Cabannes was followed by Kelly Zhao (heroically standing in for her boss, Simon Lv, on two hours’ notice), from the China-based Non-Profit Incubator (NPI). She described a fascinating situation in China, whereby the shrinking of the state and the emergence of a wealthy class has simultaneously created a need for independent non-profit organisations, and a fledgling culture of philanthropy. The newness of these institutions is startling. 2-3 years ago, there were few private foundations in China, and philanthropy was virtually unknown. This is changing fast, but there are still many regulatory issues that non-profits must face, in a country that is still somewhat cautious about the emergence of civil society. NPI exists to help new non-profits negotiate these hurdles, and is looking to replicate its basic model in Northern and Western China. Ms. Zhao said that the situation in China is changing so rapidly that there may no longer be a need for NPI within 3-5 years, as the rules for establishing grassroots organisations become more liberal, and the resources available to them continue to multiply.

Rounding out the panelists, Professor Rathgeb Smith from the University of Washington spoke about how social entrepreneurs can create change in government culture. He said that governments are increasingly recognising that social entrepreneurs can implement more innovative program models, bring new people into the delivery of public services, and broaden the constituency for government to address urgent public problems. As an example, he cited the American tax credit programmes for low-income housing, that have become very popular with developers, banks, CBOs, and virtually everyone. This degree of entrepreneurial and institutional involvement has created a much larger base of support for the provision of low-income housing.

Audience Discussion, and Concluding Thoughts

Following the panelist presentations, a fascinating conversation began to emerge.  Despite the generally upbeat picture painted by the panelists, many in the audience expressed trepidation about social entrepreneurs aligning themselves more closely with government.  One audience member pointed out that the word “politics” had not been mentioned, despite the fact that government is inherently political.  There are many hazards in political affiliation, which social entrepreneurs would do well to avoid.

Other concerns were raised about the corrupting effect that government culture can have upon entrepreneurial culture.  One person pointed out that the mission of many entrepreneurs is to change culture, whereas the mission of government is largely to stabilize it.  These can be diametrically opposing goals, and if government controls the purse strings, then entrepreneurs can turn into bureaucrats. When this happens, then the tactical “success” of acquiring government funding can be a long-term strategic failure.  So, when is it right to pursue government funding, and when should it be avoided?

Unfortunately, the session drew to a close just as the conversation was getting ramped up.  It is clear that social entrepreneurship can offer tremendous levels of innovation and enthusiasm in traditionally governmental sectors, and that governmental funding can be an invaluable resource for scaling up an entrepreneurial organisation.  However, there are serious concerns about forging tight linkages between the two spheres -- most acutely in regards to maintaining the integrity of the organisational DNA.  I can see both the hope and the danger in fostering these relationships. For example: Professor Gergen spoke admiringly of Barak Obama's call to create a Washington-based Office of Social Entrepreneurship, as evidence that the movement was finally coming of age. This may be true -- and I share Professor Gergen's enthusiasm -- but part of me can't help but be concerned that "social entrepreneurialism" not acquire the same sort of partisan taint that now afflicts "faith based organisations."  

Regardless of pros and cons of making financial linkages between governments and entrepreneurs, one thing which cannot be ignored is that social entrepreneurs must operate within the legal and regulatory frameworks established by governments, and that those frameworks can either be tremendously helpful or harmful.  How entrepreneurs should attempt to influence the regulatory ecosystem is still an open question.  Some panelists and audience members called for greater unity within the social entrepreneurial movement, so that entrepreneurs may wield greater political power, rather than fighting amongst themselves for scraps of investment.  But how can this best be done? At the session's end, this frontier still looked like a frontier.