B Corps, Nonprofits, and Small Businesses: What’s the Difference?
New York, New York
In a world where businesses and organizations are increasingly focused on impact, the different structures that define them can be confusing. What’s the difference between a B Corporation (B Corps), a nonprofit, and a traditional small business? How do these models impact the way they operate, generate revenue, and pursue their missions?
At 10F Communications, we often work with mission-driven companies and nonprofits. Understanding these structures is key to communicating effectively. Here’s a breakdown of the major differences.
Traditional Small Business or Corporation
Most businesses operate as for-profit entities, meaning their primary goal is to generate revenue. This includes everything from local coffee shops to large corporations.
While traditional businesses can certainly embrace social impact efforts, they are not required to prioritize them.
Imagine you’re passionate about coffee and want to open a business. A regular small business (LLC, sole proprietorship, or corporation) lets you focus on making a profit by selling coffee and growing your brand.
Contrast that with Tony’s Coffee, a company that sources ethically and commits to sustainability. While both businesses sell coffee, Tony’s Coffee has an added layer of accountability, ensuring fair wages and environmental sustainability.
B Corporations (B Corps)
A B Corporation (Benefit Corporation) is a for-profit business that commits to higher standards of social and environmental impact. B Corps are certified by B Lab, a nonprofit that evaluates companies based on social responsibility, environmental impact, and governance.
Patagonia, one of the most well-known B Corps, legally prioritizes sustainability and ethical labor practices alongside profit. They’ve donated 1% of their sales to environmental causes for years and recently transferred ownership to a trust that ensures all future profits benefit climate initiatives.
A traditional outdoor retailer (like an average sporting goods store) might also sell gear and care about the environment, but they aren’t legally required to align profits with sustainability.
Nonprofits
Nonprofits exist to serve a mission. They are tax-exempt under IRS 501(c)(3) or similar classifications, meaning they must reinvest earnings back into their mission-driven work. They’re funded through donations, grants, memberships, and sometimes program revenue.
Charity: Water, a 501(c)(3) nonprofit, works entirely on donations to bring clean water to communities in need. They reinvest the money into expanding their impact, relying on fundraising rather than product sales.
Meanwhile, a for-profit water purification company may also work to provide clean water, but they generate revenue by selling filtration systems instead of fundraising.
Social Enterprises: A Middle Ground
Some organizations blend aspects of these models, often referred to as social enterprises. These businesses aim to make a profit while also addressing a social or environmental issue – combining profit with purpose. Some social enterprises register as B Corps, while others operate as nonprofits with earned revenue.
TOMS shoes started with a "One for One" model, where every shoe purchase provided a free pair for a person needing shoes. While it’s a for-profit business, its strong social mission helped it grow into a globally recognized brand.
Compared to a regular shoe company focused purely on sales, TOMS attracted impact-driven customers - but later had to shift its model to remain financially viable. This highlights how balancing profit and purpose is key for sustainability.
Each model comes with its own challenges and benefits, but what matters most is how an organization uses its structure to drive meaningful change.
At 10F Communications, we help businesses and nonprofits tell their stories and connect with their audiences effectively. Whether you’re a B Corp, a nonprofit, or a small business looking to expand your impact and compelling messaging, let’s connect!
