Independent Banker - March 2019 - 76

responsible business practices.
However, while B Corp is a
professional certification with limited
legal standing, a benefit corporation is
a legal framework similar to a C-corp,
a sole proprietorship or an LLC that's
available in 34 states.
Benefit corporations allow forprofit
businesses to incorporate with
a commitment to consider the impact
of its decisions on all stakeholders,
not just shareholders. A business
can be a B Corp, but not a benefit
corporation; or it can be a benefit
corporation, but not a certified B
Corp; or it can be both.
While a benefit corporation is not
required to seek B Corp certification,
B Lab often urges B Corp-certified
companies to apply for benefit
corporation status if they are located
in states with that option.
For many community banks,
becoming a benefit corporation
would require changing their articles
of incorporation and bylaws. Such
changes put shareholders on parity
with employees, the environment and
the community in terms of decisionmaking.
This will require board
approval and may have regulatory
implications as well.
For some community banks, the
board of directors may be quick to
agree. But Reiling cautions that if the
bank doesn't already have a strong
track record of values- and missionbased
activity, getting the board
of directors on board may be the
biggest challenge.
" They could take it as a threat
that you're not going to focus on
maximizing shareholders' interest
and maximizing profit, " he warns.
Reiling does not see a necessary
conflict, and reports that Sunrise's
investments in social responsibility
have extended its network and
strengthened the bank financially.
" Our actual doing good and engaging
in the community and trying to
figure out ways to bank and serve
the unbanked, or new ways to do
affordable housing and finance, have
multiplied our business, " he says.
Andrew Kassoy, one of B Lab's
cofounders, points out that any
regulated financial institution that is
a B Corp still has an overriding duty
to safety and soundness. This duty
overrides any other consideration,
which may provide some reassurance
to skittish boards and shareholders
" It sometimes feels like
community banks are
put in the same category
as large national banks,
and this is a nice way to
differentiate who we are
relative to them. We're
taking a greater-good
approach. "
-Clay Adams, Mascoma Bank
who may worry that the community
bank will neglect profitability.
Regulatory agencies are another
audience that may not be familiar
with either B Corp or benefit
corporations. However, community
bankers report that regulators
have been generally favorably
disposed or at least neutral. " At
first, the Fed regulators looked at us
quizzically, " Adams recalls. " Once
they understood that the focus was
76 Q ICBA Independent Banker Q March 2019
not going to be much different than
how most community banks already
operate, they were very supportive of
the change. "
Next steps
If you think B Corp certification
might be right for your community
bank, B Corp bankers suggest going
to bimpactassessment.net and taking
a run at the B Impact Assessment
questionnaire. You can try either
a 30-minute questionnaire or a
comprehensive version, which will
take two or three hours.
" Don't overthink it, " Reiling
advises. " Just go through the survey
and see how you score. Just based
on the fact that you're a community
bank, you're probably already close to
the threshold. "
If you score well, the next step
might be to assign someone to be
the point person for exploring the
certification. They can review the
scores and business practices of
other community banks, and draft a
business case for why the designation
would add value to the bank and
how it aligns with the bank's existing
mission, vision and strategy.
Community bankers at certified
banks say they're happy with
their status.
" Sunrise is certified through
the U.S. Treasury as a CDFI and
we're also rated outstanding in
CRA, but those benchmarks are
fairly geography-based and don't
include a broader, more holistic
set of measurements. The B Corp
certification really fits who we were
and are today, " Reiling says. " We
want to encourage more banks to
look to the force for good that their
companies can have. "
Judith Sears is a writer in Colorado.
http://www.bimpactassessment.net
Independent Banker - March 2019

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