In recent years, nonprofit organizations have recognized the importance of diversifying their strategies for pursuing activities that seek to address some of the world’s most pressing social, environmental, and economic issues. One approach has been to work through a for-profit social enterprise, defined as a business with specific social objectives as its primary purpose. Social enterprises leverage the power of business in the global marketplace to create dignified jobs, multiply resources, and provide for families and communities with the purpose of transforming people and societies economically and socially. As for-profit vehicles that seek to maximize profits while maximizing benefits to society, social enterprises also allow business professionals to use their gifts of entrepreneurship and management to create viable, sustainable and profitable businesses that achieve a range of societal goals.
Unlike purely charitable (not-for-profit) organizations that must rely on donations to fund their activities (making them subject to stringent government oversight), social enterprises operate as for-profit entities funded by the revenue they generate and are governed by corporate and business laws. Generating a sustainable revenue stream is critical and differentiates a social enterprise from a traditional charity. Thus, it is important to develop a business plan that demonstrates a likelihood of financial success.
This can be a particularly attractive approach in South Asian countries, where the regulatory framework may be less conducive to activities that are primarily charitable in nature. By establishing one or more US entities to pursue specific business objectives through collaboration with a foreign company, it is possible to engage in work that focuses on holistic transformation and impacting people and nations while obtaining financial returns to sustain business operations.
Some organizations use social enterprises to deliver specific products or services in needed areas, such as clean water or health care services, while others focus on the holistic benefits conferred to individuals taking advantage of the employment opportunities offered by the social enterprise. A US entity can leverage this model in its strategy through commercial arrangements with a social enterprise that has a similar mission. By delivering both a social and financial bottom line, social enterprises can provide entrepreneurs with a plan for long-term growth and impact that benefits a multitude of stakeholders.
To learn how we can assist you in establishing a social enterprise or exploring business solutions to social problems, contact the DSA Group at jlee@devsourcing.com.
Disclaimer: This material is provided for informational purposes and does not constitute legal advice. Access or use of this information is not intended to create, and does not constitute, a lawyer-client relationship. No portion should be acted upon without first seeking legal counsel about your specific legal situation.