Essential Policy and Practice Considerations for Facilitating Social Enterprise: Commitment, Connections, Harm, and Accountability in: J. Yockey & B. Means, eds., The Cambridge Handbook of Social Enterprise Law (Cambridge: Cambridge University Press), Forthcoming
29 Pages Posted: 11 Aug 2017 Last revised: 19 Aug 2017
Date Written: June 30, 2017
There are numerous opportunities for policy interventions to clarify, enable, or perhaps even inhibit social entrepreneurship. As one example, consider the emergence and expansive growth of available social business forms, particularly of the benefit corporation, which substantially modified traditional conceptions of fiduciary duties perhaps to the point of elimination. Other policy efforts or possibilities include financing mechanisms involving public money, tax favored treatment, exemptions from securities requirements, and affording bid procurement preferences on government contracts.
As an essential precursor to material policy concessions to social entrepreneurship, especially to the extent it or its enterprises compete with or seek to distinguish themselves from other market participants, several determinations must be made. These determinations have two key roles: (a) shaping whether to provide the relevant incentives or make the applicable concessions and, if so, (b) how far to go to ensure a reasonably commensurate relationship between benefits and burdens for enterprises, movements, and society.
Four essential sets of questions should shape, or in some cases even dictate, how those roles are defined. Beyond policy, these sets of questions have practical implications for those who invest in, operate, and interact with social ventures. Lack of mutual clarity about any or all of these risks longer term problems for the enterprises and those involved with them but more importantly for the social benefits being sought.
• What should the underlying commitment be to pursuing social results: devotion or does mere tolerance suffice?
• What should the relationship be between the effort dedicated to social returns and the actually realized result?
• What attention should be given to or require about social harms that might be associated with, connected to, or caused by actions taken in the pursuit of social good?
• What form(s) should accountability take and what consequences, if any, should be expected for failure – not just non-compliance but less than optimal outcomes?
Clarity on these matters can also help regulators and enforcement personnel as they evaluate whether/how to proceed with guidance or actions. Resolving ambiguities that exist could facilitate more and faster adoption of social business forms and other efforts to achieve worthy objectives of the social entrepreneurship movement.
In some ways, this analysis also involves bringing clarity and discipline to whether “impact” and “intent to have impact” are the same or even similar.
Keywords: social entrepreneurship, social enterprise, social impact, impact investing, entrepreneurship, benefit corporation, low profit limited liability company, social business, business policy, tax policy, bid procurement policy
JEL Classification: G30, K20, K23, K29, L20, L21, L22, L29, L30, L31, L33, l38
Suggested Citation: Suggested Citation
Tyler, John E., Essential Policy and Practice Considerations for Facilitating Social Enterprise: Commitment, Connections, Harm, and Accountability (June 30, 2017). Essential Policy and Practice Considerations for Facilitating Social Enterprise: Commitment, Connections, Harm, and Accountability in: J. Yockey & B. Means, eds., The Cambridge Handbook of Social Enterprise Law (Cambridge: Cambridge University Press), Forthcoming. Available at SSRN: https://ssrn.com/abstract=3015975