Good guys finish first

Contextualizing the finance news you need to know.

In 2007, 82 mission-driven companies took the next step toward giving back: They became Certified B Corporations. These designations are granted by B Lab, which evaluates potential B Corps based on “social and environmental performance, accountability, and transparency.” Among the first group of B Corps was BBMG, a branding and “social impact consultancy” that serves clients like Planned Parenthood, the ASPCA, and Giffords (the gun violence prevention organization founded by former US Congresswoman Gabby Giffords).

Not only is BBMG a B Corp, the agency is also a public benefit corporation—or PBC—a legal designation for for-profit companies that focus on giving back. And while PBCs are authorized in 35 states and the District of Columbia, the designation doesn’t necessarily help during tax time, when PBCs still have to employ standard filing designations (C Corp, S Corp, or LLC, for example).

But is it possible for B Corps and PBCs to get creative with tax strategy while still putting humanity first? Bryan Miller thinks so. Miller is BBMG’s chief financial officer and resident B Corp champion, and he connected with Money Scoop to explain how BBMG empowers employees to “make a life and a living”—while still balancing the books.

This interview has been edited for length and clarity.

There’s a common misconception that public benefit corporations get tax benefits, which is generally not the case. How do you lower your tax liability and stay profitable while staying mission-driven?

There are [currently] zero tax incentives for B Corps and benefit corps. So I’m biased, but I think it does make you think about your business model in the sense of the assumptions that you have—[for example], how you can find alternative ways to use your business model to lower your tax strategy.

So for example, a normal business may not think, “Oh, wow, what if 100% of our profits went to a nonprofit that we also operate?” Or, “What if we think about the employee compensation structure or employee ownership model to reduce our tax liability?” Or, “What would it look like for us to invest R&D resources that we can then capitalize on to get tax incentives?” Really at the core of it is the business model itself—being a B Corp lets you challenge [that model] more easily than, say, a normal for-profit business.

How do you include employee compensation in your financial planning?

We do three things at the end of the year:

1. Reward the team: That’s kind of a tax strategy and a compensation strategy.
2. Reinvest: So, reinvest some of the profits into future years, so if we want to build or develop or make additional hires, we’ll set aside some capital.
3. And reserve: So just reserve cash on hand.

What are other financial challenges you face as a PBC?

Trust me—you can be very creative with tax and finance. I think it’s kind of a mindset shift for CFOs and finance directors in our space. For example, normally a finance director or CFO would see things in black-and-white—whereas, in my seven-and-a-half-year growth journey, working for an impact-led organization has gone into the full-color spectrum. So data is relevant, but it’s really to understand what questions to ask—to find the right solution and move forward.

The other thing is: People think B Corps don’t need to make money, right? We’re just the nice guys that do great things. We are certainly nice. But we still need to feed the team, invest in our futures, offer an experience, and make an impact—all with our resources.