Introduction: In recent times, a unique paradigm shift in stock exchanges has taken form – the emergence of the Social Stock Exchange (SSE). In June 2020, the Securities and Exchange Board of India put forth a pivotal recommendation, paving the way for non-profit organizations to gain more visibility and resources. Especially against the backdrop of the economic turmoil caused by the COVID-19 pandemic, understanding the SSE becomes crucial.
1. Defining SSE: The Social Stock Exchange is not just another segment of conventional stock exchanges. It’s a dedicated platform that aids Social Enterprises in gathering funds from the public using well-established stock exchange mechanisms.
2. The Role of SSE: SSE stands as a bridge connecting Social Enterprises with potential fund providers. The uniqueness lies in its emphasis on measurable social impact. Enterprises registered here are committed to creating, tracking, and reporting the tangible social differences they’re making.
3. Type of Entities on SSE: The SSE is versatile. Whether you’re a Not-For-Profit Organization or a For-Profit Social Enterprise, you can leverage this platform to raise funds. However, the primary intent should always be social betterment, regardless of the profit orientation.
4. Key Features of SSE: The core strength of SSE lies in its mission to simplify, diversify, and bolster the growth of social enterprises. By acting as a hub for social financing, it brings together social enterprises, philanthropists, and investors, streamlining the process of impact investment.
1. Core Social Intent: The enterprise should have a clear focus on creating a social impact. It should align with the 17 Social Development Goals (SDG) and could involve products, services, research, or even governance.
2. Target Audience: Social enterprises should primarily aim at serving underserved or underprivileged populations. The areas or regions they serve should ideally be ones lagging in developmental indicators.
1. Legal Framework: An NPO must be registered as such and should hold valid certifications under Sections 12A/12AA/12AB of the Income Tax Act 1961.
2. Tax Benefits: Valid 80G registration is crucial, signaling that donations to the NPO can avail tax deductions.
3. Track Record: The NPO should have been in operation for at least three years.
4. Financial Health: In the preceding financial year, the NPO should have had an annual spending of a minimum of Rs. 50 lakhs and funding of at least Rs. 10 lakhs.
Conclusion: The introduction of the Social Stock Exchange marks a revolutionary step towards integrating social good with financial mechanisms. By offering a regulated platform for social enterprises and NPOs, it promises not only to amplify their reach but also ensure that their endeavors create a sustainable and measurable social impact. As the world grapples with socio-economic challenges, such initiatives pave the way for a more inclusive and empathetic future.