Social return as a motivator

Social enterprises are motivated by social objectives and social purpose. For social enterprises registered as societies, this social purpose is either for the mutual benefit of members in a bona fide co-operative society, for broader community benefits in a community benefit society, or, for public benefit and charitable purpose in a charitable community benefit society. These differences in investor motivation are enshrined in society law by means of limits on the financial return on investment, restrictions on the scope for capital gains, and caps on the amount of capital an individual can invest.

The primary motivation for purchasing shares in a society is to support the social purpose and objects of the enterprise. Financial motivation is at best secondary, and any return on capital is better understood as compensation rather than a reward for risk taking.

So it is very important to clarify the social purpose of your enterprise for the benefit of prospective shareholders, and your efforts will be rewarded by better results. For example, if the enterprise is to preserve a precious local asset, the importance of that asset will be reflected in the amount you can hope to raise. Where the project revolves around a community need or interest that is not being met (for instance, there may be no local sports facilities, poor broadband connections, or a lack of affordable housing) the social impact will be significant and may be obvious; there will be other circumstances, however, where the social outcomes may not be immediately obvious to the man on the street, and so some extra effort needs to go into communicating your vision.