Last Thursday, I attended the Mapping the Fourth Sector gathering in DC sponsored by the Federal Reserve, George Washington University, Urban Institute, and The B Team. At the invitation-only gathering, I listened to, met, and shared thoughts with some amazing people pioneering the development of this sector made up of nonprofits and for-profits with a social purpose that derive a substantial part of their revenue through business activities.
The current working definition of for-benefit organizations that make up the Fourth Sector provides for two main defining characteristics:
- They are primarily driven by social and/or environmental purposes.
- They earn a substantial portion of their income through business activities.
What remains unresolved:
- What is a social purpose?
- Should the requirement be a primary social purpose or a substantial social purpose?
- How much overlap with other sectors is acceptable?
The discussion regarding the vagueness of the term “social purpose” also extended to the terms “benefit” and “impact”. It might be argued, for example, that every viable business advances some social purpose. I’m concerned about the inclusion of self-declared for-benefit organizations that have might more objectively be seen as having a less than the requisite level of social purpose. Could Walmart claim it is a for-benefit organization? Coca-Cola? Unilever?
The gathering concluded with a discussion about data and the commons under construction. The commons will be open and open-ended with continual data collection and no end date. The general theme guiding the development: “In essential things, unity. In non-essential things, freedom & diversity. In all things, generosity.”
From Blur to Precision, Stanford Social Innovation Review
Experts Navigate the Fourth Sector, a New Frontier in Business, GW Today