Hybrid Spectrum

Shifting stakeholder expectations of nonprofit organizations to achieve larger scale social impact while also diversifying their funding has been credited as a major factor in the appearance of the “nonprofit hybrid” part for-profit and part nonprofit.1

At this intersection of business and traditional nonprofit is where the social enterprise lies.

Spectrum of Practitioners2

  Purely Philanthropic Hybrid Purely commercial
Motives Appeal to goodwill Mixed motives Appeal to self-interest
Methods Mission-driven Balance of mission and market Market-driven
Goals Social value creation Social and economic value creation Economic value creation
Destination of Income/Profit Directed toward mission activities of nonprofit organization (required by law or organizational policy) Reinvested in mission activities or operational expenses, and/or retained for business growth and development (for-profits may redistribute a portion) Distributed to shareholders and owners

All hybrid organizations generate both social and economic value and are organized by degree of activity as it relates to: 1) motive, 2) accountability, and 3) use of income.

The Hybrid Spectrum includes four types of Hybrid Practitioners.

On the right hand side of the spectrum are for-profit entities that create social value but whose main motives are profit-making and distribution of profit to shareholders.

On the left hand side of the spectrum are nonprofits with commercial activities that generate economic value to fund social programs but whose main motive is mission accomplishment as dictated by stakeholder mandate.3

  • 1. Adapted from Tom Reis, Unleashing New Resources and Entrepreneurship for the Common Good: A Scan, Synthesis, and Scenario for Action. W.K. Kellogg Foundation, January 1999.
  • 2. Adapted from Gregory Dees, Why Social Entrepreneurship is Important to You, from Enterprising Nonprofits: A ToolKit for Social Entrepreneurs, John Wiley and Sons, 2001; and Lee Davis and Nicole Etchart, Profits for Nonprofits, NESsT, 1999.
  • 3. Adapted from Etchart, Nicole and Lee Davis, Profits for Nonprofits, NESsT, 1999.

Nonprofit with Income-Generating Activities

Nonprofit organizations that incorporate some form of revenue generation through commercial means into their operations. Income-generating activities are not conducted as a separate business, but rather are integrated into the organization's other activities.These activities usually realize little revenue relative to the organization’s overall budget and traditional fundraising contributions.

There are two types of income-generating activities, delineated here by purpose:

Social Enterprise

A social enterprise is defined as any business venture created for a social purpose--mitigating/reducing a social problem or a market failure--and to generate social value while operating with the financial discipline, innovation and determination of a private sector business.

Corporation Practicing Social Responsibility

For-profit businesses whose motives are financially driven, but who engage in philanthropy. "Strategic philanthropy" helps companies achieve profit maximization and market share objectives while contributing to public good.

A private company or corporation engages in socially beneficial activities such as grant-making, community involvement, volunteering company personnel, and sponsorship as a means to improve public image, employee satisfaction, sales, and customer loyalty.