For Benefit Enterprise

A growing number of socially motivated entrepreneurs have been creating new kinds of organizations that combine a social mission with a business engine. Unlike typical for-profits, these "for-benefit" enterprises have social or environmental outcomes as their ultimate bottom line; and unlike typical nonprofits, they derive their income mostly from the sale of goods and services rather than from grants and donations. They defy classification as pure business or nonprofit; rather, they are a blend of the two. Many more such enterprises would exist, except that few entrepreneurs have been able to choose for-benefit as a legally recognized organizational structure. Most countries' legal and economic systems allow only for-profit or nonprofit activity; entrepreneurs must shoehorn their vision into one or the other structure. All this seems destined to change. For-benefits will become more commonplace as entrepreneurs learn to better navigate existing constraints, and as an ecosystem of support--including financial markets, accounting standards, and professional services-develops around them. The even bigger news is what will happen then, writes the author. With formalization of the for-benefit structure, we will see the emergence of a fourth sector of the economy, interacting with but separate from government, nonprofits, and for-profit businesses. The rise of that sector is likely to reshape the future of capitalism. INSET: The Anatomy of a For-Benefit Organization.