Governance in Social Enterprises: How to Anchor Your Impact Objectives?

From informal collaboration to professional structures – and why it ultimately helps everyone

“Can you demonstrate that your social objectives are truly embedded in your organization?”

It was 2021, we were in conversation with the Anton Jurgen fund, and this question made us think. We had our mission in the articles of association, we did what we promised, but formally, as shareholders, we could decide tomorrow to transform Grenzeloos into a regular restaurant.

We would never do that, but how could an outsider know?

Why Governance Is Necessary at All

As a social enterprise you actually have two challenges at the same time:

• You have to be enterprising enough to survive financially
• You must safeguard your social objectives, even under pressure

Without good governance, the entrepreneurial side can overrule the social side. When things get tough financially, the temptation is great to make choices that are good for turnover but bad for your impact.

For financiers, donors and partners, this is a real risk that they want to protect themselves against.

Our Starting Situation

We started in 2019 as three friends with a BV. We made decisions together, our social objectives were in the articles of association, and we trusted each other completely.

For the daily operation this worked fine. We could switch quickly, had no bureaucracy, and everyone knew what the intention was. The problem arose, however, when we wanted to raise money for our growth plans.

The External Requirements

Funds and governments wanted guarantees:

• How do we know that this money actually goes to social goals?
• What happens when the founders have other priorities?
• Who oversees compliance with your mission?
• How transparent are your decision-making processes?

These questions were logical, but they forced us to think about formal structures.

The Solution: Dual Structure

We ultimately opted for a structure with two organizations:

• Grenzeloos BV: runs the restaurant, earns money, can operate entrepreneurially
• Stichting Thuis in Nederland: carries out trajectory guidance, receives subsidies, has a social focus

This separation had advantages:

• Clearer separation between commercial and social
• Various funding sources can support both organizations
• Transparency about cash flows

It also had disadvantages:

• More complexity in decision-making
• More communication to all stakeholders
• Explain to everyone how it works

Composing the Board

For the foundation we needed an independent board. After some searching we found three people with complementary expertise:

• Experience in pioneering
• Hospitality and management experience
• Knowledge of the social domain and impact 

The most important thing was that they were people who:

• Believed in our mission
• Wanted to invest time and energy
• Dared to ask critical questions
• Both could control and support

Priority Shares: Legally Secure Impact

One of the smartest instruments turned out to be the use of priority shares. The foundation received special shares in the BV with which it could intervene in important decisions.

We defined that the foundation could use its priority rights for:

• Amendments to the Articles of Association
• Sale of (parts of) the company
• Fundamental course changes
• Decisions that could harm social objectives

This gave external parties assurance that our impact goals were legally protected.

Code Social Enterprises

To further safeguard the impact, we registered with Code Sociale Ondernemingen. This is an independent certification that checks whether you are truly a social enterprise.

The criteria are strict:

• Primary social objective (not just profit maximization)
• Limited profit distribution to shareholders
• Transparent governance and decision-making
• External monitoring of compliance with social objectives

The certification process forced us to make explicit:

• What are our concrete social objectives?
• How do we measure whether we achieve them?
• Who checks that?
• How do we report on this?

The Practice of Governing

In practice, good governance meant:

• Quarterly reports: Regular reporting on finances and impact
• Board meetings: Monthly consultation on course and performance
• Strategic planning: Annual reflection on mission and course
• Critical sparring: A board that dares to ask difficult questions

This took time and energy, but also yielded a lot:

• Better strategic decisions through external input
• More discipline in planning and reporting
• Credibility with financiers and partners
• Safety net for difficult decisions

The Crisis Test

The real value of our governance was revealed during a critical choice we faced in mid-2024. When we had to choose between continuing to incur losses or fundamentally changing, we had a process to do that carefully.

The board helped us think about alternatives and asked us the questions that ultimately made us decide to close the restaurant. Without those structures, we would not have been able to make that choice in that way.

What We Have Learned

Governance is investing in trust: The better your structures, the easier it becomes to get external financing.

Start early, but keep it practical: Set up governance before you need it, but don't make it more complex than necessary for your stage.

Find a board that challenges and supports: The best board members combine critical oversight with strategic support.

Make agreements explicit: What seems obvious to founders often isn't to outsiders.

Transparency pays off: The more open you are about your decision-making, the more trust you will build.

Practical Checklist

For other social enterprises:

Legal structure:

• BV with priority shares for foundation
• Or operate entirely as a foundation
• Cooperative as an alternative

Forming a board:

• 3-5 people with complementary expertise
• Mix of substantive knowledge and management experience
• Diversity in background and network

Decision-making processes:

• Who can decide what?
• When should the board be consulted?
• How are conflicts resolved?

Reporting structure:

• Quarterly reports with finances and impact
• Annual strategy review
• Transparent communication to stakeholders

External certification:

• Code for Social Enterprises in the Netherlands
• Social Enterprise NL
• B-Corp International
• Other sector-specific quality marks

The Practical Reality

Establishing governance takes time and money. But the alternative – not having formal structures – ultimately costs more. You lose funding opportunities, lose trust from partners, and risk making choices under pressure that harm your mission.

Our experience is that investing in good governance pays off from the start. It makes you more professional, more credible, and ultimately more successful in achieving your social goals.

Because that is what it is all about: ensuring that your social enterprise remains truly social and makes targeted choices, especially when things get tough.

In the next blog we will address one of our biggest challenges: how do you actually measure whether you are making an impact? From feelings to numbers, and why that is much harder than it seems.