Social Enterprise - Parry Field Lawyers

Muhammed Yunus is a 2006 Nobel Prize winner who founded the Grameen Bank in Bangladesh which lends to entrepreneurs who cannot borrow under regular banks and founded the microcredit movement which focuses on moving families around the world out of poverty. He has recently published a new book titled “A World of Three Zeroes” which focuses on his vision for a kinder, gentler planet without poverty, unemployment or environmental devastation. A large theme of this is the positive impact that social businesses (or social enterprises) have on moving towards a better future.

Muhammed Yunus was interviewed by Wharton School of the University of Pennsylvania at the end of 2017, and we have noted a couple of stand-out points from the extract of that interview below:

Wharton: Do you see the number of social-impact businesses increasing around the world?

Yunus: I see it every day, every moment, because people really have that feeling inside of them. This is my thesis of what I promoted in the book. The capitalist system is based on an interpretation that human beings are driven by self-interest, meaning selfishness. That is absolutely the wrong interpretation of a human being. A real human being is not all about selfishness. A real human being is selfishness and selflessness at the same time.

You double up both sides, whatever strength you want to put in each side. That’s your upbringing, your schooling and so on. But you have two options, and you can do both. You can create business to make money for yourself – that’s a selfishness – and you can create business to solve problems, make other people happy in the world, protect the world. That’s a selflessness, and that’s a business that we create called social business.

Social business is a non-dividend company [meant] to solve human problems. We completely eliminate the idea of making personal profit in social businesses. We totally dedicate ourselves to solving problems. Now that the idea of social business is growing, young people are coming up with big ideas, big businesses are coming up to create social businesses alongside. I’m very happy about that. Hopefully, schools like Wharton will be teaching social business as a separate subject and also give social MBAs to young people who will be preparing to operate social businesses, manage social business, create social business.

Wharton: Why didn’t we see social businesses 50 years ago?

Yunus: We don’t have to blame ourselves for not seeing it 50 years back, but we must blame ourselves why are we not seeing it now… You see everything (and it’s) about dollars, how to make dollars. Why don’t you for a while take the dollar-sign glasses off your eyes and put on the social business eyes? Suddenly, you see lots of opportunity for people to come up with creative ideas, to solve the problems of the people. If we bring all of our creative energy of the whole world, all of these problems that we see every day will disappear.

Wharton: A lot of that will rely on the entrepreneurship and the mind-set that people have. They have to take incremental steps and build on it.

Yunus: And when you become an entrepreneur, you have two options. You can run a business to make money for yourself, or you can run a business to solve people’s problems. And you can do both. You can have a money-making business for yourself, and you have a social business for yourself, and you feel good that you are doing something that touches the lives of so many people around you.

The full extract of the interview is up on the Wharton website.

This encouraging interview reinforces the significance of the impact that social enterprises can have. We hope that these snippets from the interview inspire you, as they did us.

More information on the book, including a link to order it, can be found here.

We have a team at Parry Field who work in the Social Enterprise/Start-up sector who would be more than happy to assist or answer any queries that you might have. We also have a book that might be of interest – more information on this can be found here.

Contacts:

Steven Moe – stevenmoe@parryfield.com

Kris Morrison – krismorrison@parryfield.com

Keynote by Hon Peeni Henare.

Hon Peeni Henare – Keynote – Q & A session.

Three of us (Ken Lord, Kris Morrison and Steven Moe) will be going up to Wellington to participate in this conference. We have been involved in the organising committee for the last 6 months and Steven Moe will be moderating two sessions as follows:

Session 2: Are there too many charities in New Zealand

Cheryl Spain – The Gift Trust
Dellwyn Stuart – Auckland Foundation
Jamie Cattell – Charities Services
Kate Russell – Fundraising Institute of New Zealand
Sue Barker – Sue Barker Charities Law

Moderator: Steven Moe – Parry Field Lawyers

And

Session 9: Funding, social enterprise and the intersection with charities who operate businesses

David Woods – Whai Rawa Fund Limited
Levi Armstrong – Patu Aotearoa
Louise Aitken – Akina Foundation
Matt Dodd – Russell McVeagh
Michael Gousmett – Independent researcher and commentator on charities law

Moderator: Steven Moe, Parry Field Lawyers

The conference is being organised by the Charity Law Association of Australia and New Zealand (CLAANZ), Chartered Accountants Australia and New Zealand (CAANZ) and Parry Field (among others). Charities Services is also supporting this event.
The conference will focus on current topics of interest in fields of charity law and accounting.
The aims of the conference are to:
• inform and educate on important topics for charities
• strengthen links, contacts and collaboration within the sector community; and
• share lessons learnt and best practice that have worked for others, both within New Zealand and beyond.

