Publication Date

2023

Abstract

Social enterprises-nonprofit and for-profit businesses that use market-based strate­ gies to achieve social change for marginalized populations-demonstrate a new para­ digm for doing business in the United States. The Sarbanes-Oxley Act of 2002 ("SOX"), which transformed financial reporting and heightened internal controls for public com­ panies, has, perhaps unintentionally, also had an outsized influence on the development of social enterprise governance. The primary impact of SOX is found in the state-level auditing and reporting reforms imposed on large nonprofits. Moreover, "benefit re­ ports," the lynchpin of social enterprise state legislation, also mirror the SOX emphasis on transparency through third-party assessment. This article outlines those reformist and legislative SOX-inspired efforts targeting the mission-driven sector, within which nonprofit and for-profit social enterprises reside. This article also explores how social enterprise governance could further develop by learningfrom twenty years of SOX suc­ cesses, criticism, and legislative modifications.

Document Type

Article

Publication Title

Business Lawyer

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