2013 Articles

Designing a Legal Vehicle for Social Enterprises: An Issue Spotting Exercise

Loric, Aurélien

Social entrepreneurship is at the juncture of creative capitalism and social innovation. It aims at combining the best of two sectors, and thus is cramped in the traditional vehicles designed for either world in isolation. Although the social bottom line of these enterprises can usually meet the broad charitable purpose requirement of the Internal Revenue Code, tax-exempt vehicles have proven to be unable to hose the financial one. Conversely, the advantages of for-profits stem from their flexibility, but their failure to receive funding from tax-exempts and the lack of a social enterprise brand have made it necessary to design new vehicles.