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oriented approach. The double bottom-line reduces the charity’s dependence on philanthropic support for funding while remaining true to its charitable purpose. If a charity contravenes the Canada Revenue Agency’s (CRA) policies, even inadvertently, it risks deregistration and the loss of 100% of its assets. Unfortunately, an overly-complicated and costly corporate structure is required to comply with an unclear definition of “linkage” in order for the charity to maintain its status with the CRA. Of course, any business may donate a portion, or all, of its profits to philanthropic causes. So, why the fuss about social enterprise when the ends can be achieved by various existing means? Purists claim that the social venture requires a new legal approach – one that purports to address a new social frontier. It avoids complicated legal constructs and streamlines the organization to allow it to do directly what it can otherwise only do indirectly under the current regime in Canada. In effect, the social enterprise wants to enjoy the benefits from both the business and non-profit worlds in one legal entity. As it stands, any such innovative philanthropic project might want to steer clear of the regulatory restrictions of charities and operate as (i) a for-profit corporation with a social purpose or (ii) a co-operative in order to retain flexibility. From a governance point of view, operating a business for a social purpose raises some interesting questions about the fiduciary duties of the directors of such a corporation. The Supreme Court of Canada, in the Peoples and BCE cases, made it clear that directors must consider all stakeholders when making decisions in order to satisfy their fiduciary duties to the corporation. This is in contrast to the Revlon rule in the U.S. that puts the shareholders’ interest to maximize financial returns as paramount to any other stakeholder in the same circumstances. Canadian jurisprudence makes it easier for entrepreneurs considering the use of for-profit corporations to achieve social goals. At the Symposium, the Canadian legal framework for social enterprise and social impact investing were described in detail by Zachary Euler, Technical Policy Advisor at the CRA’s Charities Directorate, Terrance Carter, Partner, Carter’s Professional Law Corporation, and Jan Lederman. Reforms in both the U.K. and the U.S. have attempted to consider the emergence of the social enterprise and accept it as a stand-alone entity. A new form of entity might be able to marry its mixed-motive of profit and socially-beneficial activities in order to attract external investment from socially responsible (sometimes self-described as “ethical”) investment (SRI) funds targeting blended-value returns. In addition to SRIs, programrelated investments are another way to get new initiatives funded and off the ground (i.e. in certain circumstances, U.S. federal law allows grant-making foundations to make debt or equity investments in socially-beneficial activities). At the Symposium, Thomas Kelley III, Associate Professor at the University of North Carolina (Chapel Hill) School of Law, introduced us to the social entrepreneurship trend in the United States and to how those projects have been executed. The Lowprofit Limited Liability Company (L3C) is one new legal form of social enterprise that has emerged in some U.S. jurisdictions. Other states have attempted, and failed, to create the Socially Responsible Business Corporation (i.e. Minnesota and Hawaii). However, a handful of states have either adopted or drafted Benefit Corporation legislation that gives for-profit corporations the ability to pursue a social mission while freeing directors to make decisions that are not solely profit-maximizing. More information about the Benefit Corporation, including model legislation, can be found online here: www.benefitcorp.net. 97 ROBSON HALL ALUMNI REPORT
FEATURE The social enterprise landscape contains various and sundry corporate forms. Some of these are: (i) For-Profit, Not-For-Profit, and “Not-For-Loss” corporations, (ii) Limited Liability Companies (LLCs), (iii) Community Interest Companies (CICs), and (iv) Certified B Corporations (not the new legal form referred to earlier but one that has been certified as “beneficial” to society by B Labs, a non-profit itself) that have all been used to fulfill the mandate of these unique transformational ventures. More information about the B Corp certification process and the mandate of B Labs can be found online here: www.bcorporation.net. New experiments in social finance from the U.K., such as social impact bonds, were outlined by Kenneth Dibble, Executive Director, Legal Service and Compliance, of the England and Wales Charities Commission. Front line perspectives on business strategies to implement social missions were given by John Baker, General Manager, Inner City Development Inc., Priscilla Boucher, Vice President of Corporate Responsibility at