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Getting rich is not the most important thing for more and more entrepreneurs, researcher Nena van der Horst observes. 'You can also make a social return and help society.' She investigates how a new legal form can make social entrepreneurship easier and more normalized.

Van der Horst has noticed that there are an increasing number of entrepreneurs in the Netherlands who have a social goal in mind and who do not necessarily need to become rich from their enterprise. 'But I see that it takes entrepreneurs a lot of research to ensure that such a social mission takes priority over short-term financial goals. It's expensive, complicated, notaries don't always have experience with it, and taxes are also a big obstacle because this form of business doesn't quite fit into the system.'

Perverse incentives

The good news is that a concept does already exist to ensure that a social mission is prioritized: steward ownership. There are already many of these enterprises in Northern Europe. Steward-owned enterprises, for example, create about 5 percent of all employment in Denmark. In the Netherlands, more than 100 companies now operate this way.

What exactly is steward ownership? 'The idea of it is to arrange the structure of a company in a way that the social mission takes precedence over short-term financial goals. In steward ownership, you change the perverse economic incentive,' Van der Horst explains. 'Shareholders are still allowed to vote in this system, but they don't get to distribute profits themselves. They have no economic interests, but they are involved in a company's social mission. They think more about long-term goals. As a result, different decisions are made. Research shows that because of this, these companies are more stable and survive longer than their competitors.'

We don't want to stop at publishing articles, but actually take action

Social return

But why invest in a business if you don't get paid a profit? 'That is indeed one of the biggest challenges of steward ownership. Most investors do want to make a return. But there are also more and more who look at it differently: you can also make a social return and do good things for society.' Moreover, investing through loans, for example, is still possible. It also does not mean that a company cannot make a profit. 'The Dutch construction company TBI is an example of a successful and large company that is steward owned. It was set up in 1970 as a steward owned company and they make a profit – just like most other construction companies. But profits stay in the company or are used for charitable donations. For example, they invest in the historic preservation of buildings and they set up a fund to train students in the industry. Steward ownership is not just something for start-ups or small entrepreneurs; it also works for large companies.’

Sign petition

Enough reason for Van der Horst to push steward ownership in the Netherlands. She and partners outside the university have started an online petition to make it a legal form. 'We don't want to stop at publishing articles, but we want to actually take action. We are also in the process of designing a legal form. It's important because it means companies who are keen to use steward ownership don't have to keep reinventing the wheel. It will be much easier to start steward ownership. In Germany they have already included it in the coalition agreement to make it a legal form. I don't think it will solve all the problems in the world, but it does make social entrepreneurship a lot easier. I’m passionate about this because you can really normalize this way of social entrepreneurship by giving it a place in law.’