We will report back on how it went!

We get many questions from start-ups, charities and social enterprises on what they need to consider when establishing themselves. This made us think – “why not put all our answers in one spot?!”

After the initial buzz of coming up with your great idea, the next practical stage can be quite overwhelming – particularly if this is your first time engaged in a start-up. This toolkit seeks to guide you through the process, informing you on different structures, key contracts, and highlighting the topics people often forget about.

The book covers a range of topics including:

how to set up a company;
specific guidance on social enterprise and not for profits;
fundraising;
liability and ongoing duties;
employment issues; and
includes a template of a non-disclosure agreement.

With the success last year of “Social Enterprises in New Zealand: A Legal Handbook,” we are excited to see the impact this book will have.

To get the ebook, click here.

The book launch, which includes a bit of a busking theme by Kris Morrison and Steven Moe can be viewed here

If you find this resource helpful then please consider joining us in spreading the word to others by sharing this page on social media or emailing the link to one or two other people.

We just released our new free ebook “Start Ups Legal Toolkit 2018” with a super fun and interactive presentation at Ministry of Awesome‘s “Coffee & Jam” in Christchurch, New Zealand – had a busking theme with a bit of juggling thrown in from Steven Moe and Kris Morrison!

For more info on the book click here

(If you’d like a free copy of the startups ebook mentioned here just email stevenmoe@parryfield.com – also check out our other free resources for startups at Parry Field and our other recent book “Social Enterprises in New Zealand: A Legal Handbook” at Change for Good)

Also mentioned during the presentation: Seeds: Talking Purpose Podcast Greenhouse Christchurch & Canterbury NZ

Social enterprises are everywhere right now. But what are they? And how do we make sure they are not just businesses exploiting a trendy term? Lawyer Steven Moe outlines how social enterprise can become a legitimate force for good.

When the poet Robert Frost published his most famous poem ‘The Road Not Taken’ in 1916, he certainly did not have the New Zealand social enterprise sector in mind. Yet the words that end the poem seem particularly apt in the post Social Enterprise World Forum environment that we find ourselves in:

“Two roads diverged in a wood, and I —
I took the one less travelled by,
And that has made all the difference.”

Social enterprises seek to make a change in the world by combining both profit and purpose. Anecdotally there is definitely a move towards this new way of thinking being applicable for both existing businesses and new startups.

But what does the social enterprise road actually look like and how do we know if we are even on it? What shape will the social enterprise sector now take here in New Zealand, after having its profile raised by the 1600 participants who journeyed to Christchurch from all around the world?

I think there are five critical questions we need to be asking to find the answers we need – whether we are participants, advisors, regulators or just curious (or cynical) about social enterprise.

What does it actually mean to be a social enterprise?

It’s one thing to raise your hand and say you want to be a social enterprise but quite another to take active steps towards becoming one. Because there is currently no special purpose legal structure for social enterprises (see below) there is no clearly marked out road, and no criteria that have to be met before you can start using that label. Yet surely we can agree it is more than just saying you are one that is needed – something more than mere spoken words.

I think we need to empower people who do want to make a proactive decision to set up (or transform into) a social enterprise by educating them about what that might involve. In my view there are three key elements that should be present:

First, an identifiable and explainable purpose beyond profit (it can be diverse – social, environmental or economic);
Second, a mission lock of some kind (the organisation has demonstrably committed to that purpose and communicates it clearly to others); and
Third, reporting on the actual tangible benefit to that mission/purpose (through distribution of profits, engagement with a particular disadvantaged group, fulfilment of purpose).

