conundrum faced by any new start up enterprise, nor does it adequately state how difficult this process can be for companies wanting to set themselves up as such.

    It is correct that B Lab will only certify an organization that meets their criteria first and foremost, simply meaning that a company has to already be engaged in business and show at least 6 months of Revenue along with other caveats that make attaining this status quite difficult for most newly crafted enterprises. Most of the companies that have been able to avail themselves of this feature are all bigger entities with a longer history with an already deep imprint.

    This type of certification really does not move the needle much in terms of making getting into the game any easier for individuals seeking to craft a more ethically aligned effort to make business happen within an entity that enshrines their beliefs.

    It gives already existing organizations a way to “Position” themselves in the market so that they can be seen as a more noteworthy subject working within the protocols that B Labs has established for certification.

    And although this may indeed help focus attention on these entities, it does NOT do much at all to alleviate the burdens faced by People, who are the forces behind any company….in wanting to make their mark on society in a more equitable fashion through their own business pursuits.

    I do not believe that the Non Profit Quarterly supports the now infamous tagline of the elitist Supreme Court of the US, “Corporations are People”, so what is one individual with an idea supposed to do in the meantime…

    Does the Non Profit Quarterly have any suggestions for how all the new creative energy looking to FIX this broken system is supposed to organize their business interests in a similar way without these more onerous requirements ?

  • Shelly Alcorn, CAE

    It is important to note that “benefit corporations” in the ten states that have these statutes are not required to use B-Lab’s “b-corp” certification. The requirement is that they choose an independent third-party standard and then annually report on how they did or did not meet those standards.

    We applaud the benefit corporation movement and we also see tremendous opportunities for the non-profit sector both in terms of setting appropriate standards as well as developing stable funding streams.

    To find out more – please visit our website at


  • barry letzer

    Thanks Shelly !

    I have visited your site and will be making contact, but because we were able to make contact here within NPQ, I’d like to ask you this follow up question so that the “Benefits” can flow to the NPQ readers as well.

    This is helpful information, it clarifies the “Standards” requirement a bit better,
    Which is very enlightening, because there really isn’t any “Clearinghouse” per se, for this whole segment.
    So this type of information helps illuminate the spectrum of issues and players in this field to do this type of 3rd Party Cert.

    But then you state that there are “tremendous opportunities for the non-profit sector both in terms of setting appropriate standards as well as developing stable funding streams.”

    Could you please bring more clarity and context to this statement, as I’m sure I am not the only one who would like to hear what you have to say about this very timely subject for this segment that is currently getting HAMMERED !

    Thanks for the follow up and I’ll be checking into what you guys have to offer ~!~