Hunting Stag with FLY Paper: A Hybrid Financial Instrument for Social Enterprise
Dana Brakman Reiser and Steven A. Dean, Hunting Stag with FLY Paper: A Hybrid Financial Instrument for Social Enterprise, Boston College Law Review, 2013, Forthcoming
40 Pages Posted: 3 Apr 2013
Date Written: April 2, 2013
Social entrepreneurs and socially motivated investors share a belief in the power of social enterprise, ventures that pursue a “double bottom line” of profit and social good. Unfortunately, they also share a deep mutual suspicion. Recognizing that social ventures — just like traditional for- and non-profit enterprises — need capital to flourish, this Article offers a financing tool to transform that skepticism into commitment. Unlike the array of new entities that have emerged in recent years — including L3Cs, benefit corporations and flexible purpose corporations — the hybrid financial instrument it describes provides a robust and transparent solution to the puzzle that lies at the heart of every social enterprise: how to blend a profit motive with a social mission. Recognizing their shared dilemma as an example of what economists call a stag hunt, FLY Paper strikes that elusive balance by allowing investors and entrepreneurs to credibly signal a reciprocal commitment to the pursuit of a dual bottom line.
Keywords: Social Enterprise, Corporate Finance, Game Theory, Flexible Debt, Tax, Benefit Corporations, L3C, Flexible Purpose Corporations
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