W2/L2 Learning the language - Terms, Concepts & Definitions

Part 1: The Nonprofit and the Social Economy

#### Learning Objectives

- Understand the various types of nonprofit organizations.

- Recognize the size and scope of the social economy across different countries.

- Be familiar with key definitions and terms associated with nonprofit organizations and the social economy.

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#### 1. The Social Space Between the Market and the State

- Key Terms for Characterizing the Social Space:

- Nonprofit Sector: Focuses on providing services without profit motives.

- Charitable/Voluntary Sector: Emphasizes voluntary actions to improve social well-being.

- Social Economy: Encompasses organizations that aim to balance social value creation with economic sustainability.

- Nongovernmental Organizations (NGOs): Focus on independent, non-governmental efforts to address social issues.

- Civil Society: A broader space where voluntary associations work to advance social causes.

- Example: The Rochdale Pioneers established cooperative principles that became a global model for mutual organizations. They aimed to support the working class through collective ownership and profit-sharing.

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#### 2. Size and Scope of the Nonprofit Sector

- Global Impact: The nonprofit sector represents a $2.2 trillion industry employing 56 million people worldwide.

- Growth: Nonprofits have been resilient, growing faster than businesses during recessions due to their focus on community support and social services.

Example: The Johns Hopkins Center for Civil Society Studies partnered with the UN to develop a Nonprofit Institutions Handbook, promoting the collection of data on nonprofits globally.

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#### 3. Definitions and Approaches to Nonprofit Organizations

- Legal Definitions: Based on how organizations are structured (e.g., charities registered under legal frameworks).

- Functional Definitions: Based on the role they play (e.g., advocacy, education, health services).

- Economic Definitions: Focus on revenue models (e.g., donations, grants, social enterprise activities).

Key Point: Nonprofits are distinct from businesses primarily because of their revenue structures—relying on grants, donations, and earned income rather than profit generation.

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#### 4. Basic Forms and Variations of Nonprofits

- Associations: Groups formed for common interests (e.g., trade unions, professional societies).

- Foundations: Organizations that provide funding to various causes through grants.

- Nonprofit Corporations: Legally registered entities that operate for public or social benefit.

Other Forms:

- Cooperatives: Owned and operated by members who share the profits.

- Mutual Societies: Formed to provide mutual benefits to members (e.g., credit unions).

- Self-help Groups: Community-based organizations that address shared concerns (e.g., addiction recovery groups).

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#### 5. Special Characteristics of Nonprofits

1. Value-Based Foundations: Nonprofits are often mission-driven, focusing on social causes such as poverty alleviation, health, or education.

2. Multiple Stakeholders: Nonprofits must balance the interests of donors, beneficiaries, volunteers, and the broader public.

3. Diverse Revenue Streams: They rely on a mix of donations, grants, service fees, and sometimes earned income from social enterprises.

Reflection Question: How do nonprofits balance the expectations of diverse stakeholders while staying true to their mission?

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#### 6. Institutional Embeddedness of Nonprofits

- Nonprofits are essential to civil society, acting as a third sector between the government and private markets, promoting social causes and public debate.

Diagram: A Venn diagram showing the overlap of the state, market, and civil society sectors, with nonprofits positioned in the middle, bridging the gaps.

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#### 7. Social Economy as an Umbrella Term

The social economy consists of organizations that prioritize social value over profit, aiming to improve economic, social, and environmental outcomes.

Three Approaches to the Social Economy:

1. Third System (Pearce, 2003): Self-help and mutuality guide the activities of social economy organizations.

2. Fourth Space (Westall, 2001): Focuses on social innovation and community empowerment.

3. Big Society (Evans, 2011): Emphasizes local empowerment, minimizing state interference in the provision of services.

Example: Grameen Bank, founded in Bangladesh, combines microfinance with social entrepreneurship to lift communities out of poverty.

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#### 8. Pearce’s Three Systems of the Economy Model

- First System: Market-driven, profit-oriented (private sector).

- Second System: Planned provision, non-trading (public sector).

- Third System: Self-help, mutual, social purpose (nonprofit and social economy).

Visual Aid: A simplified chart contrasting the key features of these three systems.

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#### 9. Key Concepts Related to Nonprofits

- Civil Society: A space where voluntary organizations work to advance public debates and promote moral and social goals.

- Philanthropy: The act of charitable giving to promote societal welfare.

- Social Movements: Collective actions aimed at promoting or resisting social change (e.g., environmental movements).

- Hybrid Organizations: Entities that blend nonprofit missions with business strategies, such as social enterprises.

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### Part 2: Social Entrepreneurship & Enterprise

#### Learning Objectives

- Understand the various definitions and models of social enterprise.

- Appreciate historical examples of social entrepreneurship.

- Explore the potential of social enterprises across different sectors.

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#### 1. Definitions of Social Enterprise

- Social Enterprise: A business created to address social problems, operating with a focus on both social and financial sustainability.

Key Characteristics:

- Double/Triple Bottom Line: Focus on social, environmental, and financial goals.

- Hybridization: Combining elements of the private sector (profit generation) with nonprofit missions (social impact).

Example: Ben and Jerry’s uses its profits to fund social causes while maintaining its reputation as a successful business.

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#### 2. Origins of Social Entrepreneurship

- US Model: Focuses on individual entrepreneurial action (e.g., Ashoka Foundation).

- EU Model: Emphasizes collective action and social solidarity (e.g., social cooperatives in Italy).

Key Differences:

- The US approach highlights individual leaders (social entrepreneurs), while the EU model focuses on community-led responses to social issues.

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#### 3. Different Definitions of Social Enterprise

- Beechwood (1981): Emphasizes worker ownership and socialized control.

- EMES (2001): Combines social purpose with participatory governance and economic activity.

- US Development View (2003): Social enterprises are businesses that mitigate social problems through market-driven approaches.

- Grameen (2007): Social businesses reinvest profits into addressing poverty, rather than distributing them to investors.

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#### 4. The Practical Debate on Social Enterprise

- Social enterprise is a dynamic and evolving field, with its definition shaped by local contexts and specific social challenges.

Key Takeaway: Social enterprises are not just businesses with a conscience—they are purpose-driven organizations that aim to address critical social issues while ensuring financial sustainability.

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### Summary

- Nonprofits and the social economy fill the space between the market and the state, addressing societal needs that neither sector can fully satisfy alone.

- Social enterprises blend social and economic goals, creating innovative solutions to pressing social problems. Their definitions and practices vary by region and context, but their impact remains significant across all sectors.