If you have those three elements in place then it is more likely that you are on the social enterprise road. Empowering people to take active steps to understand what being a social enterprise is will involve education. Australia is further down the road and has an excellent resource here.

What we really need is to develop our own resources in New Zealand, personalised to our situation. My own small attempts to kick-start the process have been a podcast (more details at the end) where I interview social entrepreneurs about what they do and why they do it, and a legal handbook and more tools for social enterprises here .

How do we ensure people don’t misuse the label ‘social enterprise’ to simply sell more stuff?

This fits with the answer to the last question like a puzzle piece. It’s all about education so that people can understand what the road less travelled looks like to ensure they are on it. There is a real danger that social enterprise becomes the latest trendy phrase used to sell more things which will damage the credibility of the sector. The world forum was excellent for shining a light on the individuals and organisations who are trying to do things a bit differently. We don’t want the ship to be hijacked by opportunists who add the phrase social enterprise to their existing business without having any of the three key elements described above. We also need to ensure that consumers learn to both ask questions and ask for accountability from those who are telling their Social Enterprise story.

How do we attract and educate investors about social enterprise?

The most critical factor for most new businesses is capital investment and social enterprises are no exception to that rule. As we move towards a world where companies combine purpose and profit, investors will increasingly take notice of the impact their investment can have. They even have a special term; “impact investors”. Yet there are differences to a traditional investment which is focussed on more than just returns on capital. What should they expect to see in terms of reporting and information about non-financial returns?

Helping investors to understand the right questions to be asking is yet another example of the education that is needed in this sector. One recent initiative announced at the Social Enterprise World Forum was the Impact Investment Network. It is intended as a way for people to learn more, connect with others, share news and events and provide tools and resources on the website here (free to join).

How do we advocate for new legal structures?

I think we need a tailored legal structure that takes the best of a company structure and the best of a charity structure and looks at other jurisdictions and we mix it all up to create something new. Rather than expand on that in detail here have a read of this earlier article to find out why, what and how this might be done.

I hope the new Government will exercise some real thought leadership in this area by seriously looking into this option, as it is a way to promote real change and would transform the scene for Social Enterprises.

Why is any of this important?

The world forum was akin to a mountain top view and now we get back to life back in the valleys where the wind doesn’t blow as strong to clear our thoughts and give us focus. Every kite felt like it would fly up there on the mountain. Why ask these sort of hard questions and not just stay living on the memory of the mountain top instead? Because this is the time where the hard work needs to kick in and we see if those kites will fly when we come down from the high places.

It is vitally important to answer each of the question above well, so that we can ensure that the Social Enterprise sector is constructed in a way that has strong foundations. If we fail to consider and work out what the answers are, then there will be lack of clarity from the beginning over what we are even talking about. Those of us involved in the Social Enterprise sector want to take that road less travelled, but we need to be clear about what being on that road actually involves in order to ensure we are traveling on it. Robert Frost ended his poem with the reflection, “that has made all the difference” – asking these questions and discovering the answers will ensure that in coming years we can offer the same conclusion.

Steven Moe is a lawyer at Parry Field Lawyers who has a podcast interviewing social entrepreneurs called “Seeds: Talking Purpose” and a legal handbook that is available for free if you email him at stevenmoe@parryfield.com.

This article by Steven Moe originally appeared on The Spinoff

Social enterprises often operate as limited liability companies, but new legal structures to govern them have been introduced in a number of countries. Lawyer Steven Moe argues we need these options in New Zealand.

In the classic children’s story by Hans Christian Andersen, an emperor is given new clothes which are invisible to those who are unfit to see them. So no-one dares tell him he isn’t wearing anything at all. That’s a bit like the current legal structures available for someone who has an idea to start a new venture which incorporates purpose beyond making profit – they are faced with a difficult choice. Do they become a company, which carries assumptions that it is for profit, with less focus on social good? Or a charity, which carries assumptions that it is not-for-profit, focusing on helping others.

