Internal Factors Supporting Social Purpose Driven for-Profit Activities of Human Service Organizations

Background: As state and private donor funding for human service organizations (HSOs) has diminished significantly in Canada and as the non-profit sector continues to grow, HSOs have been required to diversify their funding sources. One of the ways HSOs have done so is through engagement in for-profit activities such as using social financing strategies, acquiring for-profit businesses, or incorporating fee for service models. We refer to these for-profit activities as social purpose driven because they are intended to increase the resource capacity of the HSO to maximize improved outcomes for their service user group(s).

Our previous research identified a comprehensive framework for the growth and sustainability of these organizations through diversification of revenue generating activities, adaptability to external environmental factors, hiring human resources personnel with diverse areas of expertise, engagement in partnerships, assessing [social] impact, and the identification of consumer needs. Building from this, the current project highlights the internal factors that were found to increase the capacity of HSOs to engage in social purpose driven for-profit activities.

Methods: Forty-six one-on-one semi-structured interviews were conducted virtually with executive leadership from non-profit and/or social enterprise organizations engaged in social purpose driven for-profit activities across Canada. Data were analyzed using standard procedures of analytic induction, including constant comparison and pattern coding.

Results: Findings showed that several internal factors contributed to successful social purpose driven for-profit activities, including organizational structure (such as organization type, the allocation of roles/responsibilities, and governance structure); human resources practices (including personnel dedicated to supporting for-profit activities, performance management, and hiring according to employee expertise); financial management practice (including cross-subsidizing between the non-profit and social purpose for-profit business side, diversifying their revenue sources, and seeking investors); leadership orientation (including the roles/responsibilities of senior leadership, and the characteristics embodied by leaders in the organization); service user engagement (including the programming and diverse opportunities available to individuals accessing programming at the organization, as well as advocacy for specific populations); and organizational culture (including the alignment of all for-profit and non-profit activities with the values and mission of the organization).

Conclusion: Accessing multifarious funding sources has been found to enhance the autonomy of HSOs, enabling them to operate more closely in alignment with their agency mission, vision, and values. To increase the capacity of HSOs to engage in social purpose driven for profit activities, it was imperative to identify internal factors which might contribute to the success of these activities. As such, the research findings highlight the nuanced internal organizational factors that HSOs contribute to successful social purpose driven for-profit activities

Implications for education and training of HSO personnel (including social workers) are related to increasing knowledge and skill development around financial/business management and social entrepreneurship, strengthening/building capacity for communication within organizations so that all organizational personnel are clear about how their role aligns with the organizational mission (whether engaging in the non-profit or the for-profit areas of the organization), how to navigate partnership engagement as a component of organizational structure, and conflict [resolution] as a strength in these hybrid organizations.