Finding the Balance between Profit and Purpose: Should Australia Create a Legal Structure for Social Enterprise?

Social enterprises take a line that falls somewhere between traditional commercial enterprise and not-for-profit organisations: their primary aim is not to make profits for shareholders but to reinvest a large proportion of profits to further a social or environmental mission. In some countries new legal business structures have been developed to facilitate this kind of enterprise and to clarify the governance model and duties of directors of social businesses. This article explores whether Australia should consider implementing a legal structure dedicated to social enterprise. It reviews data on the legal structures currently chosen by social entrepreneurs in Australia and compares this to the situation in the United Kingdom and United States where new hybrid corporate forms are available. It concludes that there is no immediate need for legislative intervention, as companies are able to voluntarily commit to a social mission and use certification schemes to signal their intentions to stakeholders.