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Do We Need Specialized Business Forms for Social Enterprise?

Cambridge Handbook of Social Enterprise Law (Benjamin Means & Joseph Yockey, eds. 2017)

21 Pages Posted: 23 Mar 2017 Last revised: 20 May 2017

Peter Molk

Willamette University - College of Law

Date Written: March 18, 2017

Abstract

Legislation enabling social enterprise-specific organizational forms has proliferated around the country. A host of benefit corporations and low profit limited liability companies have organized under these statutes, professing to combine profit-making potential with charitable goals. But companies have long managed social enterprise with traditional forms, and the recent rise of the LLC allows entrepreneurs, as a legal matter, to accomplish all the goals of more specialized social enterprise-specific forms, and more. Is there, then, a need for specialized social enterprise organizational forms?

This chapter compares the advantages of these new forms to those of traditional business entities. I show how traditional forms like corporations, nonprofits, and especially LLCs could effectively mimic the goals of modern social enterprise entity statutes. In fact, an LLC-based system is remarkably similar to modern benefit corporation statutes, suggesting those statutes may add little value. However, using LLCs as a comparative foil, I show how benefit corporation statutes could be revised to offer a stronger, more credible commitment to social enterprise than could be replicated with more typical organizational forms.

Keywords: social enterprise, benefit corporations, corporations, LLCs, nonprofits

JEL Classification: K12, K22

Suggested Citation

Molk, Peter, Do We Need Specialized Business Forms for Social Enterprise? (March 18, 2017). Cambridge Handbook of Social Enterprise Law (Benjamin Means & Joseph Yockey, eds. 2017). Available at SSRN: https://ssrn.com/abstract=2937128

Peter Molk (Contact Author)

Willamette University - College of Law ( email )

245 Winter St. SE
Salem, OR 97301
United States

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