Wednesday, August 3, 2011

Incorporating Social Ventures: A Rose by Any Other Name?

After moving the Wakulat|Law HQ to the Centre for Social Innovation - Annex this Spring, I have had the pleasure of meeting a very passionate and creative community of Canadian social entrepreneurs. I have also discovered there is a common question amongst a few early-stage ventures: what type of legal structure should I create?  I don't pretend to have a silver bullet to answer this question.  Moreover, even though greater thought is arguably being put towards this issue, it may even be more difficult to arrive at an easy answer as other jurisdictions are experimenting with an expanded menu of legal structures intended to allow entrepreneurs to meet financial, social, and environmental bottom lines.

What are my options?

In Ontario, your social venture has a variety of legal structures to choose from including for-profit, not-for-profit, registered charities, co-operative corporations or perhaps even a hybrid model. One emerging challenge facing social entrepreneurs is how to marry a straight for-profit business with a not-for-profit venture that is funded by its for-profit sibling. Unfortunately, there is not yet an easy path forward for these types of enterprises.

Perhaps the best advice that can be given is to focus on designing the business side of your venture. Ultimately, a business venture's legal structure will and should follow its business model. The legal structure should simply be a tool for accomplishing your goals. Deciding too early may lock you onto a path that won’t get you where you want to go.

Where can I get some more guidance?

Social entrepreneurs seeking some assistance in arriving at a legal structure could do worse than start their adventure by reading the following articles:
  • Legally Incorporating Your Social Venture: The MaRS Discovery District provides resources to drive innovation and assists you in asking some key questions about the activities of your venture.
  • For Love or Lucre: An article in the Stanford Social Innovation Review by a veteran social entrepreneur that provides a guide to the various options available in the U.S. Nevertheless, the issues raised can be extrapolated into a Canadian context.
  • Social Enterprise Legal Structure - Options and Prospects for a "Made in Canada" Solution: A survey of social entrepreneurs and social economy "experts" by the SFU Centre for Sustainable Community Development with the BC Centre for Social Enterprise.  It examined the prospects and potential drawbacks associated with pursuing a separate legal structure for social enterprise in Canada. 

Ready to Rock?
    Once you are in a position to move forward with establishing a legal structure for your social enterprise, it's time to have a discussion with a qualified lawyer to assist with the process. Wakulat|Law is at the heart of a legal ecosystem that can meet all your business law needs including incorporation, corporate governance, intellectual property, employment and tax law. We would be happy to have a brief introductory chat about how you are about to create positive change in your community.

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