Neither really fit a “social enterprise” the term used to describe businesses that act for both profit and purpose. Social enterprises combine entrepreneurial spirit with a strong dose of ‘heart’ as they work to make a real difference in our world. And it is not just part of a temporary trend. The 1,600 people who assembled last month in Christchurch at the Social Enterprise World Forum demonstrate that.

But how should social enterprises set themselves up? Would a legal structure created for these ventures help?

Let’s walk for a minute down each of the usual roads taken to map out that answer. Choosing a company structure has advantages because it is well known, and provides a return of profit to the founder through dividends or selling shares. Investors are easier to attract, although they probably won’t understand a business that exists for more than profit. And, in fact, directors may feel a legal obligation to maximise shareholder returns. While the purpose-driven company may solve a critical social or environmental problem, otherwise addressed by expensive government programmes, it will be hard to access any funding from that source as they will not be a charity, which is usually required.

Down the other fork in the road, a charity may offer the ability to access grant funding, although the danger is that it may come or go. People assume a charity is doing good, and an advantage that flows from such an assumption (if it meets strict charitable purposes) is that donations are tax deductible. However, despite years of a founder’s blood, sweat and tears – which every new venture requires – the founder will not be able to have private gain, apart from a market rate salary.

Neither option truly suits our social entrepreneur, a conclusion explored in detail in the recent Ākina Foundation paper about the inadequacy of current legal structures (check it out here). What would help is a “Social Enterprise Company”, a new legal structure which takes the best of both roads described above, as well as a dash of learning from Scotland, Canada and the USA where these structures already exist. Increased legitimacy would result as the purpose is baked into the DNA through clear statements in the constitution, reporting on how it is travelling (to prevent abuse), and the ability to return capped dividends to shareholders so profits go back into the purpose.

What’s the pitch to government on the case for change? We will end up with tax paying companies, that are also uniquely positioned to give back to their communities in ways that improve the environment, or care for disadvantaged social groups as they combine both making profit and acting with purpose. This new legal structure would ensure that when that light bulb moment happens, social entrepreneurs don’t need to reach for the number 8 wire in order to adapt, and then make do with the ill-fitting legal forms that currently exist. Social enterprises need ‘new clothes’ that fit better than the current legal structures we have.

All of us want to lead lives of purpose and meaning, and more businesses are seeking to position themselves in that direction as the old paradigms are tossed off the throne that profit and private wealth creation is king. New Zealand has the chance to be a true world leader through a new social enterprise legal structure that other countries would look to as an example, and which the next generations that follow us demand.

Steven Moe has a free e-book available, Social Enterprises in New Zealand. For a copy email stevenmoe@parryfield.com

This article by Steven Moe originally appeared on The Spin Off

Parry Field Lawyers are pleased to release “Social Enterprises in New Zealand: A Legal Handbook” by Steven Moe. The book is a first of its kind and is intended to resource the Social Enterprise sector with useful information relevant for Social Enterprises. It is available as an eBook or a printed copy.

The 100 page book features and introduction by Alex Hannant, the CEO of Ākina Foundation and covers a range of topics such as:

what Social Enterprises actually are;
the different forms of legal structure they can take in New Zealand;
options for reform of the Social Enterprise sector; and
useful information for Social Entrepreneurs.

To get the ebook click here

Printed copies will also be available to those who would like one with a suggested donation of $5 to the Parry Field Charitable Foundation (you can learn more about that registered charity here).

Comments from a few advance readers are set out below.

If you find this resource helpful then please consider joining us in spreading the word to others by sharing this page on social media (see icons above) or emailing the link to one or two other people.

Comments from advance readers of the book:

This is one of the clearest and succinct summaries of issues around Social Enterprise I have read. It is a great resource for those entering into Social Enterprise and a good reference for those already involved.

Peter Townsend
CEO, Canterbury Employers’ Chamber of Commerce

Social Enterprise is becoming increasingly important in New Zealand as we work to solve our complex social and environmental issues. This handbook is an excellent starting point for anyone interested in learning more about social enterprise. I hope it will stimulate discussion and understanding of what is a very exciting opportunity for social and economic development in our country.

Louise Edwards
Chief Executive, Rātā Foundation

Our world has changed. It is now time for New Zealanders to take social enterprise and social impact seriously. This book clarifies the meaning of social enterprise and begins to show organisations how they can have a real positive impact on society. It is an excellent start to enable us all to move collectively to a new way of doing business.

