Funding Implications of Social Enterprise: The Role of Mission Consistency, Entrepreneurial Competence, and Attitude toward Social Enterprise on Donor Behavior

Abstract

Social entrepreneurship covers a broad domain, including social enterprise, defined as the use of for-profit strategies by nonprofit organizations. Driven by multiple factors, nonprofit organizations have increasingly turned to social enterprise in the hopes of funding their social missions. However, only limited research has fully delineated how the use of social enterprises affects overall funding and the conditions under which social enterprises are relatively more effective. This mixed-method, three-study project provides evidence that the introduction of a social enterprise negatively affects individual donations but that some of the negative effects can be mitigated when the social enterprise is perceived as mission consistent and competent. In addition, the results show that donor attitudes toward social enterprises moderate the effects. The results of these studies have important implications for marketing, social entrepreneurship, and public policy.

Social Enterprise and Christian School Finance: Receptivity of ACSI Christian School Leaders in Mid-America

“…In addition, no research has been done on fundraising programs that effectively move beyond a dependence on altruistic donors. While research indicates that social enterprise is unlikely to solve all of a school's financial problems (Casselman, 2007;Smith et al, 2012), there is good reason to believe that if developed wisely over time it can be a benefit to the school's long term financial outlook. This study is particularly strategic because of its innovative nature.…”

“…This, at least in theory, allows organizations to diversify their funding pool and become less reliant on philanthropic contributions (Smith et al, 2012). Jason Blokhuis illustrates this in his writing about the controversial "Channel One" news programming that is broadcast into many classrooms around the nation every school morning.…”

“…It allows nonprofits to potentially support a portion of their mission through earned revenue from either their existing clients or from outside sources (Popielarski & Cotugna, 2010;Smith, Cronley, & Barr, 2012). One well known example of this can be found in the Girl Scouts and the very tempting cookies they sell each year (Smith, Knapp, Barr, Stevens, & Cannatelli, 2010).…”

“…Some studies have found that implementation of social enterprise based funding techniques can cause an organization to drift from its initial mission (Yunus, 2007;Hudson, 2009). Other organizations find that they are simply not ready to manage an organization that has all of the complexities of both the nonprofit and for-profit world (Moizer & Tracey, 2010;Kirkman, 2012;Smith et al, 2012). Then there are the financial challenges.…”

“…Many entrepreneurs get involved in social enterprise hoping it will solve their every financial challenge only to find that they still need at least some philanthropic support (Casselman, 2007). Added to this is the crowding effect, which means that for every dollar raised in social enterprise funds a portion of that dollar will generally be lost in crowded out SOCIAL ENTERPRISE AND CHRISTIAN SCHOOL FINANCE 4 philanthropic support (Smith et al, 2012). Social enterprise offers the promise of great financial reward, but it does not come without a potential price for the ill prepared leader.…”