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7 Advantages to Starting a Societal Impact Company (SIS)

The “Societal Impact Company” (SIS) accreditation was created in 2016, aiming to promote a favorable climate for developing Social and Solidarity Economy (SSE) companies. Are you familiar with it? We have gathered its greatest advantages into this article for you.

1. A better-suited legal framework

According to a Statec study[1], two thirds of Luxembourg’s ESS sector in 2012 was made up of non-profit associations. A non-profit, however, cannot conduct gainful activities, which can lead to legal insecurity (in case of bankruptcy, for example). SIS accreditation provides a better-suited legal framework that focuses on the specificities of ESS companies and encourages them to carry out economic activities.

2. Official recognition of the company’s social purpose

Non-profits have one main way of measuring their social impact - recognition of public utility – whereas, with SIS accreditation, commercial businesses now have the means to show their impact too. To be accredited, a company must have a clear and specific social purpose. The scope of a social purpose is quite broad, according to law:

  • Providing support to people in vulnerable situations, either due to their economic or social situation, or due to their personal situation especially in terms of health or their need for social or medico-social assistance,

And/or

  • Contributing to the preservation or development of social cohesion, the fight against exclusion and inequality, for gender parity, the maintenance and reinforcement of territorial cohesion, protecting the environment, developing cultural activities, and developing activities for initial or continuous training.

Having SIS accreditation as a young company gives you more credibility. It’s also a great argument for winning-over potential partners and giving confidence to customers, suppliers, etc. In short, it warrants that your activity is both real and serious, but also that it is socially engaged. Nyki[2] founder Laure Omont explains the added-value the accreditation has brought her company[3].

3. Increased visibility

Societal impact companies benefit from institutional recognition. They also have increased visibility through actors engaged in the SSE ecosystem such as MeSis (Maison de l’Economie Sociale et de l’Innovation Sociale) and ULESS (Union Luxembourgeoise de l’Economie Sociale et Solidaire).

4. Transparency (financial and extra-financial)

Some companies already measure their social impact. Two certification types that come to mind are B[4] Corporation and RSE[5]. But what distinguishes SIS companies from conventional commercial companies is that they are legally bound to measure their societal impact annually. The fact is, SIS accreditation requires financial transparency: maximum employee pay rate, make-up of the company’s share capital[6], etc. This means having their accounts audited by a certified auditor. At the same time, companies must prove their social purpose: achieved impact objectives, an autonomous management model, transparent and participative democratic governance for the various players the company works with (suppliers, customers, partners and even employees), etc. Companies must also draw up an extra-financial impact report detailing its impact measurement. All of this is used to ensure companies having received SIS accreditation are honest and genuine.

5. Access to public markets

As a societal impact company, you can benefit from a number of state aids and advantages, including access to public markets[7]. This means you can take part in official public tenders published by the state, communes or Luxembourg’s public institutions. This provides an opportunity to extend your potential activities as a commercial-type company.

6. Tax advantages

SIS accreditation comes with certain tax advantages as long as the company consists of 100% impact shares, meaning shares that carry no entitlement of the distribution of dividends. More specifically, SIS companies are exempted from corporate income taxes, communal business taxes and wealth taxes. Furthermore, like for recognized public-utility bodies (non-profits and foundations), cash donations made to SIS companies can be deducted from the total net income of donors.

7. Access to public and private funding

Like any conventional business, societal impact companies can choose from a number of possibilities for their funding sources. First, funding from associates and/or shareholders (capital contribution, risk capital, etc.), and second, funding from external partners or third-party resources (bank loans, crowdfunding, innovation grants, access to the SNCI[8], etc.). It should also be noted that since 2019, the Oeuvre Nationale de Secours Grande-Duchesse Charlotte has been supporting projects headed by certain SIS companies. The increased access to sources of funding will help your project self-finance rather than its viability being overly (or solely) dependent on public subsidies or private donations.

We hope this article has helped you see things more clearly!

All in all, SIS accreditation officially makes you a part of the SSE ecosystem. It clearly states your engagement and comes with the advantages of a commercial company (generating a surplus for growth, responding to the market’s societal needs, etc.). The objective of this accreditation is to build bridges between companies and the social sector in complete “legal” safety.

To go further: 
[1] Statec / [2] Nyki / [3] Offering an ethical service / [4] B corporation / [5] ESR (website in French) / [6] Société à Impact Sociétal (PDF available in French only) / [7] Offres marchés publics / [8] A public-law banking institution specialized in medium and long term financing of Luxembourg based companies: SNCI

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