While the term “nonprofit” is synonymous with “charity,” not all nonprofit organizations are completely dependent on grants and cash donations.
Social entrepreneurship, or the generation of revenue in order to offset the costs of providing services, is an avenue towards self-sufficiency for 501(c)(3) organizations. Social entrepreneurship can be used by either nonprofit or for-profit organizations.
Revenue does not transform a nonprofit into a for-profit entity, because—unlike for-profits—nonprofits reinvest all earnings back into their programs to continue to provide services and fulfill a social or environmental mission. Duke University’s J. Gregory Dees sums up the goal of social entrepreneurs:
“For social entrepreneurs…mission-related impact becomes the central criterion, not wealth creation. Wealth is just a means to an end for social entrepreneurs.”
Essentially, social entrepreneurship is a form of fundraising that aims to allow a nonprofit to become self-sufficient. Unlike traditional fundraisers, social entrepreneurs are paid for goods or services. The golden ticket, then, is developing a product or service that people want.
Here are some examples of social entrepreneurship:
Thistle Farms, a nonprofit, provides housing for women with histories of drug addiction and prostitution. Thistle Farms also employs its clients, who make candles, soaps, and other scented products. For this organization, social entrepreneurship provides a steady stream of income for those it serves.
CitizenInsights is a nonprofit that uses text-message surveys to collect data about low-income Americans. CitizenInsights markets its services to other nonprofits and social-service organizations that want to find out more about their clients.