For-Profit & Non-Profit Social Enterprises
Social Enterprise is the Simultaneous Pursuit of Profit & Purpose, or “Mission.”
At Bromberger Law, we have years of experience embedding mission into various social enterprise legal entities and transactions, counseling clients on the most effective ways to accomplish these complementary goals, and protecting mission over time.
Social Enterprise Company Structure
Using a combination of traditional legal forms and social enterprise legal structures (C corporations, B corporations, benefit corporations, limited liability companies, benefit LLC’s, LC3’s, partnerships, limited partnerships, nonprofit corporations, for-profit social enterprises, foundations, and cooperatives), modified to fit new priorities and circumstances, we help our clients adapt to new opportunities and circumstances successfully and deftly navigate change. Through social enterprise law, we help companies select the correct legal form and ownership structure for their ultimate objectives, including hybrid social enterprise company structures, strategic partnerships, and joint ventures. We help growing companies arrange financing, buy and sell assets, merge and dissolve, we help founders arrange exits, and we serve as outside general counsel - all while keeping purpose and mission in mind.
Our Legal Work With Social Enterprises
We work with change-makers, starting and growing businesses, financing them, leading them, inspiring them, and supporting them with cutting-edge legal methodologies. Doing business law for mission-oriented companies has become a highly specialized niche, so our firm is pleased to guide organizations as they navigate stakeholder relationships, strategic partnerships, and more. Among them are entrepreneurs, social investors, DAFs, family offices, business leaders, philanthropists, and advisors for larger companies adapting to new realities in the marketplace. Our expertise in governance and compliance is especially useful in these areas.
Our Services Include:
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New Enterprise Formation: Business Corporations, Benefit Corporations, Partnerships, and LLCs
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Create structures that support the simultaneous pursuit of financial and social objectives:
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Mission Protection
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Sales of Assets, Mergers, Dissolutions, and Exits
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Governance & Compliance
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Outside General Counsel Services
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Support for B Corp Certification
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Examples of some of our recent work include:
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Developed a for-profit socially responsible business that partners with federal programs to hire up to 50% of its workforce from a population of former substance abusers and formerly incarcerated persons, giving a “second chance” to people who are otherwise largely unemployable. The business has been very successful and is now in its third round of financing.
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Structured the successful spin-off of a for-profit social enterprise by a nonprofit. The parent nonprofit developed medical equipment for use in rural clinics of developing countries. The organization began by selling equipment to foundations who placed the equipment in clinics they supported outside of the U.S. However, other markets and customers came forward, and the company needed the freedom to grow independently. After separating from the parent nonprofit social enterprise company structure, the business has grown successfully, and the profits have been used to support the parent nonprofit’s mission.
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Structured a PRI for a private foundation, including term-sheet negotiation. Performing due diligence, drafting deal documents, and all steps to closing—the investment was successfully completed, and the company is growing its impact and finances.
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Closed a round of seed financing for a mission-oriented company in the food space, combining a benefit corporation with mission protections to operate the business and a foundation to carry out related charitable activities. Work included term sheet negotiation (including mission provisions), due diligence, deal documents, and closing pursuant to a regulatory agreement between them to guide their relationship going forward.
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Served as lead counsel for the integration of a fast-growing, tech-driven nonprofit to become a program of a much larger global nonprofit. This transaction was accomplished through an acquisition and execution of a series of intellectual property, management, and employment agreements. Negotiated legal, financial, and HR terms of all transactions led leadership team through due diligence and all legal steps. Advised board and followed up actively to successful completion.
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Negotiated the spin-off and sale of a media property from a mission-focussed nonprofit to a venture-backed media enterprise in exchange for access to a larger audience for the nonprofit’s content, reduced expenses, and a guaranteed revenue stream to fund future charitable initiatives.
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Assisted the founder of an asset management firm to convert to a “for-benefit” business form in order to devote a percentage of profits to charity, take advantage of certain tax efficiencies, and strengthen its relationship with its clients.
Bromberger Law is Committed to Building Social Enterprise Law Resources:
Impact Investing Term Sheets: How to Protect Mission - For forming a social enterprise deal, provisions relating to social impact, values, or mission, are important to impact investors and entrepreneurs alike. This resource recorded a panel discussing the use of the term sheet structure to identify, articulate, and enshrine social values and mission into impact investment transactions. Originally recorded at the Social Venture Circle Conference, building and serving communities of inspired and informed impact investors and business leaders to make social, economic, and environmental change for more than 30 years.
A New Type of Hybrid - Much to the chagrin of social entrepreneurs, U.S. law does not currently recognize any single legal entity that can simultaneously accept tax-deductible donated capital (charitable contributions and grants); invested capital (equity investment for which investors seek a market rate of return); and quasi-invested capital (such as loans or program-related investments [PRI] from foundations that are structured as investments but in which the funder has a strong philanthropic motive and neither expects nor demands a market rate of return). First written by Bromberger for the Stanford Social Innovation Review, this resource shares options.
Law in the Fourth Sector - In the field of combining non-profit social enterprise law and for-profit social enterprise legal structures, people have two goals: financial and social/environmental well-being. Sometimes, this is called the “4th sector,” and in Bromberger’s 35 years of legal practice, it’s moved from a fringe idea to a thriving pillar of our society and our economy. Bromberger co-authored the book “The Art of Social Enterprise: Business As If People Mattered” and was pleased to discuss his work, the skills it requires, and how these same ideals can build legal structures supporting changemakers for years to come.