Monday, November 9, 2009

Interesting Trend in Social Enterprise

I spend much of my time supervising my law school's Community Development Law Clinic, and this year we have seen a sudden increase in requests for legal assistance by a particular sort of social enterprise.  These organizations are combining sustainable agricultural practices (e.g., the development of small, organic farms) with public health programming (e.g., educational programs regarding diet and nutrition) and community economic development (e.g., attempting to revive a commercial strip in a moribund farm community by developing retail businesses that market goods --  primarily food products -- made from the organic produce).  I am not sure why we are being flooded with these requests this year; perhaps stimulus funding has become available to support these sorts of initiatives.

The task of advising these groups is particularly challenging for our clinic because we focus primarily on nonprofit law and these agricultural/public health/community economic development initiatives often straddle the line between for-profit and nonprofit.  In several instances, our first order of legal business is to counsel the client on what sort entity or entities they should form: nonprofit corporation, for-profit corporation or LLC, some combination of entities, or one of the new hybrid forms such as an L3C or a Socially Responsible Business Corporation.  We have found relatively few resources to help us in this task, save some brief (but well done) publications by practitioners such as Robert Wexler.  If anyone has good resources to suggest to help us counsel these social enterprise clients regarding proper entity choice, please chime in on this blog or contact me off-line at the e-mail address provided on the left hand column of the screen.


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I have a couple of papers that might interest you. One is called Social Enterprise: A Lawyers Perspective, and it covers the various issues that arise when comnsidering a non-profit, for-profit, joint venture or hybrid for social enterprise. I also have a new paper in which I discuss hybrid nonprofit/for--profit structures and the legal issues such as conflicts of interest, private benefit, UBIT, etc. that arise in these situations. It also discusses B Corps and L3C's in case those are of interest.

The first paper is on my firm's web site and the second is being finalized right now, but I'm happy to provide a copy to anyone on request. I do a lot of these deals, and these papers are my effort to help advance knowledge in the field.

Allen Bromberger
Perlman + Perlman, LLP
New York City

Posted by: Allen Bromberger | Nov 10, 2009 6:10:17 PM

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