Social Enterprises in New Zealand

Abstract

The predominant vehicle for business in New Zealand is the one-size-fits-all incorporated company form. Social enterprises in New Zealand battle the traditional split of companies being perceived as the vehicle for pursuing financial objectives, and charities being understood as the vehicle for pursuing social or environmental objectives. The perception of businesses as solely financial remains strong. This perception has created problems for social enterprises which want to access capital or philanthropy, and also with customers, who do not always understand the difference between a company that is a social enterprise and a company that has a sole focus on shareholder wealth maximisation. Consequently, New Zealand has seen a shift towards social enterprises which can marry financial and social or environmental objectives together, with little trade-off and in a way which ‘locks’ in the broader mission. The assurance provided by a distinct legal form in other jurisdictions, such as a benefit corporation or community interest company, is instead provided by the form’s essential components. Often the nature of the business structure makes it impossible to separate the financial and social or environmental objectives. Whereas, those social enterprises that struggle to marry their financial and social or environmental objectives struggle to survive. The lack of assurance that their financial returns are prioritised undermines investor confidence, and the lack of assurance that philanthropic funds are not being used for personal enrichment undermines the confidence of philanthropists. So, the story of the social enterprise in New Zealand is a story about perceptions. A social enterprise’s success or failure is intimately connected to its ability to preserve and communicate its mission. The full book chapter is available at https://www.larcier-intersentia.com/en/social-enterprise-law-9781839704116.html#product.info.tab.description