In this era of fiscal constraints and decreases in governmental funding sources, investors should be aware of an additional business structure that addresses some of our most pressing social concerns -- non-profit organizations.
Non-profits provide a great engine for social change because they allow for a more bottom-up, Schumpeterian approach to solving problems. Since they are private firms with public oversight, non-profits can experiment at the margin and take calculated risks for their stakeholders. This key insight remains important because just as for-profit markets can fail, government too can be inefficient in producing positive social outcomes.
Stories abound of non-profits pioneering novel approaches and having huge, long-term social impacts. To name a few: Mothers Against Drunk Driving changed attitudes toward alcohol, the American Lung Association led the fight against smoking, Wikimedia created Wikipedia, and Children's Television Workshop created "Sesame Street." All of these examples and many more help to demonstrate the positive "spillover effects" that non-profits generate.