You’re probably already familiar with the term social entrepreneurship- it seems to be quite the buzz word for the moment. Passing fad? Maybe, but I hope not. These guys don’t think it is…at least for now. Here’s a link with some knowledge on its origins. See the video below for an awesome example of a social enterprise.
Our friends over at wikipedia define social entrepreneurship as follows:
A social entrepreneur recognizes a social problem and uses entrepreneurial principles to organize, create and manage a venture to achieve social change (a social venture). While a business entrepreneur typically measures performance in profit and return, a social entrepreneur focuses on creating social returns. Thus, the main aim of social entrepreneurship is to further social and environmental goals.
While the non-profit business structure obviously works for these socially minded ventures, it’s not the only option. A new form of business organization has cropped up in a few states throughout the US. These are the Benefit Corporations, also known as B Corporations, though I’m not quite sure how they make that leap.*
For those of you who may be unfamiliar with corporations, business choose this type of structure for several reasons. Principally, one decides to incorporate to protect themselves as individuals. By forming a separate corporate entity, an individual can insulate their personal assets from liabilities incurred by the business. This can be debts owed by the organization or litigation it may be involved in.
There are, however, some exceptions to this liability shield (or veil), and ways the veil can be pierced. If you are familiar with the Buffalo Creek Disaster, or the book written about it, then you’ve already been exposed to this veil piercing. Additionally, there are tax advantages to incorporating, as well as investment-facilitation purposes. Corporate leadership is typically organized into shareholders, directors and officers. Shareholders can hold the directors liable for not making decisions in the best interest of the corporation.
And just how do courts generally define the best interest of the corporation? While there is much leeway, directors must essentially use their best business judgement to bring in profit for shareholders; a fiduciary duty. Here’s where B corporations come in. In addition to imposing this fiduciary duty on directors, B corporations have a social/environmental mission that directors must adhere to. Directors of a B corp have a legal duty to both make money for investors and pursue the organization’s social/environmental mission.
There are several reasons why a business would choose this type of organization and several reasons why it wouldn’t, but these are beyond the scope of this post. It may be more about image than anything, but I like to think that the thought counts. In my mind it’s a pledge the corporation makes that its motives transcend mere greed. It’s an acknowledgment that the organization exists within a larger community, and a commitment to being responsible citizens.
Anyways, social entrepreneurs and b-corporations generally kick ass. The innovators below are building a better world. Go on, check ’em out and get inspired.* I make joke, no?