The Social Enterprise Legal Advocacy Working (LAW) Group was established by NESsT to foster an enabling regulatory environment for social enterprises in emerging market countries.

Any initiative to encourage social enterprise in a country must be based on a clear understanding of the legal and tax implications of such efforts and the overall regulatory environment governing them. However, the regulatory environment for social enterprise is a largely undeveloped area in the nonprofit law in most emerging market countries.

Since 1999, NESsT has worked to increase awareness among nonprofit leaders and policymakers about the current policy and regulatory (legal and tax) framework for social enterprise and the changes necessary to foster such activities in emerging markets.

Goals

The Social Enterprise Legal Advocacy Working (LAW) Group builds on NESsT efforts to promote best practices in social enterprise law. NESsT is working with colleagues across Europe, Latin America and the USA to achieve the following goals:

• to increase awareness among policy-makers and regulatory bodies of the multiple benefits of social enterprise (e.g., for the development of civil society, community and economic development, employment creation, and addressing the needs of disadvantaged and marginalized communities);

• promote international cooperation and peer sharing of best practices among professionals in the accounting, law and tax professions in order to develop policy and advocacy strategies that foster social enterprise.

• promote greater accountability and transparency among social enterprise practitioners in order to build confidence in the social enterprise field among donors, policymakers, and the public at large.

1. Social Enterprise Legal Guides & Briefs

The Social Enterprise LAW Group has worked actively in over 10 emerging market countries to produce legal guides/briefs that help nonprofits understand the legal and regulatory framework for social enterprise in their country; their rights and obligations under this framework; and the opportunities and obstacles that exist for social enterprise development.

Each NESsT legal guide is an in-depth 40+ page resource that includes an overview of the current state and municipal laws and statutes: explains the legal and tax regime that governs social enterprise activities, how such activities will affect an organization’s nonprofit status, how such income should be reported, or how it is taxed. The country-specific guides provide an assessment of:

- what the current local laws specifically state about CSO commercial activities;

- how the current law is/has been interpreted;

- effects of the law on the nonprofit sector; and

- recommendations for policy improvements.

Each NESsT legal brief is a 2-3 page abbreviated version of a legal guide aimed at providing social enterprise practitioners with a brief summary of the current legal framework for social enterprise in their country.

NESsT has completed the following legal guides/briefs*:

* as of August 2007.

2. Hybrid Project

Varous legal forms and models exist for incorporating social enterprises worldwide -- some traditionally 'for-profit' in constitution, others traditionally 'not-for-profit' -- and each with different benefits and costs. For many social enterprise managers, determining the legal form that is best for their particular case and type of business can be difficult given the lack of clarity in the law in many emerging market countries and the limited legal guidance available to them.

In 2003, NESsT began work with select Social Enterprise LAW Group partners to examine the various legal forms for registering social enterprises and the pros and cons for each -- addressing issues of ownership, control, distribution of profits, etc. The objective of the "Hybrid Project" is to provide guidance for social enterprise practitioners to help them assess what legal form (or combination thereof) might best serve the interests of the CSO and the particular nature of the the type of social enterprise they are undertaking.

The Social Enterprise LAW Group working on the 'hybrid project' includes accounting, legal, tax and nonprofit experts from several countries.

3. Social Enterprise LAW Group Partners

In order to produce each legal guide/brief, NESsT works with existing legal organizations and experts familiar with nonprofit and commercial law in each country. To date, through the Social Enterprise LAW Group, NESsT has cooperated with the follow organizations and individuals:

- European Centre for Not-for-Profit Law (ECNL) (Budapest, Hungary)

- Fundación Pro Bono

(Santiago, Chile)

- International Center for Not-for-Profit Law (ICNL)

(Washington, DC)

- PIC (Legal Information Center for Nonprofit Organizations) (Ljubljana, Slovenia)

Individual attorneys:

- Nilda Bullain, ECNL (Budapest, Hungary)

- Lenka Deverova, Lawyer (Prague, Czech Republic)

- Peter Handiak, Lawyer (Bratislava, Slovakia)

- Juan Carlos Jaramillo, Director of the Legal Department, Fundación Social (Bogota, Colombia)

- Maria de la Luz Melo, Lawyer (Santiago, Chile)

- Felipe Viveros, Law Faculties, Diego Portales University and Bolivariana University (Santiago, Chile)