AIG and social enterprise

Outrage over bonuses paid to AIG managers has predictably included calls for government action. After all, taxpayers are (theoretically) not bailing out the insurance company so its executives can save their million-dollar paydays; if the public is going to keep a private business out of bankruptcy, cutting back on compensation only seems appropriate.

The perceived link between public support and enhanced government oversight also has direct implications for social enterprise. From a certain perspective, charity received a government bailout long before Wall Street: mainstream legal analysis has long treated tax-exemption a de facto subsidy, one that provides a basis for rigorous centralized control. If charitable business wants to maintain a culture of entrepreneurial innovation as opposed to bureaucratic administration, it needs to pay careful attention to the image that it projects.