Dr Rachel Wright
Director, Centre for Entrepreneurship
University of Canterbury

A great starter booklet for those wanting to get a basic understanding of social enterprise and the issues and opportunities for making it blossom more fully in New Zealand.

Dr James E. Austin
Eliot I. Snider and Family Professor of Business Administration,
Emeritus Co-Founder Social Enterprise Initiative Harvard Business School

I found Steven Moe’s book both interesting and valuable and believe it will stimulate discussion and further progress in this important area of social and economic development. A strong economy that marries sound business practice with social purpose will mean a more resilient New Zealand.

Dr. John Vargo, Executive Director
Resilient Organisations Ltd

This clearly written handbook is full of practical guidance and thought-provoking insights for social entrepreneurs and their advisers.

Professor Matthew Harding
Chair of the Charity Law Association of Australia and New Zealand

Steven Moe’s book serves to demystify the fast growing social enterprise sector, making it more accessible to both the practitioners and the curious. There is an unnecessary divide between the purely commercial and the charitable, and when they come together some of the most challenging social and environmental issues can been solved and we getting a little bit closer to building a more diverse and inclusive society, where everyone has the opportunity to participate on an equal basis.

Michelle Sharp, Chief Executive Officer
Kilmarnock

Excellent answers to common questions facing the growing number of humans waking up to the new way of thriving in business. I’m excited about the time when this is a history book, marking the time when global business began the paradigm shift to all business being ‘business for good’. Thank you Steven for being a powerful part of this change in New Zealand.

Kit Hindin, Start-Up Activator
Ministry of Awesome

I think the book will make a very valuable contribution to the emerging discussion about social enterprises in New Zealand, and how we can create a better eco-system that will allow them to flourish. I commend the book to anyone who is interested in exploring how we can remove barriers to finding innovative solutions to some of New Zealand’s pressing problems.

Susan Barker
Co-author of The Law and Practice of Charities in New Zealand,
Director of Sue Barker Charities Law, Wellington

At last a lawyer’s perspective on the social enterprise sector in New Zealand. Steven Moe’s book provides valuable and useful information for social enterprise practitioners on how to approach the messy legal and regulatory environment faced by the sector. It is a welcomed addition to New Zealand’s social enterprise literature.

Lindsay Jeffs, Director
Social Enterprise Institute

This is an excellent resource for the growing social enterprise sector in New Zealand! Parry Field are leading by doing, which is what this sector needs most right now.

Camia Young
Founder of Ohu Development

An easy to read book that touches on key topics that will surely stimulate a lot of discussion at both theoretical and practical levels among the New Zealand Social Enterprise community.

Dr Sussie Morrish, Associate Professor of Marketing
Department of Management, Marketing and Entrepreneurship University of Canterbury

Steven Moe has written a very readable, practical and accessible primer for all those interested in driving social change in New Zealand through the application of sound business principles. I congratulate Steven on his proactive leadership and heartily recommend his legal handbook, “Social Enterprises in New Zealand,” to social enterprise stakeholders in New Zealand and throughout the world.

Marc J. Lane
Author of “The Mission Driven Venture: Business Solutions to the World’s Most Vexing Social Problems.”
The Law Offices of Marc J. Lane in Chicago.

This is a landmark piece of work for the emerging social enterprise scene in New Zealand. This resource will be a great conversation starter to help build this community in NZ. Great leadership on the start of this journey. Kapai!

Tim Jones
Grow Good/ B Corp Ambassador

A big change that we have seen over the last few years is with the number of people looking to include values and a purpose within their early stage enterprises. Often these entrepreneurs don’t have the knowledge of the legal options and this “legal handbook” will not only reduce time spent but also minimize costly errors. The handbook also gives a great overview on a number of questions which are important for New Zealand to tackle over the next few years.

Geoff Brash
Founder, GBJ Innovation
Organiser/Facilitator/Mentor, Startup Weekend

An excellent “Field Guide” to social and business structures; what they are and how they work. Steven outlines a path through a very complicated maze of options. Disruptive technologies (exponential and otherwise) are having a significant impact on traditional structures. It is time to rethink how social focus can be most effective.

