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Social Enterprise Law: Trust, Public Benefit and Capital Markets

Online ISBN:
9780190249816
Print ISBN:
9780190249786
Publisher:
Oxford University Press
Book

Social Enterprise Law: Trust, Public Benefit and Capital Markets

Dana Brakman Reiser,
Dana Brakman Reiser
Vice Dean, Brooklyn Law School
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Steven A. Dean
Steven A. Dean
Professor, Brooklyn Law School
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Published online:
19 October 2017
Published in print:
13 October 2017
Online ISBN:
9780190249816
Print ISBN:
9780190249786
Publisher:
Oxford University Press

Abstract

Social Enterprise Law presents a series of audacious legal technologies designed to unleash the potential of social enterprise. Until now, the law has been viewed as an obstacle to social entrepreneurship, too inflexible to embrace for-profit businesses with a social mission at their core. Legislators have poured resources into creating hybrid corporate forms such as the benefit corporation to eliminate barriers to the creation of social enterprises. That first generation of social enterprise law has not done enough. The authors provide a framework for future legislation to do what benefit corporations have not: create durable commitments by social entrepreneurs and investors to balance financial gains and social mission by putting a speed limit on profits. They show how sophisticated investors need not wait for the advent of these legislative changes, outlining a contingent convertible debt instrument that relies instead on financial engineering to build trust between those with capital and those ready to use it to nurture a double bottom line. To allow social enterprises to harness the vast power of the crowd, they develop a tax regime that would provide crowdfunding platforms the means to screen the commitment of for-profit startups. Armed with these tools of social enterprise law 2.0 and the burgeoning metrics of measuring public benefit, entrepreneurs and investors can navigate even the turbulent waters of exit without sacrificing mission, so that a sale need not mean selling out.

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