Resource Library

This summary of the law is only a discussion draft intended to be revised during and after the Fourth Sector Legal Strategy Meeting on July 17, 2008. This draft is not an exhaustive list.

This brief summary of the law is only a discussion draft intended to be revised during and after the Fourth Sector Legal Strategy Meeting on July 17, 2008. This draft is not intended to be an exhaustive list and only includes laws affecting Fourth Sector organizations legally structured as for-profit corporations, non-profit corporations and 501©(3) charities. It does not include Limited Liability Companies, foundations, partnerships, trusts, and cooperatives.

The objective of this paper is describe how the nature of corporations can and should be reformed to make them an explicit instrument for building an efficient, equitable and sustainable society that is locally controlled. The paper traces how the current concerns over the role of the modern corporation arose from their origin as an explicit instrument of political and economic colonisation.

Understanding the legal framework through which hybrid organization attorneys and social entrepreneurs will view their social enterprise business plans.

The U.S. legal system largely divides organizations into two categories: for-profit and nonprofit. ... The overarching problem service organizations confront in the current binary system – in which social organizations are forced into one of two legal categories, for-profit and nonprofit – is one of access to capital. ... As a result, the nonprofit capital market is less disciplined than the for-profit capital market. ... A hybrid structure could address this problem by encouraging capital to flow more readily between like-minded organizations.

Using existing legal entities to establish hybrid arrangements.

The history and current support of value-driven organizations in the US and abroad.

Fueled by an explosion in federal spending for health and welfare programs, the nonprofit world grew rapidly in the 1960s and 1970s as a key partner with government in the delivery of social services. The eminent sociologist Amitai Etzioni called philanthropy the “Third Sector” for the important societal role it began to play alongside public bureaucracies and private enterprise. Now, some of the leading thinkers in the business and nonprofit worlds believe they see an evolutionary step in that decades-old model. They point to an emerging “Fourth Sector” of social enterprise organizations that combine charitable missions, corporate methods, and social and environmental consciousness in ways that transcend traditional business and philanthropy. This new generation of hybrid organizations is taking root in a fertile space between the corporate world, which is constrained by its duty to generate profits for shareholders, and the nonprofit world, which often lacks the market efficiencies of commercial enterprise.

How can corporations be designed so as to blend social, environmental, and financial mission at their very core? This is the design challenge of the 21st century.

Overview of recently proposed solutions to enabling Fourth Sector activity in the US and abroad.