Opinion
School & District Management Opinion

1996: Entrepreneurship Reaches a Critical Mass in Public Education (II)

By Marc Dean Millot — February 15, 2008 6 min read
  • Save to favorites
  • Print

This is the fifth in a series addressing the questions implied by Alexander Russo’s statement:

“Social entrepreneurship is everywhere these days…. And of course it’s a big buzzword in certain education circles as well. I still don’t know what it means.”

Today, it’s hard to find an operationally useful definition in academic or popular use; i.e., one that distinguish “social entrepreneurs” from other categories of people in the crowd.

The term entrepreneur dates to the 1700s. “Social entrepreneur” was coined in the 1960’s. It became part of the social science vocabulary in the 1970’s. I would say the phrase was popularized by students and readers of Harvard Business School Professor Rosbeth Moss Kanter. (She was one of the first to bring issues of gender and family into the cannon of academic business literature, and so one of the first to explore the social dimensions of corporate existence.) The phrase has been used to cover everyone from those who run firms with “a social conscience” (Bill Gates – Gates Foundation), nonprofit leaders (Michael Brown – City Year), wealthy individuals (Baron Michael Young of Dartington - Open University), academics with ideas that are being used by nonprofits (Greg Dees - Fuqua). At some point, such breadth takes meaning away from the phrase as a definition. For example, everything these folks did was done long before the term was invented.
If “social” entrepreneurs running for-profits are simply commercial entrepreneurs with a marketing spin, the true vehicle of social entrepreneurship must be the nonprofit. And among those who use and write about the term today, it is most often employed to describe the founders of nonprofits in public education. For this sector (and, as I’ll discuss later, very ironically for those who’ve watched this closely – or lived it directly), 1996 marks the golden age for the social equivalent of the small businessperson, specifically some 3000 “guys or gals” who saw the need for a particular kind of local school and seized the charter opportunity. It is also the time when research projects like Success for All (1997) and the Northwest Evaluation Association (1997) became stand-alone nonprofit fee-for-service providers. The confluence of the charter and standard movements, and the several other factors mentioned in the last posting, opened up a space for a certain kind of nonprofit leader in public education just as it did for commercial entrepreneurs.

What differentiates these nonprofit leaders from the commercial entrepreneur is ownership and control. The budding social entrepreneur cannot have a legally cognizable ownership stake. I’m a lawyer, and I managed the somewhat complicated legal work leading to formation of the Education Entrepreneurs Fund, but let me cite the Non Profit Kit for Dummies:

No one person or group of people can own a nonprofit organization…. Nonprofit assets can be sold, but the proceeds of the sale must benefit the organization, not private parties…. If you start a nonprofit and decide at some point in the future that you don’t want to do it anymore, you have to walk away from it and leave the running of the organization to someone else. Or, if the time has come to close the doors for good, any assets the organization owns must be distributed to other nonprofits fulfilling a similar mission…. When nonprofit managers and consultants talk about “ownership” of a nonprofit organization, they’re using the word metaphorically....

Nor is it permissible for the social entrepreneur to have legal control over a nonprofit. This time a section from The ABC’s of Nonprofits published by the American Bar Association, titled “Do you Really Want a Nonprofit? – Control Issues”

To assure that the organization is operated for this “nonprofit” purpose, controls are necessary.... One common method to assure such control is to have a board of directors made up of a majority of “independent” or “disinterested” directors. This means that Sam cannot be the only director; he will have to select others to serve with him. Of courtse that also means that Sam’s ultimate ability to control the organization will be limited. In fact, it may mean that at some point, Sam will be outvoted, and perhaps even removed from the board.

Some individuals, when they form a nonprofit, do so with a specific vision of what they want to see accomplished, and indeed, without their energy and vision, the nonprofit is unlikely to succeed. However if the founder is unwilling to share control, serious consideration should be given to whether a nonprofit corporation is the correct form of entity.


Consider as well the answer given on nonprofit advisory Board Source’s website to the question : What control does a nonprofit founder have over the organization?

Getting a nonprofit organization up and running is no small feat. Nonprofit founders invest a great deal of time, effort, and often personal funds, to get their organizations established. Rightfully so, they possess a certain pride of ownership and sense of personal accomplishment. Their creativity and commitment deserves real respect…. But they do not “own” the organization the same way founders of a small business have personal equity in their companies…. Nonprofit founders need to recognize that, ultimately, the buck stops with the board…. As a part of the board, a founder can voice opinions during meetings and when voting, like all board members. As the chief executive, he or she manages the operations, reports to the board and, like all nonprofit chief executives, should be evaluated by the board on his or her performance.

