Social Entrepreneurship as a New Economic Structure that Supports Sustainable Development: Does the Law Provide for a Special Legal Structure to Support Innovative and Sustainable Non-Profit Entrepreneurial Activities? (A Comparative Legal Study)

Abstract

Recently, ‘social entrepreneurship’ has been growing rapidly. Social entrepreneurship lies in the wider spectrum of social economy (job creation) with a reference to sustainability (social and environmental innovation). Social enterprises devote their activities to achieving social objectives to benefit the community, to improve human well-being and preserve the environment.

One of the critical enabling factors for social entrepreneurship is the presence of a supportive legal and tax environment. This article identifies and analyses innovative legal non-profit corporate structures and supportive tax regulations in various countries (Belgium, the UK, Greece, the Netherlands, South Africa and Canada). The article also clarifies which legal (non)-profit corporate structures can best support and encourage new social entrepreneurship initiatives. Legal structures include: non-profit associations, not-for-profit companies, cooperatives, mutual societies, and foundations. Predominantly, we will compare the most interesting innovative company forms that have a specific social enterprise objective.

In order to stimulate, a structure should be able to support the common characteristics of social entrepreneurs, eg their mission-driven activity by delivering social value, entrepreneurial orientation (usually small scale), financial self-sufficiency, and participatory nature (apart from being structured either for profit or non-profit).

Our comparative analysis identifies corporate non-profit legal structures, legal criteria and tax notions and determines which factors can be considered critical to successfully stimulate (the start-up of) innovative social entrepreneurial activities. We regard the term ‘sustainability’ as it is described in the framework of the civil society document the ‘Earth Charter’ (2000), ie. the declaration of fundamental ethical principles for building a just, sustainable and peaceful global society in the 21st century. The term entrepreneurship is perceived as starting activities in a business-type of way, contributing to the economy.

Keywords: social enterprises; corporate legal structures; Earth Charter; innovation; non-profit; sustainable development