The Legitimacy of Nonprofits’ Transition to Nonprofit Social Enterprise - A Case Study of Homelessness-Related Nonprofit Social Enterprise in San Francisco
Social enterprise is an innovative concept of creating positive social impact through business activities. However, the definition of social enterprise is ambiguous (Zhang and Li, 2017, Lajovic, 2012, Galera and Borzaga, 2009). Different countries have various standards of social enterprise. According to the social enterprise spectrum published on Harvard Business review in 1998, social enterprise is a type of organization that falls between a purely philanthropic organization and purely commercial organization. This paper particularly focuses on the nonprofit social enterprise, which defined here as the social enterprise housed within the nonprofit organization.
The emergence of nonprofit social enterprises can be traced back to decades ago. Owing to the economic crisis in the 1970s and government social welfare cut and reform in 1980s, many nonprofits faced financial difficulties. The absent of the government support and increased needs from private charitable sources, nonprofits increasingly turned to the alternative available to them: the market (Salamon, 1993; 鄭國安等, 2001). With the rise of neoliberalism, the pervasive faith in the market and business-based approaches and solutions incited the nonprofits’ transition to the social enterprise (Sepulveda, 2015; Nickel and Eikenberry, 2009; Gerrard, 2017).
However, nonprofit social enterprises brought a lot of changes and challenges to the nonprofits. The expansion of commercial activity and the blurring distinction between nonprofits and for-profit providers raise serious questions about who will serve those in need (Salmon, 1993). This study aims to answer the effects of the nonprofit’s transition to the nonprofit social enterprise, including the challenges faced by the nonprofit and the efficiency and legitimacy of nonprofit social enterprise in solving a social problem. This paper will argue that though engaging in business increases the financial flexibility of the nonprofit, it causes management challenges and only when the business model aligns with the mission can it survive and achieve their social goals.
First, this paper discusses existing knowledge on the issue of the legitimacy and the effects of the nonprofit engaging in pursing profit or launching the social enterprise and scholars’ different perspectives toward it. Next, this paper explains how the interview data are gathered and why they are helpful to answer the questions above, despite the bias and limitation. Finally, drawing on rational, natural, and open system perspectives of organizational theory, this paper demonstrates the agency of the organization, which opposite to the neoinstitutional theory; it also finds “triangular relational effect” showing the challenges and the changes of the nonprofit’s transition to nonprofit social enterprise.
「雙圓理論」 iCESD 一個根基於循環經濟的創新社會設計