On the one hand, nonprofits encouraged by their constituents and existing funding sources to be more business-like and results-oriented are seeking control of their own funding to minimize dependence on donations for growth and survival. On the other hand, for-profit businesses are being challenged by their customers, employees and investors to become more socially responsible in their day-to-day business practices. Social enterprise occupies the space where these historically bi-polar forces are now converging.
Starting in 2003, in a report titled “Blurred Boundaries and Muddled Motives”, the W.K. Kellogg Foundation identified the blurring of traditional boundaries between the nonprofit and private business sectors as a trend:
“Nonprofit organizations are developing earned-income ventures. Businesses are increasingly engaging in philanthropy and taking on social missions. Some government functions, like the management of public schools, are being contracted to private for-profit enterprises. And multi-sector partnerships are emerging with greater frequency. This overlapping of traditional sector roles is an important trend because it is the blurred area this overlap creates that is a space for social innovation today.”
The economic downturn has accelerated the growth of businesses that engage in social missions as well as the number of consumers who seek them. Numerous studies have verified that consumers like to support good causes with their purchasing decisions. Most recently a 3BL Media report issued in December documented that “the average American consumer will drive nearly 11 minutes out of their way to buy a cause-marketing product and 83% of employees would seriously consider leaving their job if their employer used child labor in sweatshop factories.” Their data on the “price elasticity of cause-marketing products” indicates that a majority of consumers are willing to pay an additional $2.12 for a $1 cause-marketing product and an extra $4.53 for a $50 product.
What have you done for your planet lately?
Betsy Densmore is Founder and President of Academies for Social Entrepreneurship, which creates programs and collaborations to support social enterprises. ASE has worked with hundreds of non-profit organizations on how to grow mission-related earned income ventures and improve their business acumen. Learn more at http://academies-se.org/