Assiniboine Credit Union, Terry Cooke, President and CEO of the Hamilton Community Foundation, and Rick Frost, CEO of the Winnipeg Foundation. An overview of the philanthropic sector and social finance in Canada was given by Tim Brodhead, former President and CEO of the J.W. McConnell Family Foundation, and Dr. Ilse Treurnicht, CEO of the MaRS Discovery District and Chair of the Canadian Task Force on Social Finance. The Symposium provided an excellent introduction to groundbreaking reforms in philanthropy and law. As the social enterprise trend continues to grow, it will be interesting to watch federal, provincial, and territorial responses, if any. It remains to be seen if Canadian legislators will take on the challenge of pioneering a new form of organization that (i) satisfies the needs of a hybrid entity and (ii) also complies with the policies of the CRA. Aleternatively, perhaps they could turn their minds to new social purpose financial instruments. Either way, there would be significant implications to the legal environment that regulates these novel initiatives. Stay tuned for news about the next Philanthropy and the Law Symposium. For more information Contact John Pozios Director, Marcel A. Desautels Centre for Private Enterprise and the Law & L. Kerry Vickar Business Law Clinic UNIVERSITY OF MANITOBA, FACULTY OF LAW robsonhall.ca 98
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FEATURE<br />
The social enterprise landscape contains various<br />
and sundry corporate forms. Some <strong>of</strong> <strong>the</strong>se are:<br />
(i) For-Pr<strong>of</strong>it, Not-For-Pr<strong>of</strong>it, and “Not-For-Loss”<br />
corporations, (ii) Limited Liability Companies<br />
(LLCs), (iii) Community Interest Companies (CICs),<br />
and (iv) Certified B Corporations (not <strong>the</strong> new<br />
legal form referred to earlier but one that has<br />
been certified as “beneficial” to society by B Labs,<br />
a non-pr<strong>of</strong>it itself) that have all been used to fulfill<br />
<strong>the</strong> mandate <strong>of</strong> <strong>the</strong>se unique transformational<br />
ventures. More information about <strong>the</strong> B Corp<br />
certification process and <strong>the</strong> mandate <strong>of</strong> B Labs<br />
can be found online here: www.bcorporation.net.<br />
New experiments in social finance from <strong>the</strong> U.K.,<br />
such as social impact bonds, were outlined by<br />
Kenneth Dibble, Executive Director, Legal Service<br />
and Compliance, <strong>of</strong> <strong>the</strong> England and Wales Charities<br />
Commission. Front line perspectives on business<br />
strategies to implement social missions were<br />
given by John Baker, General Manager, Inner City<br />
Development Inc., Priscilla Boucher, Vice President<br />
<strong>of</strong> Corporate Responsibility at Assiniboine Credit<br />
Union, Terry Cooke, President and CEO <strong>of</strong> <strong>the</strong><br />
Hamilton Community Foundation, and Rick Frost,<br />
CEO <strong>of</strong> <strong>the</strong> Winnipeg Foundation. An overview <strong>of</strong> <strong>the</strong><br />
philanthropic sector and social finance in Canada was<br />
given by Tim Brodhead, former President and CEO<br />
<strong>of</strong> <strong>the</strong> J.W. McConnell Family Foundation, and Dr. Ilse<br />
Treurnicht, CEO <strong>of</strong> <strong>the</strong> MaRS Discovery District and<br />
Chair <strong>of</strong> <strong>the</strong> Canadian Task Force on Social Finance.<br />
The Symposium provided an excellent introduction<br />
to groundbreaking reforms in philanthropy and law.<br />
As <strong>the</strong> social enterprise trend continues to grow, it<br />
will be interesting to watch federal, provincial, and<br />
territorial responses, if any. It remains to be seen if<br />
Canadian legislators will take on <strong>the</strong> challenge <strong>of</strong><br />
pioneering a new form <strong>of</strong> organization that (i) satisfies<br />
<strong>the</strong> needs <strong>of</strong> a hybrid entity and (ii) also complies with<br />
<strong>the</strong> policies <strong>of</strong> <strong>the</strong> CRA. Aleternatively, perhaps <strong>the</strong>y<br />
could turn <strong>the</strong>ir minds to new social purpose financial<br />
instruments. Ei<strong>the</strong>r way, <strong>the</strong>re would be significant<br />
implications to <strong>the</strong> legal environment that regulates<br />
<strong>the</strong>se novel initiatives.<br />
Stay tuned for news about <strong>the</strong> next<br />
Philanthropy and <strong>the</strong> <strong>Law</strong> Symposium.<br />
For more information<br />
Contact John Pozios<br />
Director, Marcel A. Desautels Centre for Private<br />
Enterprise and <strong>the</strong> <strong>Law</strong> & L. Kerry Vickar<br />
Business <strong>Law</strong> Clinic<br />
UNIVERSITY OF MANITOBA, FACULTY OF LAW robsonhall.ca 98
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