An Exploratory Study of Social Purpose Business Models in the United States

Abstract

A growing subset of nonprofit organizations in the United States are launching social purpose businesses (SPBs) that serve both as sources of additional revenues and locations for employment and job training for disadvantaged populations. This research note presents data from a study exploring SPB models for integrating business and social service technologies and organizational strategies for competing successfully in product and service markets while maintaining commitment to social goals. Data from a pilot study testing a survey instrument with a sample of 15 directors or managers of SPBs located in different regions of the United States show that slow growth, crosssubsidization, and diversification are key approaches to balancing commercial goals with social aims across a range of SPB organizational models. The relevance of these findings for future research on nonprofit social purpose enterprise is discussed. Keywords purpose business, social enterprise, work integration social enterpriseIn the wake of welfare reform of 1996 and the Workforce Investment Act of 1998, a particular form of nonprofit commercialization, social purpose business (SPB) venturing where nonprofit organizations use in-house business ventures as locations for job training, has gained momentum across the social service sector. SPBs involve a particularly embedded form of social enterprise where the business activities and the social interventions are synonymous in that the work performed by clients is both rehabilitative and revenue generating (Alter, 2006, p. 212). In the United States, SPBs are operating businesses in a wide range of industries in the construction, manufacturing, and retail sectors. The key social aspect of these businesses involves providing

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