Social enterprises mull tax-break push
Social enterprises that turn a profit to do good are being heralded as the next big thing at an international conference in Christchurch, but they lack proper legal status in New Zealand.
The Social Enterprise World Forum has attracted 1600 delegates.
Speaker Steven Moe, a lawyer who has written a legal handbook for social enterprises, said they need legal recognition of their special status.
Social enterprises are generally regarded as business ventures that trade to fulfil social or environmental goals, rather than to maximise profits to shareholders.
Moe said that in New Zealand they currently had the option of operating as a charity or a limited liability company, when a mix of the two would probably work better.
A company was not eligible for public sector funding, ‘‘and if they become a charity it’s almost impossible to get investors to put money in because there cannot be any private benefit’’, he said.
Moe would like to see a legal structure that required social enterprises to clearly state their purpose and report on their social benefit activities, with a cap on the level of dividends to investors.
Making the charitable portion of a business exempt from tax would also encourage more social enterprises.
‘‘If there was a structure that let you do everything a company does, and has the best bits of what a charity does, that would potentially be a world leader,’’ Moe said.
He also believes it’s important to recognise true social enterprises, possibly via an accreditation system, so that big businesses don’t abuse the term as a branding and marketing exercise. ‘‘I’m worried that the term social enterprise gets used as a way to sell more stuff.’’
The Akina Foundation supports social enterprises. General manager Louise Aitken said it had worked with more than 700 over the past year, ‘‘but we believe there’s 2000 to 2500 in New Zealand.’’
In July the Government announced $5.5 million in funding to research and develop social enterprises.
Aitken said promotion of the sector would help consumers identify organisations they might want to buy from, along the lines of the United Kingdom’s ‘‘Buy Social’’ brand.