Search
  • iliyan kuzmanov

Economic Overview

In Economic terms, social enterprises maximize profits to have a chance of impact investment or they prevent mission drift by avoiding profit maximization along the lines of traditional philanthropy. Social enterprise is a mechanism for value creation that forgoes value capture and engages in value devolution to serve a wider vulnerable clientele. Profit motives are alien to social enterprises and social entrepreneurs, and related research maintains that non- profit organizations make sense when it is too costly to monitor for- profit firms misuse of donors monies, in terms of diverting resources to increase shareholders wealth. Thus social enterprises provide a sort of guarantee that surpluses will fulfil a given mission, just like charities ressure donors that their contributions will not enrich shareholders by preventing dividend distribution, as a way to deal with contract failures that otherwise would prevent the accrual of money for attaining social objectives (see Hansmann 1980; Kashinsky, 1986; Rose- Ackerman; 1996; Valentinov, 2008a;),

Not all programs are scalable. Not all projects can produce a profit. Not everything worth doing earns recognition, wins a competition, attracts fat cat investors or garners a foundation grant. For many worthy social justice organizations, chasing scale is wholly unrealistic. Because social progress is human progress, it’s really thorny to isolate what drives, or impedes, social change. People lead varied and complicated lives. Within the borders of our lifetimes, people laugh, dance, drink water, fall in love, fall out of love, sweat, work, raise kids, cook food, make music and make mistakes. We have dreams; we have nightmares. Deep inside the ecology of a community so much of what happens is intangible, without clear causation. So much of what binds a community of people or creates economic opportunity is invisible and hard to capture with measurable certainty or cash dividends.

Jonathan C. Lewis, The Unfinished Social Entrepreneur

4 views