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Public benefit corporations & benefit corporations and other entities that may designate a charitable purpose in their organizational documents
Q1. What is a public benefit corporation?
A1. In Colorado, a Public Benefit Corporation is organized as a for-profit corporation or domestic cooperative. Other states may call these "benefit organizations." They are managed in a manner that balances the shareholders’ interests, the best interest of those materially affected by the corporation’s conduct, and the specific public benefit(s) identified in its articles of incorporation. Other entities, such as limited liability companies or even other corporations, may designate a similar purpose in their organizational documents. Even though they are not tax-exempt and donations to them are not tax-deductible, some of these organizations may engage in charitable solicitations.
Q2. Do for-profit public benefit corporations (benefit corporations) or other entities that designate a charitable purpose in their organizational documents need to register?
A2. In some cases, the specific "public benefits" a public benefit corporation (PBC) or benefit corporation or other entity identifies within its statement of business purposes in the articles of incorporation or other organizational documents may also fit the definition of a "charitable purpose" under the Colorado Charitable Solicitations Act (CCSA). If the PBC or benefit corporation or other entity intends to solicit funds in Colorado for that purpose, the organization may fit the definition of a charitable organization soliciting contributions, so it may need to register as a charitable organization. Consult with your legal counsel if you are unsure whether the CCSA applies to the activities of your organization and requires it to register.