Philanthropic Innovation and Creative Capitalism: A Historical and Comparative Perspective on Social Entrepreneurship and Corporate Social Responsibility

55 Pages Posted: 8 Feb 2013 Last revised: 6 Aug 2013

Shruti Rana

Indiana University Bloomington - School of Global and International Studies; Affiliated Faculty, Indiana University Maurer School of Law, Stewart Center on the Global Legal Profession

Date Written: 2013

Abstract

Each generation creates its own philanthropic bodies, with novel structures promising both increased sustainability and efficiency. From the seventeenth-century financial imperialists to today’s internet entrepreneurs, innovation, wealth, and philanthropy have moved in tandem, shaping one another and resulting in new philanthropic forms.

The most recent of these emerging entities is the “for-profit charity,” which relies on market profits and market principles to replace donations and to maximize its impact. Current philanthropic literature praises these market-based structures as revolutionary innovations that enhance long-term sustainability, and the focus of legal reforms falls along these lines. Yet the legal literature fails to fully appreciate the lessons of history. Although state after state is authorizing or fostering the growth of such hybrid entities, and although these entities do have the potential to contribute to philanthropy in novel ways, without a broader set of legal and regulatory reforms, the new philanthropic entities now emerging will be unable to meaningfully harness market forces to enhance their philanthropic endeavors.

This Article argues that the key philanthropic innovation transforming society today is not the public-private hybrid model. An examination of the history of philanthropic innovation in the U.S. and in other nations exposes what the current literature largely overlooks. That is, a historical and comparative analysis reveals that meaningful and lasting philanthropic change arises when philanthropic entities are able to capture and utilize the market innovations that are transforming society and leading to bursts of industrial or technological progress. Thus, groundbreaking philanthropic change comes when charitable entities can harness such transformative commercial and technological developments towards charitable ends.

In this light, the most critical philanthropic innovation transforming society today is not the public-private hybrid idea, but rather the little studied phenomenon of firms applying to philanthropy the ideas that made them successful in the marketplace. Understanding this under-appreciated nexus between business and philanthropy is vital for harnessing the larger potential of the new philanthropy, as well as for promoting regulatory action that can enhance both business and philanthropic innovation. Recognizing philanthropic entrepreneurialism as a reflection of, and reaction to, commercial innovations such as the development of capital pooling models or internet social networks is imperative for the design of a more proactive and efficient regulatory regime.

Keywords: philanthropy, innovation

Suggested Citation

Rana, Shruti, Philanthropic Innovation and Creative Capitalism: A Historical and Comparative Perspective on Social Entrepreneurship and Corporate Social Responsibility (2013). Alabama Law Review, Vol. 64, 2013, p.1121-; U of Maryland Legal Studies Research Paper No. 2013-8. Available at SSRN: https://ssrn.com/abstract=2213349

Shruti Rana (Contact Author)

Indiana University Bloomington - School of Global and International Studies ( email )

355 N. Jordan Avenue
Bloomington, IN 47405
United States
812-856-7328 (Phone)

HOME PAGE: http://https://sgis.indiana.edu/faculty/directory/rana-shruti.html

Affiliated Faculty, Indiana University Maurer School of Law, Stewart Center on the Global Legal Profession ( email )

211 S. Indiana Avenue
Bloomington, IN 47405
United States
812-856-7328 (Phone)

HOME PAGE: http://https://sgis.indiana.edu/faculty/directory/rana-shruti.html

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