Fiduciary Duties in Social Enterprise

Abstract

This chapter examines theoretical and practical issues relating to fiduciary administration in social enterprise. It argues that social enterprise often calls for fiduciary administration on a hybrid model, combining elements of service-type administration and governance-type administration. Like standard service-type situations, social enterprise calls for administration in the interests of a defined constituency (ordinarily, shareholders). However, hybridity is introduced through the commitment to general public-oriented purposes that distinguish social enterprise from conventional business organizations. We will show that, contrary to common opinion, the fiduciary hybridity found in social enterprise is neither unique nor unworkable. We will briefly discuss other examples of hybrid fiduciary relationships and institutions, and we will explain the value of hybridity and how problems attributed to it are, or may be, resolved.

Keywords: social enterprise, fiduciary duties, discretion, for-profit, non-profit, corporate governance, public benefit corporations

JEL Classification: G30