Do Nonprofit and For-Profit Social Enterprises Differ in Financing?

Abstract

This study is an empirical investigation of the survey data from 109 social enterprises, nonprofit and for-profit, in Illinois, the USA. We compare sources of startup funding and revenues of social enterprises by the organizational form. Findings reveal that nonprofit social enterprises do not significantly differ from their for-profit counterparts in sources of startup funding. But the types of revenues differ by the organizational form of social enterprises. Nonprofit social enterprises are more likely to rely on foundation grants and government grants as their primary sources of revenue, while for-profit social enterprises are more likely to rely on revenues through sales.

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Notes

  1. 1.

    B Lab is a nonprofit that serves a global movement of people using business as a force for good. One of its initiatives is B Corp Certification. For a for-profit to become a certified B Corp, it must meet B Labs’ standards for social and environmental performance, accountability and transparency.

  2. 2.

    For-profit organizations registered as L3C, however, can have access to investment from charitable foundations (Battilana et al. 2012).

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Correspondence to Baorong Guo.

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Guo, B., Peng, S. Do Nonprofit and For-Profit Social Enterprises Differ in Financing?. Voluntas 31, 521–532 (2020). https://doi.org/10.1007/s11266-020-00218-5

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Keywords

  • Social enterprise
  • Organizational form
  • Finance
  • Startup funding
  • Revenue