Thursday, August 13, 2009

Comment: Challenges for social enterprise

Professor Scott Allard has a new book out that examines the changes in the "safety net" over the last 40 years. In "Out Of Reach", Allard surveyed over 1,500 non-profits that work to provide benefits to the poor. With the survey results Allard argues that assistance programs have become unreliable over the years.

In an accompanying essay, Scott Allard looks at social enterprise and the challenges it faces on improving the state of the poor. We found this commentary at TPM Cafe.

As Arthur Brooks notes, social enterprise and social entrepreneurship are becoming increasingly central to community-based antipoverty strategies. One's first reaction may be to dismiss these approaches, particularly if the preference is for government to bear the responsibility for alleviating poverty. Our safety net, however, is highly dependent upon private nonprofit organizations for the delivery of assistance to the poor. Much of the funding may come from federal, state, and local government sources, but much of the help is provided by nonprofits. This is a relatively new development in the history of our safety net. Today, entrepreneurs working through private nonprofits and foundations are developing some of the most innovative and successful strategies for alleviating poverty.

It is my opinion that social enterprise cannot replace the public safety net, but I think it can become a more important and sophisticated complement to existing government safety net programs.

To say that we need to cultivate enterprise and entrepreneurship among the poor could be taken to suggest that the poor do not work. Yet, as we know, most poor persons work, many more than one job, which they bundle with income from informal work and social networks to get by. Simply navigating the uncertainties of the low-wage labor market and safety net, demands that poor families are entrepreneurial.

So where does social enterprise fit into the safety net? We could think of social enterprise as helping poor persons start and cultivate their own business. Over time such efforts could create jobs and reduce the significant problem of asset poverty among low-income populations.

Increasingly we see nonprofit organizations using social enterprise strategies to create job opportunities for disadvantaged populations, strengthen communities, and generate new revenue streams that support other programs of assistance. It seems to me that these nonprofit-driven approaches to social enterprise hold much promise - not only do they provide meaningful help to people in need, but they provide employment opportunities and are able to attract private philanthropy.

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