Fourthsector

Mapping the Fourth Sector

Bill Densmore's running notes on "Mapping the Fourth Sector" summit at George Washington University on Thurs., Jan. 15, 2015:

GWU President Steven Knapp:

• Students are already dreaming about creating fourth-sector businesses. "For many of our students, there is nothing surprising about crossing back and forth between for-profit and benefit enterprises ... they often see no contradition."

Joseph Firschein, Federal Reserve Board of Governors

"We're consumers of this, we're just looking to learn as much as we possibly can." His remarks are his only. Why is fed interested in the topic.

• Make sure fed institutions comply with law, community investment act.
• Inform fed users about practics and products
• Advance public understanding

Want to identity issues that affect the low-income communities and convening. "There are folks here from all different kids of sectors ... we have a lot of expertise in the room. it is not just the presenters, there are alot of people I hope to hear from. "There is a lot of tlak about things like crowd funding, pay for success." Certification regimes -- B-corps and things individual corporations are doing. Impact goals.

Troubling things:

• "What is in and what is out as far as what a for-benefit is?"
• "To what extend are some things for benefit only and how do you distinguish them."

Hopes to tackle those and other questions.

Joe Cordes

High interest on the part of students is absolutely real. Organized this quickly with student volunteers from the Trachtenberg School.

• What is a For Benefit corp: "It's a hybrid organization and what makes it a hybrid is it combines key features of a for-profit enterprise, the strategic objective to make good and services at a profit ... and a committment to achieve a social mssion of some sort."

Economits asks, what is the point of that: Think of the concept of signal, the idea of a non-distribution constraint developed by Henry Hansen. By calling itself a non-profit in the US the entity is signaling that any value it creates are going to be devoted to mission and not shareholder maximization. "That's an important signal." "Having that signal comes at a price and things an economist worry about is limitations on sources of financing for such activities." They are shut out of equity market and have trouble in debt markets.

What about a B-Corp -- should have wider access to a range of financing. But it has to confront the user forces of market competition, which forces a maximizing of private shareholder value. "The late Milton Freedman would have been rolling over in his grave at this type of a gathering."

Why has this peaked now? Economic growth is in areas "that lend themselves to a kind of blending with this kind of activity."

Elizabeth Boris, Urban Institute:

Project to define, identify and create information about the Fourth Sector. It involves 170 volunteers. Calls it a "wonderful cacophony that we have been engaging in in the last 10 months."

Rajiv Joshi, Managing Direcdtor, The B Team

Declining ecosystmes, levels of inequality and poverty. World Bank estimates 4-6 degrees global warming by the end of the century. "Many of the challenges we face in the world today require a fundamentally different approach to solving them. ... How you you transform the ways that organizations, some of the biggest, can be changed. .... purpose of business is not to maximize quartelry returns but to transform environment .... we are building a movement of business leaders who are leading by example to try ot change their companies."

In Brazil, the first publicly listed B-corp is forming. "I think we are at the cusp of a real change we can all be inspired about. We are at a tipping point that we are heading toward."