Policymakers

 

As we have seen, Fourth Sector entrepreneurs face significant structural obstacles. Legal forms are not optimized for them and tax structures do not incentivize them. By addressing these and other critical issues, policy-makers at all levels of government can enable the emergence of a vital Fourth Sector. Specifically, they can:

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• Facilitate the emergence of Fourth Sector enterprises through measures such as tax adjustments and the elimination of red tape.

• Enact new forms of incorporation that formalize the Fourth Sector marriage of mission and method, along with features of the For-Benefit archetype.

• Incentivize corporations to factor long-term considerations into their return-on-investment calculations.

• Integrate continuous improvement into regulatory standards, rewarding organizations that exceed the prescribed standard and sanctioning those that fall short.

• Amend the law so as to eliminate the primacy of shareholders for Fourth Sector organizations.

• Procure goods and services from Fourth Sector providers.

• Invest public funds in social enterprise and support the provision of technical assistance to Fourth Sector organizations.

• Provide loan guarantees to financial institutions who support Fourth Sector organizations.

• Tax behaviors that have costs to society, regardless of the nature of the organization being taxed.

 

The benefits would be reciprocal: A thriving Fourth Sector would help governments fill their mission. Since the mission and operations of a For-Benefit organization are designed to deliver public good, they should, implicitly, reduce costs to society.

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Governments would also benefit from using For-Benefit enterprises to deliver public goods such as utilities, sanitation, waste disposal, and corrections services. Many of these services are currently privatized, and privatization is sometimes problematic. For-profit companies take a strict financial bottom-line approach to delivering these services, and sometimes this means that service quality suffers. Because For-Benefits will be biased toward providing the best social benefit, rather than delivering the best financial return, they may make better partners for the delivery of these public services. A For-Benefit utility company might put greater emphasis on reducing environmental impacts; a corrections For-Benefit might emphasize prevention over incarceration.