Prioritizing Mission with a Mission-Protected Hybrid

This chapter describes how state legislatures could create a legal form of organization to brand trustworthy social enterprises. It identifies the two key components of such an organizational form, and explains how to implement them. It asserts that to brand adopting entities as trustworthy social enterprises, statutes must mandate that they prioritize social good. This will distinguish adopting entities from traditional for-profits and nonprofits, and enable reliable enforcement by identifying their primary objective. The chapter also argues that an effective legal form must contain multiple layers of enforcement. Along with adaptations of familiar disclosure requirements and litigation rights, it proposes a provocative new enforcement tool. If a social enterprise sheds the new form prematurely, or fails to meet its requirements, a percentage of its assets would be directed to a charity. Accepting the diversion of organizational assets to a mission-driven counterpart powerfully signals entrepreneurs’ and investors’ commitment.