Social Ventures: The New Nonprofits
Young and Salamon ask whether the non distribution of profits still makes sense, or if it is time to shift to social enterprises instead of traditional nonprofit organiztions. The example Richard mentions seems to suggest that it is time for such a shift. Instead of viewing marketization as a threat in which organizations must choose between mission and economic survival, we should be advocating marketization as a method of integrating the provision of common goods with the economy.
There is no question that nonprofits, as they exist, fill a necessary role. However, the growing social enterprise movement has the potential to replace some of our dependancy on charitable donations with profitable enterprise that contributes to economic growth. When organizations are providing a common good and maintain the ability to pay taxes, they are helping the community on two fronts: by directly serving the community and contributing tax revenue.
One example is the Economy of Communion developed within the (Catholic) Focolare Movement. www.focolare.org In brief, the Economy of Communion teaches entrepreneurs to keep their businesses profiable so they can help people by providing jobs and perpetuate a culture of giving through their own organizational and community cultures. By adhering to this or similar business ethics, the haves can help the have nots get what they need for themselves while at the same time stimulating the local economy. This type of strategy reduces the need for common goods while providing more tax revenue for public goods.
Although such an idea may result in financial and job losses to the nonprofit sector, the individuals affected could easily recover. A stronger economy would mean higher job availablity and the shift to social business ventures would inevetably prompt new needs from the nonprofit sector. Anyone care to brainstorm about the ways in which the nonprofit sector would be affected by such a shift?
There is no question that nonprofits, as they exist, fill a necessary role. However, the growing social enterprise movement has the potential to replace some of our dependancy on charitable donations with profitable enterprise that contributes to economic growth. When organizations are providing a common good and maintain the ability to pay taxes, they are helping the community on two fronts: by directly serving the community and contributing tax revenue.
One example is the Economy of Communion developed within the (Catholic) Focolare Movement. www.focolare.org In brief, the Economy of Communion teaches entrepreneurs to keep their businesses profiable so they can help people by providing jobs and perpetuate a culture of giving through their own organizational and community cultures. By adhering to this or similar business ethics, the haves can help the have nots get what they need for themselves while at the same time stimulating the local economy. This type of strategy reduces the need for common goods while providing more tax revenue for public goods.
Although such an idea may result in financial and job losses to the nonprofit sector, the individuals affected could easily recover. A stronger economy would mean higher job availablity and the shift to social business ventures would inevetably prompt new needs from the nonprofit sector. Anyone care to brainstorm about the ways in which the nonprofit sector would be affected by such a shift?
posted by Anonymous @ 11:43 PM
1 Comments:
At 6:14 PM, September 11, 2006,
Paul Jonas said…
I think that social ventures run the risk of losing focus on their cause. A social venture is similar to a non profit, but I differentiate it by switching around the primary goal of a social venture: To make money. I think they run the risk of losing focus on the social cause for which they are formed. Nonprofits can go this way, too.
The temptation of profit, can become too great. Young and Salamon show that "for-profits can focus more easily than nonprofits on the most profitable segments of particular service markets, neglecting the populaations unable to pay or at most severe risk" (p. 426). Non-profits, again are left to pick up the slack. Because it is the cause that drives them first.
Religion of all kinds discuss avoiding and denying temptation. If successful, then I can see social ventures being a great addition to society. However, succumbing to temptation to deviate from doing good is not unheard of. Secondly, and I touched on this in the prior paragraph as did complitchick in her post, nonprofits end up getting the short end of the stick.
On the positive end, however, I turn again to Young and Salamon who discuss the for-profits additional source of profit through the sale of stock. If a company is more self-reliant in making money and it sticks to its mission, the opportunity for good-doing is multiplied.
Regardless, I think social ventures that focus only on profitable sections of previously nonprofit areas(and by nature should) do more harm to nonprofits and their causes than to, say, another social venture.
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