The Organization of Social Enterprises: Transacting Versus Giving

49 Pages Posted: 27 Jul 2018

See all articles by Ofer Eldar

Ofer Eldar

Duke University School of Law; Duke Innovation & Entrepreneurship Initiative

Date Written: July 21, 2018


Traditional models of organizations focus on the distinction between for-profits and non-profits. This article presents a model where entrepreneurs receive subsidy-donations and have a choice not only between the for-profit and non-profit 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 theory of the firm and subsidy policies to promote development.

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 (July 21, 2018). 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 Innovation & Entrepreneurship Initiative ( email )

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

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