Social impact organizations, especially those advocating for justice or serving the marginalized are under attack.
It’s not only President Trump’s 139 (and counting) executive orders, but “the big beautiful bill” making its way through Congress that would curtail the sector, eliminate nonprofit status whimsically (even Wikipedia is under fire), and put the full weight of law enforcement at the administration’s beck and call to target both organizations and workers.
There is no return to normal – there’s only forward.
Consider with me a different way of organizing the work: one that still prioritizes social impact, allows open advocacy, dispenses with line-item budgeting, and is accountable to the public. There is already a legal structure available to do all these things that has been around for over a decade: the public benefit corporation, or PBC, represents not a departure from nonprofit values, but their evolution.
A Solution Hiding in Plain Sight
PBCs were introduced in 2010 by B Lab to bridge the gap between for-profit businesses and nonprofits. B Lab drafted legislation enabling companies to prioritize public benefit alongside profit. Maryland was the first state to pass PBC laws, and since then, over 38 states, including
Delaware and California, have adopted similar statutes. Patagonia, known for its environmental commitment, became California’s first PBC in 2012, aligning its operations with its mission to preserve nature and advocate for environmental policies. Other notable examples include Allbirds, Tom’s of Maine, and Warby Parker.
Today there are just over 1,000 PBCs around the United States. (There is some confusion around PBCs and B Corp companies since B Lab initiated both and some PBCs have B Corp certification, but it is not required.) At this point there are a handful of examples where former 501(c)(3)s re-incorporated as a PBC, like Kickstarter, but the urgency of the moment now makes this a more attractive, if not imperative, option. For nonprofit leaders, transitioning to a PBC or adding a PBC subsidiary offers a path to greater mission resilience, financial sustainability, and operational freedom.
PBCs have a legal mandate to balance public benefit and profit, ensuring that mission remains the top priority. Annual Benefit Reports provide transparency and accountability that surpass standard nonprofit compliance, reassuring investors and the public that the mission remains central.
There are trade-offs: directors have the expectation to seek profit, in addition to social good, which means that the organization should be able to commodify its services. (How far is this really from documenting activities, objectives, and goals?) Incorporation is by state, as noted earlier, exempting PBCs from IRS restrictions that limit advocacy. Nonprofits can change incorporation or create a PBC subsidiary to provide the freedom to pursue bold policy work and collaborate with activists without the risk of losing their incorporation status. For organizations whose missions necessitate advocacy, this freedom is crucial. Depending on the state of incorporation, there are other mission critical benefits, in Oregon, PBCs are preferred providers to state agencies, giving them a leg up on traditional for-profit vendors.
PBCs have financial flexibility. They can access financing not readily available to nonprofits, such as equity investments, venture capital, and debt instruments. The financial flexibility afforded to PBCs also allows them to reinvest both profits and surplus funding into their ongoing activities, unlike nonprofits, which must return unspent grant funds, or seek funding extensions. Unlike traditional nonprofit boards that focus on compliance and fundraising, PBC boards are legally obligated to balance priorities of shareholders, stakeholders, and the public. This three-part mandate tends to attract financing from impact investors, those with an interest in ESG, and mission-driven capital.
An example of the power of flexible, mission-driven capital is the Ford Foundation’s recent $6 million program-related investment in partnership with the REDF Impact Investing Fund. Managed by RIIF Capital LLC, small businesses in Appalachia can access affordable loans, preferred equity, and revenue-based financing in emerging sectors like renewable energy and manufacturing. Through financial guidance and partnerships with private co-investors, Ford is contributing to local wealth building and fostering economic resilience in a region historically underserved by both government and philanthropy. This scale of investment and flexibility is just not feasible within the traditional nonprofit framework.
Charting the Path Ahead
Transitioning to or adding a PBC subsidiary is not without challenges. It requires mastering new fundraising methods, engaging with investors, and navigating new or hybrid governance structures. Yet the risks of inaction are far more severe. In a climate where government hostility and philanthropic caution pose existential threats to mission-driven organizations, adaptation is not optional; it is imperative.
By combining legal mission protection, advocacy freedom, financial innovation, and strong governance, PBCs provide a path forward for nonprofits striving to thrive, not just survive. The urgency of this moment cannot be overstated: the center will not hold. Nonprofit leaders must act decisively, and the PBC model can serve as a strategic lifeline. Those who adapt now will be best positioned to safeguard their missions, sustain their impact, and lead the sector into a more resilient and innovative future.
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