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Fourth Sector Development: Scaling Private Enterprise for Public Good

  • Open Gov Hub 1110 Vermont Avenue Northwest Suite 500 Washington, DC, 20005 United States (map)

Many of the social, environmental, and economic challenges we face are downstream consequences of outmoded economic systems and organisational models whose roots date back to the industrial age. The scale, urgency, and complexity of these challenges demand a fundamental upgrade to business-as-usual.

Over the past few decades we have seen many for-profit companies broadening their purpose to pursue social and environmental aims, while many nonprofits and governmental organizations have adopted market-based approaches to advance their goals. At the same time, a rapidly growing movement of “for-benefit” enterprises around the world have been leveraging the power of business to solve social and environmental problems. These pioneering for-benefits are challenging the traditional boundaries that separate the public, private, and social sectors, giving rise to a new, fourth sector of the economy. Though still quite nascent, a supportive ecosystem around this fourth sector has also been emerging in recent decades, with innovations in finance, metrics, policy, education, and more. The rise of Impact Investing, Corporate Social Responsibility, Benefit Corporations, Social Enterprise, Sustainability, Venture Philanthropy, and Conscious Capitalism are but a few examples of these trends.

To advance inclusive, sustainable growth and achieve the Global Goals for Sustainable Development by 2030, it is estimated that tens of trillions of dollars must be invested into enterprises across the world that can deliver market-based solutions to a wide range of social, environmental, and economic problems. These investments are more likely to achieve their intended development outcomes—and not generate counterproductive harmful externalities in the process—if they are directed toward for-benefit enterprises.

For-benefits are already a large sector of the economy, comprising 10% of GDP in the U.S. and Europe and growing jobs twice as fast as traditional for-profit firms. And they’re poised to grow rapidly, because, as numerous studies show, there is tremendous demand for them among consumers, investors, employees, millennials, entrepreneurs, and other stakeholders.

The fourth sector promises to unleash a wave of innovation and entrepreneurship that can deliver scalable solutions to pressing global challenges. Its growth accelerates a transition toward more inclusive, sustainable, and resilient economic systems. However, for the sector to realize its potential, much work needs to be done to strengthen its supportive ecosystem. To succeed at delivering on both their commercial and impact objectives, for-benefit enterprises need access to financial markets that seek positive social and environmental impacts, enabling policy and regulatory environments, integrated assessment and reporting standards and tools, specialized technical and legal assistance and training offerings, and more. In short, the mechanisms that make a market function.

 

Discussion Questions:

  • What opportunities and implications does the fourth sector’s growth present for government, business, and the third sector?

  • What are the barriers facing for-benefit enterprises?

  • What policy and market reforms are needed to accelerate fourth sector growth by the trillions of dollars required to achieve the SDGs by 2030?

  • How do we scale collaboration at the scale and pace needed?

Speakers

Heerad Sabeti
Co-founder and CEO, The Fourth Sector Group

As a serial entrepreneur and systems thinker, Heerad Sabeti is devoted to pursuing systemic solutions to complex social, environmental and economic challenges. He is co-founder and CEO of The Fourth Sector Group (4SG), a multi-stakeholder, collaborative platform dedicated to accelerating the growth of the fourth sector globally.

 

Alan J. Abramson

Professor of Government and Politics, Schar School of Policy and Government, George Mason University
Founding Director, Mason’s Center for Nonprofit Management, Philanthropy, and Policy

Alan J. Abramson is a Professor of Government and Politics in the Schar School of Policy and Government at George Mason University, and Founding Director of Mason’s Center for Nonprofit Management, Philanthropy, and Policy. Alan is also currently a Senior Fellow at the Aspen Institute and an Affiliated Scholar at the Urban Institute. In these several positions, he teaches, conducts research, and works with leaders on a broad range of nonprofit and philanthropic issues.

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