The fundamental philosophical and practical foundation of the market economy is belief that the public interest is best served by private initiative.

People want all kinds of stuff. Over the millennia, we’ve found that we can get more stuff by buying most of it from others rather than trying to make it all ourselves. Individual enterprise and the wisdom of crowds have produced vast wealth over much of the globe.

Over time, we’ve also discovered that this process, known metaphorically as the “invisible hand,” has created problems as well as wealth — vast social inequality, environmental degradation and destruction of other life forms.

In response, we’ve created organizations intended to serve not private but public interests — wage and work rules, environmental regulations, public education.

Some of these organizations are governmental and some private nonprofit. Their distinguishing characteristic is that they are funded by many of us through taxation and some of us through voluntary contributions, rather than by consumers who pay directly for the goods or services they consume.

But during tough economic times such as these, most of us resist the idea of taxing ourselves any more, and fewer of us have the resources to give beyond what we need to meet our own needs.

Both government agencies and private nonprofits are confronting the pressures of “austerity.”

Does this mean that the “public” interest will increasingly go unmet? Perhaps, but not necessarily. Welcome to the world of the hybrid organization — part nonprofit altruism, part self-supporting revenue seeking.

Among the best-known hybrid organizations is Goodwill Industries. Goodwill’s core mission is “to create work opportunities and skills development for people facing barriers to employment — among them, persons with disabilities, youth at risk, the chronically unemployed.”

As a nonprofit organization, Goodwill meets its goals in part through voluntary contributions.

Equally important, however, is its operation as a revenue-generating enterprise. It meets its skills development mission in large part by running an efficient retail business. It diversifies both the activities it undertakes and the revenue needed to undertake them by drawing on both altruistic contributions and sales to satisfy consumer demand.

The hybrid model is becoming more common. A recent study by the Harvard Business School and Echoing Green, a nonprofit that supports what it calls social entrepreneurs, cites a number of interesting examples.

One example is an offshoot of the Goodwill Industries model. Hot Bread Kitchen in New York City employs mostly low-income immigrant women who “bake bread inspired by their countries of origin, while learning job skills that can lead them to management positions in the food industry.”

Another, Sanergy, a waste conversion company, created two organizations to work in tandem. One, a for-profit manufacturer of super-efficient recycling toilets, and another, a nonprofit that supports the extension of public water and sewer infrastructure in low-income areas. Together, they become more sustainable than either would be alone.

This social entrepreneurship, I believe, is Maine’s best hope for future prosperity.

Charter schools, public-private training cooperatives and educational analytics companies will produce more educational reform than all of the solely public resources poured into “A Nation at Risk” imperative, Learning Results and school district reorganization combined.

Game and app developers, social network specialists and internet-savvy town clerks will do more to make local government more efficient and responsive to taxpayers than all the tea party revolts combined.

Medical device inventors and deployment of in-home communications technology will do more to curb the frightening rise of health care costs than all of the Supreme Court decisions combined.

We simply need to open up the space traditionally reserved for purely governmental and nonprofit solutions to those offered by hybrid organizations.

Charles Lawton is senior economist for Planning Decisions, a public policy research firm. He can be reached at: clawton@maine.rr.com

 

Copy the Story Link