I'm trying to understand Public Benefit Corporations (PBCs) vs. traditional C-corps, and I'm still not seeing the appeal despite the explanations.
From what I understand:
– Formation/ongoing fees are the same
– You add extra duties to consider public benefits/stakeholders
– Extra annual "benefit reports" or impact disclosures
– No tax breaks or cost savings
So why do founders/companies like Coursera choose this? Is it legal protection against activist shareholders pushing pure profit? Or does it actually help with fundraising/valuations long-term?
Any positive or negative stories of a PBCs to read?
Why choose Public Benefit Corporation (PBC) status with the extra compliance burden? (e.g., Coursera)
byu/fossterer inEntrepreneur
Posted by fossterer
1 Comment
the real reason is legal and signaling, not taxes or savings. PBC status gives founders and the board cover to say no when profit conflicts with a stated mission, without getting sued for not maximizing short term shareholder value. that matters once you have outside investors or go public.
it also works as a credibility signal for certain customers, employees, and long term investors who care about mission alignment, especially in education, climate, healthcare. coursera for example can justify decisions that favor access or outcomes over pure margin.
downside is exactly what you said, more reporting, more scrutiny, and it can scare off purely profit driven investors. upside is protection, brand trust, and alignment. it only makes sense if the mission actually matters to how the company operates, otherwise it is just extra paperwork.