The Emerging Fourth Sector

The social sector in the United States has a rich history of connecting communities and individuals with vital resources to address our nation’s most daunting social challenges. However, amidst today’s increasingly competitive funding landscape and complex regulatory environment, the effectiveness and sustainability of traditional charities and nonprofits is often challenged.

Innovators working in traditional government and nonprofit settings often find that their new ideas are stymied by organizational culture or funding limitations. Opportunities for innovation are heavily influenced by both internal factors (such as organizational culture and staff capacity), and external factors as well (such as policy and funding considerations). A recent survey of nonprofit leaders conducted by Johns Hopkins University found that more than two-thirds of organizations developed at least one innovation in the past two years that they were unable to adopt, due to funding or other considerations.

In the social sector, innovations may be new products or services, but are also likely to be technical, managerial or process-related innovations to deliver services more effectively. However, a barrier to innovation in the social sector is that “organizations tend to invest more in skill development and less in creativity education and training.” As a result, even seasoned nonprofit leaders have never received training that even remotely resembles the interactive opportunities offered through an innovation incubator process. The Social Innovations Lab ™ offers a unique opportunity for social innovators to develop their own creativity and immerse themselves in a culture that values and teaches entrepreneurial thinking.

The social sector is changing whether you work in private, nonprofit, or government organizations. The public, as well as leaders in government, social impact and mission aligned investors are demanding new social models that are cost effective, financially self-sustainable, adaptive to feedback and metrics, with clear outcome accountability measures, and the potential for large-scale impact and systems change. Social sector-oriented leaders from the nonprofit, government and private sectors are increasingly drawn to funding social innovation that has a lasting impact on communities, creates systems change, is financially self-sustainable, and has the potential to be taken to scale. They are less interested in funding costly traditional strategic plans, but do seek ways to test new ideas and models to determine whether the ideas are effective, sustainable or scalable before they receive significant investments.

The social enterprise movement is gaining traction worldwide, in part because it combines the passion and commitment of the social sector with the business and financial savvy of the private sector. Nevertheless, there are few funding avenues available to support the creation, incubation, start-up, and/or scaling of new social enterprises. There are also far fewer capacity-building resources available to support the most talented entrepreneurs within the social sector, many of whom lack formal business training, and do not have the knowledge and skillset to turn their ideas into positive social change.