Social Enterprises as New Types of Nonprofit For Profit Companies

 home-make-stand-ardsNew Orleans     According to Professor Steven Davidoff of Ohio State more than one-third of the states now have a special designation for corporations wanting to establish themselves as social enterprises.   In Louisiana, they are called L3C corporations meaning Low Profit Limited Liability Corporations.   I read Davidoff’s “Deal Professor” column in the New York Times with interest because when we were trying to find alternate, sustainable ways to support ACORN International’s global community organizing program and purchased New Orleans’ only 100% fair trade coffeehouse, the Fair Grinds Coffeehouse, I just happened to see this category at the Secretary of State’s website as I registered ACORN Global Enterprises, so jumped at the chance.   Later I was informed that we were perhaps the first and only taker for this offer in Louisiana, but I fail to believe that could be possible.

            Davidoff  detailed the story of a fair trade lemonade purveyor called Make a Stand which set itself up on a similar basis in the Washington state and has gotten 128 stores to carry its good so far.   Similar to Fair Grinds, 5% of its gross goes to its causes which for them mean donations to five charities fighting child slavery, while ours are ACORN-affiliated community organizations in Latin America which is also where we source our coffee. They don’t make a profit, and neither do we, nor are they paid, same here of course.   It’s actually hard to make a profit in a low margin business when 5% goes off the top, which means subsidizing the operation with labor and love.

            Davidoff wonders if such experiments can create new corporate forms that will make more for their causes than traditional nonprofits, and these are interesting questions, though perhaps not the right ones.  Money that looks “free” from foundations and others along with the narcotic of tax exemptions will always be more enticing for many than the struggle to build social enterprises which couple hard work with charitable drive.  There just aren’t many incentives.

            There are some though which are powerful and compelling.  Best is sustainability itself for the mission.   You can’t beat that in terms of creating funding support vehicles that can give organizations the freedom to do what has to be done and needs to be done without fear of funding reprisals.  That may not be the kind of incentive that creates a new corporate model in the professor’s terms, but for organizers I would argue that along with membership dues it is as close as it comes to lifeblood for long term survival and growth.  

            So why not!

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