The Organization of Social Enterprises: Transacting versus Giving

48 Pages Posted: 27 Jul 2018 Last revised: 13 Oct 2021

See all articles by Ofer Eldar

Ofer Eldar

Duke University School of Law; Duke University - Fuqua School of Business; Duke Innovation & Entrepreneurship Initiative

Date Written: October 11, 2021


Traditional models of organizations focus on the distinction between for-profits and nonprofits. This article presents a model where entrepreneurs receive subsidy-donations and have a choice not only between the for-profit and nonprofit forms, but also between (1) giving to the beneficiaries, and (2) forming social enterprises that transact with them. Entrepreneurs form social enterprises to measure beneficiaries’ abilities and tailor disbursals to their needs when variance in abilities is high. When variance is very high, social entrepreneurs choose to form for-profits rather than nonprofits. This analysis has implications for the evolution of organizational forms and policies to promote social entrepreneurship.

Keywords: social enterprise, corporate social responsibility, theory of the firm, non-profits, development, subsidies

JEL Classification: L3, K1, H2

Suggested Citation

Eldar, Ofer, The Organization of Social Enterprises: Transacting versus Giving (October 11, 2021). Duke Law School Public Law & Legal Theory Series No. 2019-44, Available at SSRN: or

Ofer Eldar (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

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