What’s the right amount of “for-profit smarts” and “not-for-profit soul” necessary to become a credible, effective, and viable social enterprise? When a small business or nonprofit asks the question, the concern usually reflects a larger set of ongoing debates among social enterprise supporters and critics.
For some, social enterprise combines the best of the for-profit world with the not-for-profit sector (or the reverse). For others, social enterprise opens up a risky new area that threatens the established order of sectors. Still others called it a gimmick by businesses attempting to reach new markets, and by nonprofits desperate for new forms of support.
These threads of uncertainty and distrust invariably lead to discussions on how nonprofits claim the “good” parts of social good, while the “strong” traits of corporate effectiveness thrive best within the for-profit world.
“For-profit” versus “not-for-profit” discussions, however, often overlook the presence of other entities (formal and informal) delivering social good across and outside their respective sector frameworks. It marginalizes the multiple roles and interconnectedness that may already exist among individuals and constituencies. It also ignores significant dynamics around public agencies, “third sector” (post-business and post-government) and “civil society” (post-government and post-markets) actors.
Honest consideration of what’s “good” for existing and emerging activity, regardless of the sectors involved, requires a close look what’s “bad” or “unnecessary” in those same areas. The existence of alternatives beyond the familiar sectors we know will appear to cast doubts about the ability of the current sectors to support new ideas much less sustain existing arrangements.
So after all the discussion, what then for the social enterprise still grappling with the “right” sector in which to operate?
Avoid the “identity hurdle” by remembering that the organization structure, operating model, and operational strategy are distinct elements within the larger structure for social good. Concentrate on a clear sense of why the venture is needed, what’s being offered and resources needed, which audience(s) are involved, capacity to deliver on proposed aims, and measures of success.
The decision regarding which corporate structure best suits the needs and ambitions of a social enterprise is not always easy, but can help shape how a great idea will translate into practice that speaks volumes through its good works.