An optimal framework for structuring social enterprises : the case for South Africa

Abstract

There is no recognised legal structure for social enterprises operating in South Africa and as a result many are running two or more legal entities. This has created confusion and skepticism in the market place, specifically when it comes to funding these enterprises. By using both qualitative and quantitative methods, this research study draws from a small sample to create an understanding of the dynamics that social entrepreneurs are faced with when choosing an appropriate structure. It then draws a correlation between South African social enterprises and those internationally in order to compare the revenue generated from earned income and grant funding. Furthermore, the research compares and discusses the correlations between the forprofit and non-profit social enterprises and how these compare with regards to generating revenue and sustaining their activities. It outlines some important principles of social enterprises which include that they: (1) are mission focused, (2) can access funding in order to scale, (3) earn sufficient income to sustain their operations and (4) provide a social return on investment. The research highlights both similarities and differences between the various entities and suggests an optimal framework for the South African context that guides social entrepreneurs, investors and funders of social enterprises.Copyright