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Philanthropy Roundtable


New Ideas People

July 31, 2004

By Howard Husock

Government inefficiency around the world motivates social entrepreneurs to find another way

David Bornstein grandly titles his new book How To Change the World. The fulcrum for change the author discusses is that fashionable creature known as the “social entrepreneur.” There is much that is useful in his portraits of those who, as a group, are said to pursue social improvement rather than personal profit. But there is also unfortunate imprecision. At a time when the social entrepreneurship movement is in much need of definition, Bornstein has actually conflated a number of different types of leaders under one label.

Bornstein broadly defines the type as “people with new ideas to address major problems who are relentless in the pursuit of their vision.” He looks to history for example and, under this loose definition, lumps together an eclectic group that includes abolitionist William Lloyd Garrison, conservationist Gifford Pinchot, educator Horace Mann, suffragette Susan B. Anthony, settlement house pioneer Jane Addams, and civil rights activist A. Philip Randolph. Such choices reveal the lack of clarity surrounding the answer to the question of who, exactly, is a social entrepreneur.

Anthony, Garrison, and Randolph are really citizen advocates, people who promote causes through private organizations they lead. Mann and Pinchot, as public officials, represent political entrepreneurs, people who promote a cause and strive to assemble constituencies that can attract government funds to that cause. Addams, alone among the above-mentioned group, is a social entrepreneur by my lights—a leader who struggles to start new organizations to provide social services, supported mainly through charitable contributions and their own revenues. In Addams’ case, she opened Hull House in Chicago motivated by the government’s inability to deal effectively with poor immigrants. Hull House provided immigrants not only a place to stay but a place to learn how to assimilate into American culture. Its achievements were supported almost entirely by charitable contributions and the revenues it could produce.

Bornstein’s failure to make these distinctions is particularly unfortunate because his own examples of contemporary social entrepreneurs do largely focus on those who are not mere advocates for a cause or scroungers for government money. Collectively, his entrepreneurs point toward a dramatic and important trend: If we define social entrepreneurs as providers of privately funded direct services, we find that they are growing rapidly in number, not only in America but around the world.

Bornstein quotes a past president of the Rockefeller Foundation who told him, “It’s got to strike you that a quarter of a century ago outside the United States there were very few NGOs [NonGovernmental Organizations involved in social work], and now there are millions of them all over the globe.” For example, Bornstein reports that “in Bangladesh, most of the country’s development work is handled by 20,000 NGOs,” nearly all created in the past 25 years. Between 1988 and 1995, the formerly communist countries of Eastern Europe saw 100,000 citizens’ groups open. The phenomenon even appears in First World countries like France, which saw an average of 70,000 new groups appear annually in the 1990s, and Canada, where such groups have increased by more than 50 percent since 1987. The United States has countless unregistered small groups, while the number of registered charitable organizations rose 60 percent between 1989 and 1998, and fully 70 percent of all registered groups are less than 30 years old.

What has spurred this impressive growth? According to Bornstein’s Rockefeller Foundation friend, “You have restless people seeking to deal with problems that were not being successfully coped with by existing institutions.”

Though Bornstein doesn’t stress it, the main institutional problem making those people restless is the poor quality of government efforts to meet human needs, or the failure of government to recognize needs at all. In other words, the social entrepreneurship movement described by Bornstein can arguably be viewed as a parallel, in the social services sector, to the widespread recognition that utilities and other government-controlled businesses can be better managed by the private, for-profit sector. Social entrepreneurs are evidence that social services, too, may be better placed in private hands—the hands of privately supported nonprofits.

Consider the contemporary examples Bornstein cites. There is Brazil’s health care nonprofit Renascer, founded by Vera Cordeiro to provide follow-up care for children ill-served by public hospitals. Bornstein reports that Cordeiro persisted even after a potential donor rejected her request for support with the response, “Vera, this is the government’s work.” Another Brazilian, Fabio Rosas, frustrated when a state-owned electricity system blocked experimental approaches to bringing power to unserved rural areas, founded a nonprofit to spread the use of photovoltaic energy. Bornstein quotes Rosa as saying that starting his own nonprofit was “much quicker than spending ten years of my life arguing with the government.”

