Entrepreneurship for social change: Is the U.S. doing enough to encourage and support sustainable social innovation?
Throughout U.S. history the nonprofit and government sectors have addressed needs that are not being met by the marketplace through the provision of a variety of social goods and services ranging from health and human services to environmental conservation. In response to increased demand for these services, the number of nonprofits has grown by 59% over the past 20 years (Powell and Steinberg, 2006; NCCS, 2010). There are now over 1.5 million nonprofit organizations in the U.S. which account for 5 percent of GDP, 8.1 percent of the economy’s wages, and 9.7 percent of jobs (Wing, 2008). Over the same time period, government social programs also rapidly expanded in number and per capita cost (OCED, 2010) .
While the social sector contributes significantly to societal well-being, traditional approaches have proven unable to fully address critical social problems or deal effectively with increased need. In the past, good intentions were enough; however, the recent push towards increased organizational transparency and accountability left stakeholders – politicians, government contract administrators, leaders in the social sector, and service recipients – demanding more. This created a paradigm shift, both internal to and external to the sector, in the expectations for social sector providers. Not only do organizations need more entrepreneurial approaches to provide innovative and more efficient ways of tackling difficult social problems, but also a commitment to increased outcomes-based program performance assessment.
In light of the current fiscal situation, the sector is also experiencing a fundamental change in the funding environment. The majority of nonprofits have historically relied on volunteers to provide human capital for services and donor contributions and government grants to finance operations. With the government at all levels cutting discretionary spending and donations from the private sector declining, this charity model is no longer viable for all organizations. In fact, the culture of dependency leaves organizations susceptible to external sources of volatility which can impact their ability to accomplish their social mission.
The decrease in funding availability, coupled with the fact that performance assessment has not been a central focus in social sector operations, leaves funders asking for increased accountability and organizations seeking ways to become more self sufficient.
Just as for profit businesses are transforming to meet the current needs of the global economy in new ways, there is a rising trend towards innovation in the social sector. Entrepreneurs are combining their passion for social causes with creativity and sound business practice to develop and manage ventures to make positive social change, resulting in a blurring of sector lines. These social...