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Let’s talk structure…


One of the first questions that any (social) entrepreneur faces as they straddle the three legs of the stool – business, government and non-profit – remains: “What are you?” In essence, are you a for-profit, not-for-profit, hybrid etc.? Underlying that question (in addition to whether the organization might deservingly (or not) benefit from tax exemptions) is often a need to better understand the “motivation” behind the founding (and founders/owners/management team) of the organization?  Will your organization generate public value and/or will it privatize the gains in the form of dividends to shareholders?

These are complicated questions that lead to the heart of the wildly progressing debate on emerging structures for social enterprises. Certainly other options to consider beyond the more traditional “hybrid” structure of for-profits separated by arms-length agreements with their not-for-profit sister organization include authorized legal structures, such as Flexible Purpose Corporations and Low-Profit Limited Liability Corporations, and broadly accepted industry certifications, such as Certified B-Corps (certification given by the non-profit B-Lab from sunny Palo Alto).

Fortunately, the debate will continue at the conference, as Andrew Kassoy from B Labs, Todd Johnson of Jones Day (behind designing the legislation for Flexible Purpose Corps in CA), and Herrad Sabeti (founding thinking behind the idea of For-Benefit Organizatios) from Fourth Sector Network will be present.




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