Social Enterprise Legal Models

The Social Enterprise Legal Models Working Group (LMWG) – which was originally convened by Centre for Social Impact as part of the Social Innovation, Entrepreneurship and Enterprise Alliance (SIEE) – has been operating as a working group chartered to investigate the issue of social enterprise business models/legal structures. The coordinator of the group has been Alan Greig a Board member of EOA, representing EOA on the SIEE. The Group’s Chair is Malcolm Rodgers, PSM, a former Director of Market Regulation in ASIC and an expert on corporations law.

You can see our most recent training session on what to consider when setting up a legal model for a social enterprise.

The breadth of social enterprise ‘types’ is well described in the Social Enterprise Manifesto that the SIEE has produced.

The LMWG has now produced a Final Report with a number of recommendations regarding the need to approach legal structures for social enterprise as a strategic business issue, particularly with regard to accessing adequate capital.

The report also considers – and extensively reports on – the range of social enterprise structures being legislated for in other countries, including the “community interest company” (CICs) in the UK and the “for social benefit corporation” in the US. For example, there are nearly 11,000 CICs in the UK following the introduction of this legislation in the UK in 2005, many of them employee owned.

(For more information on  this, see our work on creating aCommunity Interest Company structure in Australia)

For an excellent study on the topic of legal models for social enterprises – one that was used as background by the UK Cabinet Office for the development of the community interest companies legislation in the UK –  see the report “Private Action, Public Benefit: Organisational forms for social enterprise (2002).”

Australia is way behind other jurisdictions in the development of legal models/structures for social enterprise. On this, the LMWG has produced a Summary”  of legal models applying in other countries.

The LMWG is also actively promoting research on these developments and is undertaking educational work on the issues involved. In this regard, it has developed a  Legal Models Comparison Matrix as an educational tool to assist with the identification  of legal forms in Australia and the choices involved therein for social enterprises. The matrix is now in the process of being  distributed to social enterprise intermediaries and their business advisors, as well as to those enquiring about starting up social enterprises. The general public will find it useful as well.

While not specific to the employee owned form of social enterprise, the LMWG is involved in considerations being given to those high profile social enterprises in other parts of the world that are employee owned, especially Sunderland Home Care Associates in the UK (Social Enterprise of the Year in that country in 2006) and Cooperative Home Care Associates in New York (Best for the World “B-Corp”).

An Australian version of this employee owned social services model has also recently started up – see the Australian Independent Living Enterprise trading as Cooperative Home Care.

There will be a public webinar on the topic on the 18th of February, for the details see Webinar- Starting out in social enterprise? What legal structures are possible?

The LMWG in continuing activity in this area will add to this page as further work is issued or seminars are undertaken.

Alan Greig
Board member, Employee Ownership Australia Ltd, and
Co-ordinator, Social Enterprise Legal Models Working Group
Email: ahgreig@bigpond.com

Related pages: Public Service MutualsEmployee Buyouts

Testimonial:

“I’m late to the party here but I want to say many thanks for this excellent material. I get asked questions about different legal entities on a daily basis. This is incredibly useful – for SEFA as well as for our clients. Thanks!”

Ben Gales, Chief Executive Officer, Social Enterprise Finance Australia

Resources:

“High Performance in Social Care in the UK”Dr Guy Turnbull talks at Social Care Expert Forum in Canberra Australia about high performance in Social Care in the United Kingdom.

Building the ‘New Economy’ With Sustainable Social Enterprise”

Excellent UK based web-site on legal issues/choices for start-up social enterprisesGet Legal

Why Share Ownership”, presentation to the Social Enterprise World Forum, Melbourne, 2009

Workshop for aged and disability care workers on employee owned cooperative home care services delivered in Sydney in late 2014 (Youtube, 56 minutes).

Social Investment Made Simple  – a short guide to the breadth and variety of financing mechanisms for social enterprise.

Another key, short document in terms of describing what social enterprise is that from SEUK called What Makes a Social Enterprise A Social Enterprise”.

Cooperative Checklist – Employee owned cooperatives – Governance Checklist under Australian Cooperative Law

EOA’s submission to the Senate Enquiry on worker owned Mutuals and Cooperatives  (July 2015)

Submission to the Review of Crowd Sourced Equity

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