Give Something Back’s Mike Hannigan on The Emerging 4th Sector

The following guest post by Give Something Back President Mike Hannigan was originally published as an introduction to NCG’s All Member Newsletter Summer issue. Since Mike’s introduction makes connections between NCG’s Annual Meeting, the upcoming Corporate Philanthropy Institute and our transforming sector, we decided to re-post it here on our blog.


Dear Friends and Colleagues,

We can speak of the non-profit sector, the public sector and the private sector and everyone knows what we are talking about. We don’t have to specify a particular organization, company or agency to define what we are referring to. The specific manifestations come and go but the sectors remain. They have institutional permanence, at least as far as we can foresee. It’s in the interplay of these 3 sectors, at least in the US, that broadly defines what we might call the quality of life in America.

Some would argue, myself included, that over the past decades, the erosion of the basic institutions that support quality of life for the citizenry; public health, public education, a measure of income and wealth parity, has called into question the ability of the 3 sectors, each working on behalf of their stakeholders to cobble together a fair and just society by any consensual standard. It is not a question of available resources (we are still a rich and powerful nation) but rather the misallocation of resources to needs that defines the disconnect felt by many. It is not our people or our ideas that have fallen short, but rather our institutions.

As necessity is the mother of invention there is evidence to suggest that a 4th sector is emerging in our society. Earlier this year NCG Annual Meeting keynote speakers Lucy Bernholz and Rob Reich shared their thoughts on this new social economy and its impact on our work as grantmakers. And this June NCG continues this conversation on our transforming sector at the Corporate Philanthropy Institute: Corporate Social (R)evolution-From Social Enterprise to Shared Value.

Broadly speaking, this 4th sector connects the value and wealth creating power of the marketplace through commerce to a broader set of community stakeholders. This multi-faceted and evolving approach in using for-profit business as a tool to create community value has been called “social enterprise”, “mission driven business”, “benefit corporations”, and many other things but one thing is undeniable. It is growing and has been for the past 20 years. The foundational infrastructure underneath the sector is taking shape. Successful businesses on this model are profitable, scaling and replicating. The organizations that identify and support this movement, SVN, BSR, BALLE, SEA, B-Lab,  etc. are growing stronger. The human capital needed to start, staff and grow these businesses is flooding out of the business schools armed with both the technical tools and commitment to social service. Investment capital has become available, as billions of dollars seek investment opportunities that can offer a community benefit as a defined outcome of success. SOCAP, Investors’ Circle, the Google Foundation, Omidyar and Skoll are some of the well known players.

Finally, and perhaps most significant of all, corporate law itself is changing to accommodate this marriage between the power of business and the community stakeholder. The creation of the Benefit Corporation form in California and other States is a transformative change in the way that Capital, Community and Company can connect to their mutual benefit.

If you are fortunate enough to attend this year’s Corporate Philanthropy Institute you will get a sample of these important developments and have the opportunity to engage with grantmakers employing these new approaches. And if you weren’t able to attend this year’s NCG Annual Meeting, take a look at the post-program materials archived on NCG’s website for more information on the new social economy.

Hopefully 50 years hence our replacements will be talking about the 4 sectors as we now talk about 3; and everyone will know exactly what they mean.

Mike Hannigan
Give Something Back

About the author

Northern California Grantmakers is an association of foundations, corporate contributions programs and other private grantmakers. Its mission is to promote the well-being of people and their communities in balance with a healthy environment by the thoughtful and creative use of private wealth and resources for public benefit. To this end, NCG works to enhance the effectiveness of philanthropy, and to strengthen the ties between philanthropy and its many stakeholders; including nonprofit organizations, government, business, media, academia, and the public at large.

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