Apparently not everyone in business feels the same way about the disadvantages of establishing a nonprofit vs. establishing a for-profit to achieve social purpose (see Friday's blog).
As a matter of fact, the Dream Scholars Foundation appears to believe that a nonprofit offers many more benefits than a for-profit. While the Foundation carries a nonprofit-like title (foundation) the Minnesota Attorney General believes it is otherwise and is suing accordingly (in essence suing on the grounds of impersonating a nonprofit). For sure, the Dream Scholars Foundation uses all the nonprofit-like words including extolling its "board" but identifying who is on this board and the organization's finances is not possible. Turning to Guidestar produces similar results.
Is there a caveat emptor here -- yes indeed! But more importantly for me, I believe we have a way to go on understanding what is social enterprise, particularly to understand the virtues of the non-profit vs. for-profit and more importantly, what these differences and expectations mean to the donor or purchasing public. We know that cause-related marketing is an effective approach at raising money for social purposes (e.g. Newman's Own). We also know that for-profits can, within their production activities, have a positive social impact (e.g. Ben & Jerry's and Greyston Bakery). And we also know that nonprofits can combine philanthropy with revenue to fill market niches (e.g. Benetech).
Of course, for-profits can make contributions that meet social needs but that does not singularly make them social enterprises. Or does it? Maybe the first question to be answered: who is the primary beneficiary? In nonprofits, the public or a segment of the public is the primary beneficiary. In a social enterprise, owners and the public (or a segment) benefit. It remains to be seen who is the primary beneficiary of the Dream Scholars Foundation.
The basis for today's blog was a story in the San Francisco Chronicle.