Background and Need

Over the past few decades, we have witnessed traditional boundaries separating the nonprofit, business, and public sectors become increasingly blurred. Many for-profit firms have broadened their purpose to include social and environmental aims, while a growing number of nonprofits and governmental organizations have adopted market-based approaches to advance their goals. At the same time, a new fourth sector of for-benefit organizations has emerged at the intersection of the three traditional sectors (see diagram). 

For-benefits are a diverse class of organizations that share two main characteristics—they are primarily driven by social and/or environmental purposes, and they earn a substantial portion of their income through business activities. They include sustainable businesses, social enterprises, municipal enterprises, community development corporations, social businesses, and a wide range of other models. 

 

In recent years, there has been a growing recognition among governments at the national, state and local levels of the fourth sector’s potential for delivering solutions to a broad array of social, environmental, and economic challenges, from job creation and sustainable economic development to climate change, healthcare, education, social services, energy and more. As a result, a range of new policies and programs, such as hybrid corporate structures and impact investment funds, are being developed to create a more enabling environment for for-benefit entities and to accelerate the growth of the fourth sector. Most of these efforts, however, are hampered by a lack of adequate data and analysis. There is a critical need to undertake a comprehensive research agenda to help policymakers better understand and address barriers facing for-benefits and determine strategies for promoting the fourth sector’s growth and impact. 

 


The Initiative

 

 

To meet the global demand for better data on the fourth sector and a more rigorous understanding of for-benefit organizations, The Fourth Sector Group, in partnership with the Urban Institute, The B Team, and a 180+ member Council of experts are undertaking the Fourth Sector Mapping Initiative. The project was launched with seed funding from a competition held at the Growing the Impact Economy summit at Harvard University in 2013. The Urban Institute is leveraging its experience with the development of the National Center on Charitable Statistics, a comprehensive repository of data on the third sector in the U.S., and The B Team is leading the development and deployment of a global outreach campaign to collect data on the fourth sector.
 

For-Benefit Organizations and the Fourth Sector

Scope

 

 

The purpose of this initiative is to shed light on the emerging fourth sector of the economy. This means that the study will be focused on gathering information on all organizations that have a primarily social and/or environmental purpose and earn a substantial portion of their income through commercial activity. What constitutes a social/environmental purpose, how its achievement is assessed, and how much earned income is sufficient are all open questions—along with many others that need to be addressed. 

 

Because the law has not caught up with the field of practice, the study will be agnostic as to the current legal form of these entities. There are many organizations that fit broadly within the fourth sector but are currently legally structured as for-profits, nonprofits, governmental entities, some type of hybrid, or one of a number of new legal forms which have been enacted in various jurisdictions. 

While the Initiative is primarily focused on identifying and understanding for-benefit organizations, we will cast a wide net that will capture data on profit-motivated firms that are socially/environmentally responsible or have products, services or practices that make a significant social/environmental impact, or on charities that employ business management practices or are highly entrepreneurial. We may also inevitably gather information on related fields such as social innovation, social entrepreneurship, social entrepreneurs, CSR, sustainability, and others, all of which intersect in important ways with the fourth sector.

Blended Value Organizations

Chaordic Organizations

Civic Enterprises

Common Good Corporations

Community Development Corps.

Community Interest Companies

Community Wealth Organizations

Cooperatives

Cross-Sectoral Partnerships

Employee Owned Businesses

Ethical Social Institutions

Faith-Based Enterprises

Hybrid Organizations

Mission-Driven Businesses

Municipal Enterprises

New Profit Companies

Non-Profit Enterprises

Social Businesses

Social Economy Enterprises

Social Enterprises

Sustainable Enterprises

Key goals of the Initiative include developing a consensus definition of the fourth sector’s boundaries and a taxonomy of for-benefit organizations, conducting a global mapping of for-benefits and their supportive ecosystem, identifying the barriers these organizations face, and understanding their potential for generating economic, social and environmental impacts. Specific deliverables include the following:

 

  • Fourth Sector Definition
    Identifying the characteristics that distinguish for-benefit organizations
    from traditional nonprofit, for-profit, and governmental organizations
    (i.e. defining the fourth sector’s boundaries). 

     

  • Taxonomy of For-Benefit Organizations
    Creating a classification structure that can be used by policymakers,
    investors, researchers, and other key stakeholders to differentiate and
    describe the various types of for-benefit organizations.

     

  • Glossary
    Developing a glossary of terminology in the field.

     

  • Census Instrument
    Developing a comprehensive census instrument for collecting,
    (a) information on for-benefit organizations, including the barriers
    they face, their social, environmental and economic impacts, and
    other data useful to policymakers, investors, and other key stakeholders; 
    and (b) information on organizations that form the supportive ecosystem
    around the fourth sector.

     

  • Data Acquisition and Integration
    Acquisition of data from (a) existing public and private datasets that include
    information on for-benefit organizations and fourth sector support organizations,
    and (b) global distribution of the census instrument. 

     

  • Data Commons of For-Benefit Organizations and the Fourth Sector's Supportive Ecosystem
    Developing an open, freely accessible, interactive online database of for-benefit organizations and fourth sector support organizations, which will be designed and stewarded as a participatory “data commons” for the benefit of public agencies, practitioners, researchers, consumers, economic developers and other members of the fourth sector community. Includes development of a technology platform as well as operating guidelines, participation agreements, and a governance structure that enables broad participation in the commons.

 

 

Process & Timeline
 

 

The Initiative aims to map the fourth sector through a broadly collaborative process. A small project team coordinates a diverse Advisory Council of 180+ thought leaders and seasoned practitioners who serve as the brain trust for the effort, shaping the content of all deliverables. Together, we are compiling data on for-benefit organizations and their supportive infrastructure by conducting background research, acquiring existing data, and developing and fielding a global census. FSMI Council members are either engaged in one or more Working Groups, or serve in an at-large capacity, supplying information and providing feedback at key milestones along the way. Council members initially convened on a conference call in April, 2014 to kick off the Initiative. An in-person convening of the Council was held in January, 2015 in Washington DC, at a conference organized in partnership with the Federal Reserve Board of Governors, George Washington University, the Urban Institute, and The B Team. Once the census instrument has been completed, it will be fielded through a high visibility global outreach campaign to maximize reach and response. The data collected will be assimilated into a master Data Commons on the fourth sector. At that point, the taxonomy and census instrument will be placed in the public domain as “living” documents that can be improved and adapted over time. During this initial phase, which is expected to be completed in the spring of 2017, the Council will also help develop a roadmap for ongoing enhancement and growth of the Data Commons and the future of the initiative. Outreach will be conducted to potential users and funders, while collaborators and organizations will be invited to contribute content on an ongoing basis. The Working Groups include:

 

  • Taxonomy Development
    Conceptualizing a system of classifying for-benefit organizations and developing a consensus definition of the fourth sector’s boundaries based on collected data, analysis, and literature reviews. 

     

  • Census Design
    Developing a census instrument for collecting data on for-benefit organizations and fourth sector support organizations (e.g. capital providers, metrics, technical assistance, etc.) to serve the needs of various constituencies (policymakers, economic developers, investors, researchers, consumers, etc.).

     

  • Data Acquisition
    Collecting and compiling data on for-benefit organizations and fourth sector support organizations from existing public information and organizational databases, and helping develop a strategy for deployment of the census instrument for maximum reach and response. 

     

  • Data Commons
    Developing guidelines, governance structure, and protocol for community access to the database of fourth sector organizations, and devising a plan for its ongoing stewardship and growth.

 

 

Fourth Sector Supportive Ecosystem