The Governance of Social Enterprises

The document outlines a framework for the governance of social enterprises, focusing on the strategic role of boards in providing oversight and support. It details how governance structures should evolve across an organization's lifecycle—from start-up to maturity—and offers options for board structures based on organizational complexity, such as one-tier, two-tier, or hybrid models. The guide emphasizes the importance of aligning investor interests with the social mission to prevent 'mission drift' and provides criteria for recruiting board members based on expertise, stakeholder representation, and network access. Additionally, it defines the distinct roles of the CEO and board chair, suggests reporting cycles for transparency, and includes tools for board self-assessment and conflict-of-interest management.

• Governing boards serve two complementary primary responsibilities: support and oversight. Support involves acting as "sparring partners that provide strategic guidance", providing "access to their networks", and serving as "ambassadors for the mission". Oversight focuses on "safeguarding the mission of a social enterprise" by monitoring both social and financial performance against benchmarks.
• Governance structures must be dynamic and adapt as a social enterprise progresses through its lifecycle. Start-ups may use "advisory committees or informal boards" for flexibility, while scaling organizations should establish "more formal governance structures". Mature enterprises may move toward a "participative structure" to remain connected to stakeholders.
• To prevent 'mission drift' caused by the diverging interests of equity investors and founders, social enterprises can implement two specific governance solutions: creating "non-voting shares for equity investors" or retaining the right of social entrepreneurs to "select a set number of board members" via the organization's constitution or charter.
• The document identifies five options for board structures based on organizational circumstances: Option 1 is a "single governing board" (one-tier or two-tier); Option 2 involves "several boards" for organizations operating across multiple countries; Option 3 uses "board committees and task forces" for specialized workloads; Option 4 combines an "advisory council plus legally binding board" to include stakeholders who cannot assume legal liability; and Option 5 utilizes "hybrid organizational structures" for mixed for-profit and non-profit entities.
• Board size impacts effectiveness, with research suggesting that "smaller boards positively influence organizational performance". A survey of 71 social enterprises showed median board sizes of 10 for non-profit models, 6 for hybrid models, and 5 for for-profit models.
• Effective board recruitment should prioritize a balance of expertise and stakeholder representation. While business experts are the most represented group (appearing in "over 70% of all boards"), the guide suggests including representatives from target populations, though it notes they may lack the "relevant expertise and experience as a board member to provide strategic oversight".
• There is a fundamental distinction between the roles of the chief executive and the board chair. The CEO is responsible for "running the organization’s business", whereas the board chair is responsible for "running the board". Combining these roles can "erode the system of checks and balances".
• Management should maintain transparency through a reporting cycle that includes at least quarterly updates. These reports should cover "cash flows, a comparison of budget and actual financials", and "social performance indicators compared to benchmarks".

APA

Schöning, M., Noble, A., Heinecke, A., Achleitner, A.-K., & Mayer, J. (2012). The Governance of Social Enterprises. World Economic Forum. http://www3.weforum.org/docs/WEF_Governance_Social_Enterprises_2106_light.pdf

Chicago

Schöning, Mirjam, Abigail Noble, Andreas Heinecke, Ann-Kristin Achleitner, and Judith Mayer. The Governance of Social Enterprises. World Economic Forum, 2012. http://www3.weforum.org/docs/WEF_Governance_Social_Enterprises_2106_light.pdf.

Wikipedia

{{cite report |last1=Schöning |first1=Mirjam |last2=Noble |first2=Abigail |last3=Heinecke |first3=Andreas |last4=Achleitner |first4=Ann-Kristin |last5=Mayer |first5=Judith |title=The Governance of Social Enterprises |publisher=World Economic Forum |date=June 2012 |url=http://www3.weforum.org/docs/WEF_Governance_Social_Enterprises_2106_light.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{schning2012governance, author = {Schöning, Mirjam and Noble, Abigail and Heinecke, Andreas and Achleitner, Ann-Kristin and Mayer, Judith}, title = {{The Governance of Social Enterprises}}, institution = {World Economic Forum}, year = {2012}, month = jun, url = {http://www3.weforum.org/docs/WEF_Governance_Social_Enterprises_2106_light.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }