December 13, 2007 | Read Time: 1 minute
The language, practices, and outlooks of business and philanthropy are becoming increasingly intertwined in the field of social entrepreneurship, with important ramifications for both for-profit and nonprofit institutions, says Fast Company magazine (December).
On the nonprofit side, some donors are trying to bring the logic of markets to the way charities raise money.
Teach for America, for example, has sought large sums of “patient capital” from individuals to support its growth, “bypassing foundations that typically fund only startups or specific projects,” writes Keith H. Hammonds.
Similarly, he says, online-donation sites like Donors Choose and Kiva, which allow donors to pick specific projects to support, offer an experience that resembles choosing an investment.
At the same time, developments in business offer “the prospect that investors could actually make money from the social sphere,” writes Mr. Hammonds.
He points to the example of microfinance, a field started by charities that provided money to nonprofit lenders in developing countries, who in turn made very small loans to entrepreneurs.
Now, more and more of the lenders are becoming for-profit companies, Mr. Hammonds notes.
A new type of business “that integrates financial returns with social good” is becoming more common.
“Sometimes called ‘for benefit’ companies, these hybrids have access to capital markets,” writes Mr. Hammonds, “but they’re explicit that profit isn’t the top priority, or at least not at the expense of the workers, the environment, or the community.”
The article is available free online at http://www.fastcompany.com.
