The social sector, which encompasses the set of nonprofit and for-profit firms that are primarily pursuing a solution to social or environmental as their core business, is an increasingly important sector.
A traditional economics textbook view of society is that profit-maximizing firms generally lead to efficient social outcomes, leaving governments to deal with externalities, public good provision, redistribution or poverty alleviation programs. Individuals with a desire to pursue their own social or ethical objectives could do so by giving time or money to the people and nonprofit organizations they care about. While society has never been organized in such a simple way, this traditional view seems particularly stale in today’s world of increasing overlaps between the for-profit, governmental and nonprofit spheres. More and more governments are engaging private sector capital and organizations to address social problems in new ways, and are less likely to adopt new social innovations due to budget pressures. Some corporations are redefining their obligations as citizens with expanded social responsibility efforts. Many individuals are bringing social and ethical considerations to their decisions about what to buy or for which employer to work. Nonprofit organizations are pursuing market-based strategies to expand their impact and mission-driven for-profit enterprises are becoming more prevalent. A growing contingent of investors are seeking social impact in addition to financial returns.
Though it remains relatively small compared to the corporate and government sector, the role of the social sector is more fluid today and understanding the structure, strategies, and management tools of the sector is more and more relevant. That said, in many ways managing in a social-maximizing context is not substantially different than in a profit-maximizing context. The same fundamental approaches to marketing, competitive analysis, etc. can be translated across contexts. Where there are differences, however, they are important. In this class, we will review and analyze the distinctive challenges of managing for social or environmental impact, as opposed to profit maximization.
In this course, we will use cases and exercises to examine and unpack key topics in social sector management and strategy. This includes how organizations are structured from a tax-status perspective; common business models; management tools such as the construct of theory of change/intended impact, impact measurement, marketing to donors and beneficiaries; managing paid and unpaid labor; funding sources such as philanthropy and impact investing; governance; and scale and growth. Via an overarching understanding of these important distinctions in managing a successful social venture, we will develop the ability to analyze the distinctive components of a social sector organizations capacity to deliver the impact it promises.