Hungary’s Erzsebet Szekeres, the mother of a developmentally disabled child, grew distressed at the poor quality of state-run institutions for such children and used a private loan to start a business co-operative, staffed by the disabled themselves, that aims to help them live independently. Bornstein notes that she took action in part because “she’s doubtful that state institutions will be reformed any time soon.”

Then there is India’s Childline program, a privately supported call center set up to provide 24-hour referral services for children living on the streets of Bombay. The service has grown to include 11 other Indian cities. In effect, Childline, which directs children to those groups (including government agencies) that provide direct emergency services, is an intermediary that government did not understand was necessary.

Bornstein’s examples of the effective privatization of social services are not confined to the developing world. In Washington, D.C., J.B. Schraam founded College Summit to assist talented but poor high school students who need help in writing effective college application essays. This nonprofit is filling the void left by inadequate guidance counselors in public secondary schools.

In short, Bornstein’s book has the raw material necessary to construct an important argument about popular dissatisfaction with government-provided social services. The groups and individuals he profiles represent the emerging generation of social entrepreneurs who are tired of waiting for government to recognize people’s needs and act upon them effectively.

It’s a phenomenon I’ve observed firsthand in my own role as director of the Manhattan Institute’s Social Entrepreneurship Initiative, a four-year-old awards program that recognizes five start-up nonprofits each year. We define social entrepreneurship as I have above—the direct delivery of a charitable service, with little or no support from government. Like Bornstein, we’ve come upon a wave of organizations that not only operate without public funding but have arisen because of their founders’ dissastisfaction with public programs.

Think Detroit, for example, is a nonprofit recreation program that provides the citizens of Motown with an alternative to the patronage-laden Detroit Parks Department. In Oakland, California, the First Place Fund for Youth targets foster children released from state-run institutions. These children, the fund contends, have not been properly prepared for adulthood; so the fund provides a life-skills assistance program to help them as they grow up. Upwardly Global, a San Francisco-based immigrant aid program, was started specifically because its founder, after working for a series of government contractors, concluded that publicly funded programs were failing to place immigrant professionals in appropriate jobs—to their own detriment as well as to the detriment of the local economy.

Like so many others who celebrate those who would start new nonprofit organizations and build upon new ideas, Bornstein fails to reflect on the central issue of the past two decades: The shape of society in the post-welfare state era. Or, put another way, in an era in which the limits of government spending and the failure of socialism have become apparent, what does the spontaneous generation of so many new nonprofit enterprises, addressing all sorts of needs, say about the proper role of government? Which tasks are best performed by government and which by self-organized nonprofits? What should the contours of the welfare state be when it comes to providing specific social services?

Not long ago a widespread consensus held that nonprofits were useful, but relatively marginal, elements of an advanced industrial society. In Britain, the Nathan Committee, convened in 1952 after the expansion of the British welfare state, wrote that, “Historically, state action is voluntary action crystallized and made universal.” Voluntary organizations, then, could at most point the way toward unmet needs, but they were not the proper vehicles to deliver social services; only “universal” government could do that effectively.

In an age when much of the world was governed by command-and-control economic systems, these understandings of voluntary organizations seemed to be common sense. But so, too, was the notion that state-owned enterprises were the best way to deliver public transportation, power, and water. Today, most of these services have been privatized, and few will argue that government-controlled delivery was better. If power, water, and transportation can be successfully privatized, is it not time to ponder whether a similar phenomenon may be—or should be—happening in the nonprofit sector?

It is too early to know whether the growing number of social entrepreneurs will become advocates for larger government programs and involvement, or whether they will move in the other direction and support the idea that social services, like public utilities, are best handled and delivered within the private sector. The question of scale will, in my view, be crucial in determining which way the wind is actually blowing. If large, new nonprofit organizations emerge to provide universally endorsed social services, or if successful small organizations are widely copied—and if both can attract long-term support from private philanthropy and, especially, individual donors—then we may indeed have entered a post-government social service era. Bornstein has provided significant evidence that day is dawning.

Original Source:



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