Legal & Regulatory Requirements
For Non-profits and Social Enterprises

Non-Profits

Social Enterprises

Legal Requirements

Regulatory Requirements

Legal Requirements

Regulatory Requirements

Similarities

Differences

Have federal and state laws

Funds must be allocated for the purpose stated in the organizations charter

Cannot distribute excess funds to founders or employees beyond regular pay

Attorney General or State court of law can override board decisions

Write Charter and Bylaws of organization

Must file 501(c)(3) for tax exemption

Strict financial reporting guidelines

No lobbying or electioneering

Must pay taxes

Funding comes through donations, grants, loans, or earned income

Funding comes from equity investment, loans, or earned income

Pay employment tax

Monetary donations are taxed as income

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

Both have purposes to benefit a community

Taxation like VAT