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Legal & Regulatory Requirements For Non-profits and Social…
Legal & Regulatory Requirements
For Non-profits and Social Enterprises
Non-Profits
Legal Requirements
Cannot distribute excess funds to founders or employees beyond regular pay
Attorney General or State court of law can override board decisions
Must file 501(c)(3) for tax exemption
Strict financial reporting guidelines
No lobbying or electioneering
Regulatory Requirements
Differences
Owners of non profits are not personally responsible for debts of the organization but they are in social enterprises
Social enterprises allow owners to make a profit off their investment while still doing good for others where as non-profits are limited to the pay they can give.
Non-profits have more regulations
Funds must be allocated for the purpose stated in the organizations charter
Write Charter and Bylaws of organization
Funding comes through donations, grants, loans, or earned income
Social Enterprises
Legal Requirements
Similarities
Have federal and state laws
Pay employment tax
Both have purposes to benefit a community
Must pay taxes
Monetary donations are taxed as income
Regulatory Requirements
Funding comes from equity investment, loans, or earned income
Taxation like VAT
https://independentsector.org/programs/principles-for-good-governance-and-ethical-practice/principle-1/
https://www.hbs.edu/newventurecompetition/Documents/Legal%20Aspects%20Feb%202016.pdf
http://www.oecd.org/cfe/leed/37508887.pdf
https://makeanimpactcic.co.uk/2018/02/can-social-enterprises-accept-donations/