Social enterprise for afp conference   session one final
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A panel presentation for NC AFP Conference - session 1 of 2 focused on legal forms of social enterprises.

A panel presentation for NC AFP Conference - session 1 of 2 focused on legal forms of social enterprises.

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  • This presentation is based on slides from a class given by Social Enterprise Network of the Triangle (SENT – through Duke’s Certificate Program in Nonprofit Management. That 4-hour class has been condensed into a one-hour presentation for this talk. Prior slides were put together by Suzanne Steffens Smith, Ruth Peebles and Agnes Vishnevkin. Much credit for the quality in this presentation goes to them – all errors and omissions I claim as my own.
  • In 2007, 20.9 million U.S. women lived below the federal poverty threshold. Economically disadvantaged teens are more likely to be un- or under-employed in the summer job market. Early work experience improves prospects for employability and real wages in the later teens and early 20s. Work experience in high school also increases the likelihood of graduation and lowers teen pregnancy and delinquency.
  • I am *not* an attorney! You *should* consult an attorney about legal structure!


  • 1.
    • A panel discussion with Marty Martin of the Martin Law Firm, Dan Moore of the Redwoods Group and Jeff Stern of TROSA
    • August 11, 2011
    Session One: What is Social Enterprise ? Social Enterprise: Expanding Philanthropy's Boundaries
  • 2. Session One: What is Social Enterprise? Session Two will cover information on how to become a social enterprise Defining the terms we use Defining the Legal Forms Panel Discussion
  • 3. Social Enterprise: an organization or venture that achieves its primary social or environmental mission using business methods.
    • Definition from the Social Enterprise Alliance
  • 4. Social Enterprise is a subset of social entrepreneurship .
    • Social Entrepreneurship includes:
    • Social Innovation
    • Corporate Social Responsibility (CSR)
    • Socially Responsible Investing
    • Triple Bottom Line
    • Venture Philanthropy
    • Direct service and advocacy groups
    • Blended value organizations in various legal structures
    • And maybe even things like cause-related marketing
  • 5. What we talk about when we talk about SE
    • “ We look for organizations or ventures who have a primary orientation or mission of achieving a measurable social benefit and a market-based approach toward generating revenue. Most often these organizations have a nonprofit status, a clear theory of change and a commitment to transparency.”
    • - Social Enterprise Network of the Triangle
    • more info available at
  • 6. Social Enterprise is not :
    • Social Enterprise is :
    • Creating sustainable revenue streams to support mission
    • Engaging market forces in pursuit of social impact
    • Devising new ways to leverage existing assets
    • Decreasing dependence on the external funding community
    • Utilization of business methods, tools and discipline
    • Traditional fundraising
    • Grant money
    • Gifts/donations
    • A “quick fix” in a time of a crisis
    • For everyone
  • 7. Defining the legal forms
    • Is this legal? Even for nonprofits? And what is an L3C anyway?
  • 8. Legal forms and related implications
    • Ownership
    • Stakeholders
    • Tax status
    • Risk
    • Capital
  • 9. Organizational Entities
    • Proprietorship
    • Partnership
    • Unincorporated Associations
    • Corporations
      • Business (C & S)
      • Nonprofit
      • Hybrid (Benefit -NC pending)
    • LLC
      • L3C
  • 10. Corporations and LLC
    • Lawful business or activity
    • Business Judgment rule
    • General powers
      • Donations
      • Government policy
      • Payment or donation
  • 11. Exempt Organization
    • Organized and operated exclusively
    • Limited statutory purposes
    • No inurement or private benefit
    • Limited lobbying and no political activities
  • 12. Exempt Organizations and related organizations
    • Unrelated Business Income
    • Charitable
    • Control
    • Cash
  • 13. Foundation PRI and L3C
    • Charitable purposes
    • No significant purpose – income or capital appreciation
    • No legislative or lobbying
    • Taxable
  • 14. Social Responsibility of Organizations
    • “ The issue of social responsibility is also inherent in the society of organizations.”
    • “ Every organization must assume full responsibility for its impact on employees, the environment, customers and whomever and whatever it touches. That is social responsibility.”
    • Peter Drucker
  • 15. Panel Discussion: Questions? Comments? Ideas?
    • If you don’t come forward with questions, we’ll give you a few examples…
    Discussion time!
  • 16. Additional Resources
    • Social Enterprise Database:
    • CASE (Center for the Advancement of Social Entrepreneurship) :
    • SocialEdge :
    • Social Enterprise Alliance :
    • REDF :
    • Stanford Social Innovation Review :
    • NC Fourth Sector Cluster Initiative: http ://
    • Social Enterprise Network of the Triangle (SENT): http://
  • 17. Jeff Stern will have links to this presentation on slideshare plus my email, twitter, etc. Email me at TROSA using or see Thanks for your time today. If you want to get in touch: Marty Martin, JD MPA Martin Law Firm, Counsel for Nonprofit, Tax-exempt and Social Enterprise Organizations [email_address] Blog: Dan Moore The Redwoods Group Chief Marketing Officer [email_address] http :// Blog: / The Redwoods Group – Serve Others
  • 18. Really? No more questions? In that case, we have a few examples of social enterprises for you…
  • 19. A few examples of successful social enterprise Juma Ventures develops and operates concessions at stadiums for the purpose of providing job opportunities to economically disadvantaged teens. The Women’s Bean Project in Denver employs women from backgrounds of chronic unemployment and poverty to manufacture gourmet foods. The project does not hire women to make and sell bean products. It makes and sells bean products to hire women.
  • 20. More examples, closer to home:
    • TROSA runs several social enterprises (moving, lawn care, furniture and frame shop, grocery and more) in pursuit of its mission to enable substance abusers to be productive, recovering individuals by providing comprehensive treatment, work-based vocational training, education, and care.
    • The Scrap Exchange runs a creative re-use store and education programs in pursuit of its mission to promote creativity, environmental awareness, and community through reuse.
    • Extraordinary Ventures employs young men and women with autism and other developmental disabilities. They create jobs through conference center rental and laundry services.
  • 21. More local examples, but not nonprofit:
    • The Redwoods Group sells commercial specialty insurance to camp programs, particularly focusing on YMCA and JCC camps. Their social mission is baked into their articles of incorporation and in the past they’ve taken a loss rather than lay off employees or drop their less profitable customers.
    • TS Designs in Burlington makes custom T-shirts and runs the company on a triple-bottom-line basis, with organic, recycled and locally produced options.
    • Bountiful Backyards is a community-based enterprise that uses the profits from its edible landscaping business to create community gardens and educate people about sustainable agriculture.
  • 22. Characteristics of a successful social enterprise: Source: Community Wealth Ventures - Powering Social Change
  • 23. Remember the old saying:
    • “ One man’s trash is another man’s treasure”
    Be creative in thinking about your undiscovered assets!
  • 24. Yes, it’s legal, and it can take many forms:
    • Nonprofits can launch and operate a social enterprise and maintain 501(c)(3) tax status
    • Income Related to Exempt Purposes
      • Must be substantially related to exempt purposes
      • No limit on amount of revenue
    • Income from Unrelated Activities
      • Not substantially related to exempt purposes
      • Produces unrelated business taxable income (UBTI)
      • If less than 10-15% of budget, okay
      • If more, consider moving activity outside of nonprofit entity
    • There is no standard legal structure
  • 25. While there is no standard form, a few options include:
    • Nonprofit with 501(c)(3) tax status
    • Traditional for-profit structures including LLC, S-Corp, etc
    • L3C
    • B-Corp
    • Benefit Corporation