Three schools define social philanthropy debate, says professor

Three schools define social philanthropy debate, says professor
Investment Europe, by Dennis Young

I recently returned from a conference in Italy, where the concept of social enterprise was at the centre of discussions among ‘third-sector’ researchers.

This came as no real surprise given the high level of contemporary interest in non-governmental, entrepreneurial solutions to public problems. Across the world, we seem to be expanding our perspectives from a narrow definition of the non-profit (third sector) to a broader, more hybrid approach to addressing social issues through private, market-oriented solutions.

Three schools of thought

One can identify three schools of thought, all trying to pin down the exact definition of social enterprise.

The European research network EMES argues that there is an ideal type of social enterprise, or a set of guiding principles, to which all social enterprise ventures, no matter which form they take, should aspire. These principles involve democratic governance, limited profit distribution and devotion to a social purpose.

Another approach uses the metaphor of a spectrum, recognising many combinations of profit-making and social organisational motivations exist between unfettered profit-making business and pure devotion to a social mission. Greg Dees, a professor at Duke University’s Fuqua School of Business, is most closely associated with this school of thought. Dees argues that social enterprises range from charitably supported non-profits, to commercial non-profits supported substantially by market revenues, to socially responsible businesses, to businesses purely devoted to maximisation of profit.

A third approach takes innovation as its central focus, arguing that social enterprises are created by Schumpeterian social entrepreneurs who employ market and non-market means to achieve a combination of material and social goals by implementing new ways of doing things.

The debate about social enterprise is helping us break free from the sectoral straightjacket represented by singular attention to traditional non-profit organisations, and to think in terms of a variety of organisational vehicles that can accomplish various social aims. It is also helping us understand the increasingly hybrid character of non-profit organisations themselves, and the networks and partnerships in which non-profits are involved.

That said, I do not believe social enterprise is simply a substitute form for traditional non-profits, nor even a single organisational type. Moreover, I do not think the study of social enterprise requires or benefits from a narrowly confining fence separating ventures that can be defined as social enterprises, and those that cannot. I understand the desire for clean definitions, but for social enterprise, there is no ‘one size fits all’ solution.

The best metaphor I can suggest is of an organisational zoo where each animal has its own orientation, capacity and interests, and should be managed accordingly. In each case, public purpose and self interest fits into the organisational calculus in some way. The common interest of society is to encourage effective ways of addressing social issues and problems, taking into account the peculiar nature of the different animals.