What are public purpose corporations?
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The general definition of a public purpose corporation or public benefit corporation, is a corporation chartered by the state, usually formed to perform a government function. Some states define a public purpose corporation as any non-profit or charitable corporation, even if it is created by private parties.
Public Purpose Corporation Function
When a government body creates a public purpose corporation, it is similar to a private non-profit organization, meaning, it is created for the purpose of benefiting the public. Many government chartered public purpose corporations serve in highly-regulated areas, such as broadcasting and public transportation. While most public purpose corporations are created by state government, such as libraries or senior centers, the federal government has also created public purpose corporations such as Amtrak and the United States Post Office.
Public Authority Public Purpose Corporations
Another type of public purpose corporation is a public authority. Like other public purpose corporations, a public authority is created by a government body to promote a benefit to the public. However, a public authority has higher bureaucratic powers than other public purpose corporations and often will regulate things like state or federal infrastructure. While the public authority is created and run by the government, it has a separate legal structure from the government and is generally sheltered from political influence. Public authorities are involved in operations like running highways and bridges, low-income housing, and medical care.
Quasi-Public Purpose Corporations
A variation on the public-purpose corporation is the quasi-public purpose corporation. Like the public purpose corporation, the quasi-public corporation is created to benefit the public; however, a quasi-public purpose corporation is always operated privately. In a quasi-public purpose corporation, the private owners usually have partial government funding. While the owners may sell the stocks of this type of corporation publicly, creating a profit for shareholders is secondary to carrying out its public purpose. An example of a quasi-public purpose corporation is Sallie Mae, which was founded to advance student loan development.
Distinguishing Between Public Purpose Corporations and Publicly Held Corporations
Most importantly, a public purpose corporation is not to be confused with a publicly held or publicly traded corporation, wherein shares are traded-in on a securities exchange or in the over-the-counter market. Publicly held corporations refer to many types of corporations and do not require that there be any public purpose or benefit involved.