Because of their passionate commitment and personal sacrifices, founders exert considerable influence that extends well beyond managing the organization. Many founders have difficulty imagining someone else leading the organization, and it is natural for them to fear losing control as time passes and others get involved. Some founders seek to establish a permanent position for themselves by amending the bylaws. However, “founder” does not fit into an organizational chart and does not have easily defined roles and responsibilities within an organization.

Legal ownership is essential to the entrepreneurial dynamic of commercial settings. There is a huge difference between the brilliant research scientist, the incredible general counsel, the great site manager, the best salesman, and the owners. Without ownership, the individual is simply selling his or her time. She may be “psychologically” invested, he may have taken out his own wallet to meet the entity’s expenses, but ultimately he or she is subject to the strategy and direction of those with legal ownership.

Because founders are prevented by nonprofit law from controlling these entities and/or holding any ownership stake of their assets, they cannot be seen as simply a subset of entreprenreurs. They are something different. However, nonprofits operated in public education long before 1996, and the personality type of founders hasn’t changed that much, Either we call all nonprofit founders social entrepreneurs – in which case the term is again, spin; or we come up with something important to distinguish this new group of nonprofit leaders from their predecessors.

What distinguishes the nonprofits formed circa 1996 from those formed before is potential sources of revenue. Before that time, education nonprofits relied on philanthropy to work in schools. By that time, it became possible - at least to in principle - to operate on a break-even basis with fees charged to public education for services rendered. What the new nonprofit leaders brought to the table was a commitment to demonstrate the social value of their views on public education more by convincing schools and parent to buy their offerings, and less by convincing foundation program officers. With this came an interest in business skills. This in turn drew the new wealth creating new foundations to the idea of venture philanthropy – basically applying the commodification of venture capital to the development of social enterprise, and the valuation of Starbucks for k-12 over k-12s neighborhood coffee shop. If you are an independent charter school you are a “mom and pop.” The “social entrepreneurs” are running the nonprofit outfits with aspiring to national scale.

Next: Zeroing in on the reality of social entrepreneurship?

The opinions expressed in edbizbuzz are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.

Events

School Climate & Safety K-12 Essentials Forum Strengthen Students’ Connections to School
Join this free event to learn how schools are creating the space for students to form strong bonds with each other and trusted adults.
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
IT Infrastructure & Management Webinar
Future-Proofing Your School's Tech Ecosystem: Strategies for Asset Tracking, Sustainability, and Budget Optimization
Gain actionable insights into effective asset management, budget optimization, and sustainable IT practices.
Content provided by Follett Learning
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Budget & Finance Webinar
Innovative Funding Models: A Deep Dive into Public-Private Partnerships
Discover how innovative funding models drive educational projects forward. Join us for insights into effective PPP implementation.
Content provided by Follett Learning

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

School & District Management From Our Research Center Here's What Superintendents Think They Should Be Paid
A new survey asks school district leaders whether they're paid fairly.
3 min read
Illustration of a ladder on a blue background reaching the shape of a puzzle piece peeled back and revealing a Benjamin Franklin bank note behind it.
iStock/Getty
School & District Management Q&A How K-12 Leaders Can Better Manage Divisive Curriculum and Culture War Debates
The leader of an effort to equip K-12 leaders with conflict resolution skills urges relationship-building—and knowing when to disengage.
7 min read
Katy Anthes, Commissioner of Education in Colorado from 2016- 2023, participates in a breakout session during the Education Week Leadership Symposium on May 3, 2024.
Katy Anthes, who served as commissioner of education in Colorado from 2016-2023, participates in a breakout session during the Education Week Leadership Symposium on May 3, 2024. Anthes specializes in helping school district leaders successfully manage politically charged conflicts.
Chris Ferenzi for Education Week
School & District Management Virginia School Board Restores Confederate Names to 2 Schools
The vote reverses a decision made in 2020 as dozens of schools nationwide dropped Confederate figures from their names.
2 min read
A statue of confederate general Stonewall Jackson is removed on July 1, 2020, in Richmond, Va. Shenandoah County, Virginia's school board voted 5-1 early Friday, May 10, 2024, to rename Mountain View High School as Stonewall Jackson High School and Honey Run Elementary as Ashby Lee Elementary four years after the names had been removed.
A statue of confederate general Stonewall Jackson is removed on July 1, 2020, in Richmond, Va. Shenandoah County, Virginia's school board voted 5-1 early Friday, May 10, 2024, to rename Mountain View High School as Stonewall Jackson High School and Honey Run Elementary as Ashby Lee Elementary four years after the names had been removed.
Steve Helber/AP
School & District Management Quiz Quiz Yourself: How Much Do You Know About the School District Technology Leader?
The tech director at school districts is a key player when it comes to purchasing. Test your knowledge of this key buyer persona and see how your results stack up with your peers.