Regulating Social Enterprise

Abstract

The challenge for regulators considering how to approach social enterprises lies in their dual purposes of pursuing profit for owners and good for society. This challenge exists on multiple levels. Conceptually, it is unclear how much involvement by public regulators will be needed to monitor market entities with investors, employees and customers. Like in the purely for-profit sector, perhaps regulators are better limited to engaging in consumer protection, anti-discrimination, and garden variety anti-fraud activities. Yet, social enterprises dedicate some of their energies and resources to pursuing benefits for society. Attorneys general charged with protecting charitable assets and enforcing the accountability charity fiduciaries rightly see social enterprises as potentially within their mandates and possess relevant expertise. Practically, though, how can a regulator (or any enforcement mechanism) police the operations of an enterprise committed to two goals that will often conflict? Where social enterprise enthusiasts see the value in blending mission, architects of a regulatory framework see a muddle. Furthermore, AGs are already overtaxed and would need an infusion of resources to pursue social enterprises in addition to their very full regulatory plates. This Article identifies the interests and the challenges of the states and their regulators considering their role in the burgeoning social enterprise sector.

Keywords: social enterprise, charity, nonprofit, attorneys general