Working document, prepared by
Ann-Kristin Achleitner, Andreas Heinecke, Mirjam Schöning, Judith Mayer, Abigail Noble
Foreword
Social enterprises, which have as core to their strategy the goal of addressing the most pressing problems societies face, often must balance both financial responsibilities and social impact, coordinate among multiple stakeholder groups and consequentially navigate complex trade-offs.
Governance of a social enterprise, if incorporated well, helps safeguard the mission of the social enterprise while allowing the management team to meet the demands of the variety of stakeholders, including investors, employees, clients or beneficiaries, as well as to comply with public policies and regulations. Furthermore, governance is a mechanism to strengthen leadership and to empower stakeholders, which increases their motivation to contribute to the development of an organization. Furthermore, incorporating stakeholders is a way to make decisions that display their interests. This ensures acceptance by key external stakeholders
and thus, facilitates smooth operations and optimal impact of the social enterprise. Yet, few social enterprises use governance as a means for their social enterprise to reach its highest potential. Likewise, board members often feel that they have more to offer than the social enterprise currently engages them. The time and effort spent by management teams to create and maintain the right governance mechanisms for their social enterprise can save valuable “trial and error” time in building and scaling their organization, extend the
organization`s fundraising capacity and expertise network most easily, and ensure that the organization does not make costly mistakes given the regulatory, legal and financial environments.
This document offers social entrepreneurs an opportunity to evaluate the needs, focus and personality of their social enterprise with the goal of determining which systems, processes, mechanisms and structures of governance will help their organization to achieve its goals. It offers practical advice on how to design governing boards and committees, what can be done with existing structures once set up to ensure they best serve the social enterprise, and how to transition effectively the governance structures as the needs of the social enterprise change.
The view of the authors is that no one governance mechanism fits all social enterprises; rather governance should be dynamic and adapt to the changing needs of the management team, the operating and regulatory environment, and the larger goals and vision of the social enterprise over its lifespan.
- For more information, contact: Abigail Noble (abigail.noble@weforum.org), Schwab Foundation for Social Entrepreneurship, or Judith Mayer (judith.mayer@wi.tum.de), Technical University of Munich -
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