The place of social enterprise in the new welfare state

One traditional understanding of charity is that it serves to lessen the burdens of government. It's a seemingly innocuous enough notion--as with its deceptively prosaic cousin, the notion that a tax exemption or deduction is a tax subsidy, it sounds like a common sense idea--but as applied it tends to raise uncomfortable questions.

A big 'un is the question of whether charity deserves support for any purposes or projects outside the government's own agenda--after all, if a charity is supposed to be performing government functions and the tax privileges that help fund it are essentially government grants, tolerance for risky disruptive innovations tends to be relatively low.

As the political pendulum swings back to government away from the private sector, it's been fascinating to see how social enterprise is being re-imagined as an extension of government aid. It's a subtle but significant shift from just a decade ago--heck, a year ago--when social entrepreneurs were said to have the answers that governments & nonprofits lacked.

Case in point: Scott Allard's essay on social enterprise in relation to his new book on the geography of current government social programs. Allard gives the usual huzzahs to social enterprise, but as usual, the caveats are where it's at. The real point of his analysis is what he says that social enterprise is lacking and how it needs to "fit within and strengthen the existing safety net."

Yet, we should not view social enterprise as a magic bullet. The financial institutions located in high-poverty communities may not be a good fit for this type of enterprise. . . .

Social enterprise also does not remove the need for other safety net programs. Most social enterprise cannot provide the health care, access to affordable housing, child care, quality education, and transportation resources necessary for low-income families to weather temporary economic setbacks or achieve permanently higher economic trajectories. Moreover, many startup businesses fail or fail to generate significant income, which leaves the owners and workers economically vulnerable. Even with more entrepreneurial approaches in place, there remains a need and a role for the public safety net to help working poor families overcome barriers to employment and well-being.

These concerns, however, do not outweigh the potential impact of social entrepreneurship. Social enterprise should be a prominent tool in any community's antipoverty toolkit. Instead, we should be asking ourselves whether we are training the next generation of nonprofit leaders, social workers, and policy experts to think not just about creative entrepreneurial solutions, but how they fit within and strengthen the existing safety net.