Giving Compass’ Take:
• In this story from SSIR, author Jinglian Wu discusses how the nonprofit sector and social enterprises came to be.
• What are the best ways for donors to support social enterprises — through funding or purchasing goods and services?
• To learn more about social entrepreneurship’s potential for positive change, click here.
By the 20th century, the deepening of the economic division of labor resulted in an increase in frequency of transactions and complexity of cooperative relationships. Dealing with the modern world’s issues, from external ones such as national defense and counterterrorism to internal ones such as environmental protection, equity in education, and the shortfall of social security benefits for seniors, required more resources. As a result, governments found it harder and costlier to deal with these problems over time.
As a result, civil and nongovernmental organizations stepped up to take the lead in addressing society’s various needs. The nonprofit sector developed rapidly in the 20th century and made major contributions in the public arena, from community service to citizens’ empowerment.
However, it became clear that the third sector had its own challenges, particularly when it came to scaling solutions. Under such circumstances, further breaking the boundaries between the public and private spheres and mobilizing more resources to deal with public affairs were put on the agenda. A trend emerged in the late 20th century among traditional nonprofit organizations and commercial enterprises. On the one hand, many nonprofit organizations no longer relied solely on donations and began to use commercial means to obtain business income to enhance their ability to provide social services. On the other hand, some commercial enterprises no longer regarded economic returns as the sole purpose of operation, but took the initiative to commit themselves to fulfilling more social responsibilities. As a result, a number of hybrid organizations with both a public welfare and a commercial nature, which some call “social enterprises,” emerged.
Read the full article about social enterprises by Jinglian Wu at Stanford Social Innovation Review.
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