California and Arizona recently began registering ‘benefit corporations.’ A small California non-profit university with which I’m acquainted has commenced the transition to for-profit, b-corp status. At the same time, according to Education Dive , the Arizona for-profit Christian institution Grand Canyon University is considering making the transition to nonprofit.

What’s going on here?

B-corporations are supposed to ‘create high quality jobs, help build stronger communities, and restore the environment, all while generating solid financial returns.’ The site suggests no direct tax benefits for b-corps, meaning that the only reason to form one would be some kind of recognition from the state that your firm performs in a socially beneficial way. That should, in principle, attract civic-minded investors.

Citing an Inside Higher Ed article, Education Dive says that Grand Canyon University’s move is ‘due to the "stigma" that being a for-profit university carries,’ as well as the facts that ‘its stock price is idling, it would have a lower tax burden, and it would be able to offer tax write-offs to donors.’

Seemingly oblivious to the for-profit stigma and to donors’ deductions, the California university, which I will not name, has agreed to be bought by an existing b-corp.

What does it mean to ‘buy’ or acquire a non-profit corporation? Non-profits have assets, but no shareholders. A non-profit corporation has a board of trustees who are pledged to advance the organization’s mission, which in the case of universities is high-quality education. The acquiring entity gets the non-profit’s assets. The sale should proceed only if in the board’s judgment, it advances the mission more effectively than the existing institution could do.

What constitutes a purchase price, and who gets it? The ‘price’ is simply any incentives needed to get the existing board to vacate or to cede voting control to the acquiring entity. This may occur over the dead bodies – well, not quite, but over the vociferous objections – of the faculty senate. Even a vote of no confidence in the university president will not stop the sale; the president is going to step down afterward anyway, probably very much the richer.

To recoup these incentives, the acquiring b-corp will probably sell off university assets that are critical to quality education, and/or squeeze faculty into less happy contracts.

So, who benefits from a benefit corporation? Certainly not faculty, unless a miracle happens and the b-corp can in the long term increase enrollment, maintain educational quality, and thus ultimately increase professors’ salaries. The immediate beneficiaries, it appears, are university trustees who can be ‘incentivized’ to take a flexible view of their responsibility to their institutions. There is as yet no clue about whether or how students would benefit.

Berrett-Koehler Publishers’ latest newsletter is mostly devoted to b-corps. It touts a book called The B Corp Handbook: How to Use Business as a Force for Good. So B-corps do seem to be all the rage, a fact that I find suspicious. The Corporate Social Responsibility (CSR) movement holds that all corporations should perform as described in the third paragraph of this column. Indeed, Milton Friedman’s notion that the corporation is solely responsible to its shareholders now looks deader than the proverbial doornail. So what is the state’s purpose in authorizing b-corps? Is it to give a free pass to ordinary corporations (c-corporations and s-corporations), to say ‘You don’t have to worry any more about CSR’?

Berrett-Koehler present Eight Reasons Why B Corps Are Superior Even to Other More Traditional Sustainable Businesses. These show evidence mostly favorable to b-corps, but they do reinforce the suspicion I voiced in the paragraph above. I can only say, as Rod Serling would, that these facts and thoughts ‘are presented for your consideration.’