Social enterprise as a means to reduce public sector deficits

Abstract

Purpose – Charitable organizations have long been held out as separate from other human endeavors. One of the ways that this distinction has been maintained is through the use of a tax exemption. However, difficult economic times have caused state and local governments to search for additional revenues to make up for budget deficits. At the same time, there has been significant growth in the use of a new model for funding social missions as a social enterprise. While charity gets its operating income from grants and donations, this model uses commercial business activities as the funding for a social benefit, the purpose of this paper is to explore this model.Design/methodology/approach – This paper will provide a detailed review of the various reasons behind the tax exemption that nonprofits currently enjoy. It will then review alternatives that are available to government entities to address the desire to obtain additional revenue. Finally, it will examine the notion that a social enterprise may be a wa...