New status explored for social enterprise

While many attendees at a recent roundtable discussion agreed that creating a new legal and tax status for social-enterprise for-profits would be beneficial, others questioned the feasibility of such federal changes, a new report says.

The conversation was designed to explore ways to support the growing number of “hybrid” organizations, or groups that combine philanthropy with traditional business practices and currently must adhere to tax laws that do not recognize their social impact.

Held in September of 2006, the discussion was hosted by the Nonprofit Sector and Philanthropy Program of the Aspen Institute and included founders and heads of social-enterprise groups, as well as attorneys, and finance and tax consultants.

The roundtable concluded that creating a clearinghouse of publicly available information on such hybrid organizations would foster experimentation with new ways of structuring and financing such groups.

And many believe creating a new tax status for businesses with underlying social missions would encourage greater societal contribution.

At the same time, some attendees acknowledged that changes to the federal tax code are unlikely.

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