6. Hybrid Spectrum Purpose: Social Value Creation Purpose: Economic Value Creation Sustainability strategy: commercial methods support social programs Sustainability strategy: “Doing well by doing good” Traditional Nonprofit Nonprofit with Income Generating Activities Social Enterprise Socially Responsible Business Corporation Practicing Social Responsibility Traditional For Profit
7. Purely Philanthropic Hybrid Purely Market Motives Appeal to goodwill Mixed motives Appeal to self interest Methods Mission driven Balance of mission and market Market driven Goals Social value creation Social and economic value creation Economic value creation Destination of Income/Profit Directed toward mission activities of nonprofit org. Reinvested in mission activities or operational expenses and/or business growth Distributed to shareholders and owners
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13. Varying Levels of Integration Social Programs + Enterprise Activities Social programs Social Programs Enterprise Activities Enterprise Activities
Cooperative is defined by the International Cooperative Alliance (ICA) as "an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. Since their inception over one hundred years ago, cooperatives have become widespread throughout the world, and continue to play an important function in promoting international economic development and social justice for the poor. Fair Trade is another predecessor to the contemporary social entrepreneurship field. Early attempts to commercialize fair trade goods in Northern markets were initiated in the 1940s and 1950s by religious groups and various politically oriented NGOs. In the 1960s to 1970s American and European nonprofits began experimenting with enterprises to employ disadvantaged populations. In the mid-1960s, John Durand, started working with 7 mentally retarded people and by 2005 Minnesota Diversified Industries had revenues of $40,000,000 and employed over a 1,000 physically and mentally disabled people Although presently few microenterprise organizations commune in the social entrepreneurship space, social entrepreneurship field views the microfinance institution (MFI) as a quintessential social enterprise and sees its leaders as some of the world's most formidable social entrepreneurs. Following the collapse of the Soviet Union, countries in this part of the world experienced rapid proliferation of civil society organizations (CSOs), their development aided in part by international development agencies nterest in the "base (or bottom) of the pyramid" was catalyzed by a paper written by two University of Michigan professors in 2002. In " The fortune at the bottom of the pyramid,"20 C.K. Prahalad and Stuart Hart highlight the untapped market potential of the four billion people at the base of the economic pyramid. In this article, the global population is divided into three segments, based on purchasing power parity (PPP). BoP customers are defined as those with a PPP of less than $1,500 per year. In the past several years, an increasing number of multinational corporations (MNCs) have recognized this opportunity and are making commitments to launch ventures in BoP markets. Drawing on their success in business, new economy philanthropists apply market principles to their philanthropic efforts and view grant-making through a venture capitalist lens. They treat charity as "social investment" for which they expect to realize a measured social return (and often a financial return) and thus have been dubbed "venture philanthropists." The venture philanthropy adapts the six tenets of venture capitalism: high funder engagement; multi- year funding; risk-return analysis and risk management; exit strategies; capacity building of the funded institution and measurable performance results (social and financial returns)
The enterprise is central to the organization's social mission. These social enterprises are created for the express purpose of advancing the mission using a self-financing model. Organizations created to employ disadvantaged populations (employment microfinance institutions are examples of this type of social enterprise. The enterprise is related to the organization's mission or core social services. Mission-related social enterprises have synergistic properties, creating social value for programs and generating economic value to subsidize the organization's social programs and/or operating expenses. Commercialization of social services is a common form of the mission-related social enterprise. One example is a family services organization that provides free meals to the children of low income families enrolled in the organization's day care programs. The enterprise is not related to the organization's mission, or intended to advance the mission other than by generating income for its social programs and operating costs. Business activities may have a social bent, add marketing or branding value, operate in an industry related to the nonprofit parent organization's services or sector, however, profit potential is the motivation for creating a social enterprise unrelated to mission.
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