Rob Lawrence, R & D Specialist
Canterbury Employer Chamber of Commerce

Social Enterprises are becoming an increasingly popular topic of conversation. But with a variety of different meanings attached. Steven Moe provides a very helpful attempt to add clarity to our conversations, to explore some creative options and to point us to some helpful resources.

Alistair Mackenzie
Teaching Fellow, Laidlaw College
Author of “SoulPurpose: making a difference in life and work”

This helpful text comes at an exciting time for social enterprise in New Zealand. We need to use this opportunity to talk about the path of existing social enterprises and about the possibilities across the social enterprise spectrum. We need to help the current not for profit sector gain the skills and experience to explore enterprise. And we need to understand the role of the private and philanthropic sectors in providing capital and support.

Jenn Chowaniec
Trust Coordinator, Wayne Francis Charitable Trust

The label ’social enterprise’ seems to be very ‘on trend’ at the moment – however defining a ’social enterprise’ still remains reasonably elusive. In a country where many businesses have always operated in a socially good way without seeking recognition or formalising business models – this book will help us look at our unique way of doing business and I hope gather conversation to ensure our communities and governments insist Aoteoroa not only does ‘business for good’, but is a leader in the business transformation.

Jo Blair
Founder of Brown Bread

This is an incredibly poignant time to really kickstart this conversation: Canterbury is full of talented and dedicated people working in the ‘social enterprise space’, but oftentimes without a legal structure that really works for them. As leaders, customers, volunteers and commentators in this space, we have all grappled with this particular question – so we’re fortunate to have this piece of work aggregate some of the common opportunities and challenges to enable us to move forward. Onwards and upwards!

Erin Jackson
Director, Narrative Campaigns

This is a “must have” for anyone looking to start up their own social enterprise. It’s a great snapshot of the Social Enterprise legal landscape leading up to the 2017 SEWF and I can’t wait to see what opportunities exist for Aotearoa New Zealand afterwards.

Anthony Rohan
Enspiral Accounting

This book pulls everything you need to know to set up a social enterprise from a legal perspective in a way that is easy to read and understand. It will serve as a reference point for much of our decision making and is a must if you are setting up in social enterprise.

Rebecca Parnham
Co-founder, Krama & Co.

Social enterprise is the future, and this book provides a great launching point for practitioners and their advisors. Thank you for providing this insight and snapshot, Steven!

Anna Guenther
Chief Bubble Blower & co-founder
PledgeMe, a crowdfunding social enterprise

Around New Zealand, there are hundreds – if not thousands – of charities, entrepreneurs, communities, and whanau, investing their time, energy, passion, and resources into social enterprise. They are doing this as a means to end. A means to include more people in the economy, to regenerate the environment, to create and redistribute resources, and to innovate around intractable problems. To say, ‘we are empowered, equal, creative, caring, determined, optimistic, and we are taking charge of our future’.

Social enterprise can do all of these things and represents a systems solution to many of the complex challenges we face. Social enterprise is business but it is business in service to people, conducted in a very human way. It is also a movement that is growing, global, and entirely relevant to the fast changing world we’re moving into.

The individual social enterprise work going on in New Zealand is excellent; world-class. But what we have lacked up until now is the connectedness, intention, knowledge, and coherence that will make our collective effort more productive and powerful. We have lacked the presence of an identity, the guidance of good information, and the grunt of a supporting infrastructure.

This report helps to start solving this problem, giving sound advice and informed guidance for people finding their way in social enterprise as doers, supporters, or customers. It comes at a time when exciting progress is being made across our emerging sector, and contributes to a more strategic approach to building a world-class environment for more social enterprises to startup and succeed.

Ākina’s mission is to contribute to a sustainable, prosperous, and inclusive New Zealand through the growth of social enterprise. We applaud and welcome important resources such as this, which will help bring about these goals.

To access the book click here!

Alex Hannant

CEO of Ākina Foundation

Christchurch CBD

Christchurch

Rolleston

Hokitika