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36 N.Y.U. Rev. L. & Soc. Change 283 (2012)
Toward an Improved Legal Form for Social Enterprise

handle is hein.journals/nyuls36 and id is 287 raw text is: TOWARD AN IMPROVED LEGAL FORM FOR SOCIAL ENTERPRISE KEREN G. RAzt ABSTRACT Lawyers, policymakers, and social entrepreneurs are engaging in a vigorous debate regarding new legal forms for social enterprise. Some argue that commercial activity in the non-profit sector is not new and does not require a new legal form; others argue that new legal forms, including the Low-profit Limited Liability Company (L3C) and the Benefit Corporation, can meet the needs of social enterprise; and still others argue that new legal forms are needed. This debate has suffered, however, from a fractured understanding of foundational issues related to the meaning of social enterprise and the limitations of existing legal forms in facilitating it. This paper seeks to repair our fractured understanding of social enterprise by (1) clarifying what social enterprises are and how they differ from other organizations; (2) revealing what social enterprises require from a corporate form; (3) explaining how existing corporate structures, including the L3C and the Benefit Corporation, fall short in meeting those requirements; and (4) briefly considering the characteristics of a new legal form for social enterprise that will better facilitate the growth and success of these promising organizations. I. INTRODUCTION................................................. 284 II. FRAMEWORK: DEFINING SOCIAL ENTERPRISE AND IDENTIFYING ITS UNIQUE CHARACTERISTICS ................................... 287 A. Defining Social Enterprise: Four Core Characteristics....................287 B. Delving into the Definition: Exploring the First Two Characteristics of Social Enterprises......... ..............288 1. Social Enterprises Serve First and Foremost a Social Mission..289 2. Social Enterprises Accomplish a Social Mission Through the Use of Sophisticated Revenue-Generating Business Models t Associate at Paul, Weiss, Rifkind, Wharton & Garrison. Previously the 2010-11 NYU Law and Social Enterprise Fellow and co-founder of NYU's Law and Social Entrepreneurship Association. New York University School of Law J.D. 2010. I extend my gratitude to the following: Hannah Davis, Ben Cokelet, Andreas Zeller, and all other social entrepreneurs who provided enormous insights into the inner workings of their enterprises; Helen Scott and Gerald Rosenfeld of the NYU Jacobson Leadership Program in Law & Business; the NYU Catherine B. Reynolds Program for Social Entrepreneurship, and the editors at the NYU Review ofLaw & Social Change. 283 Reprinted with Permission of the New York University School of Law

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