Pursuing Profit And Purpose: Towards A Hybrid Legal Structure For Social Enterprises In New Zealand

Abstract

The social enterprise movement is gaining momentum in New Zealand. Social enterprises are hybrid organisations that use business models to create social and environmental value. This relatively new approach to doing business is becoming increasingly important as New Zealand works to solve some of its most complex and pressing social and environment issues such as poverty, unemployment and climate change. However, the current legal structures available in New Zealand have been identified as creating a barrier for social enterprises. These structures force entities to have only a single primary mission. This paper posits that whilst the charitable trust and limited liability company forms have the flexibility to be adapted and combined, they continue to create an uncomfortable existence for social enterprise. This paper investigates whether a new legal structure specifically designed for social enterprises should be introduced in New Zealand. It analyses the features of the hybrid legal structures available in the United Kingdom and in the United States. Drawing from these examples, this paper observes that giving legal recognition to social enterprise, as a distinct entity, will bring legitimacy and favourable recognition to their business, thereby enabling and supporting more organisations to pursue profit and purpose, which will directly benefit all New Zealanders.