Marco Tavanti, Kyle Pate
Renewing Sustainable Social Economy Accounts: Nonprofit Institutions (NPIs) and Third Sector Institutions (TSI) Economic Contributions to Social and Sustainable Benefits.
The nonprofit sector, often portrayed also as third sector, is a cradle for social innovation while seeking sustainable management solutions. There are numerous nonprofit consulting companies (i.e. CompassPoint) that recognize the social impact of the sector and assist nonprofit organizations to achieve financial sustainability. On one hand, the dependency of the sector on private donation, public funds, and grant cycles can be detrimental for achieving financial sustainability. On the other hand, the advancement of earned income solutions and socially innovative organizational models (i.e. social enterprises) is quite promising. This paper attempts to clarify the connected but distinguished definitions nonprofit institutions (NPIs) in relation to the third sector institutions (TSI) as hybrid organizational configurations between the social sector and the business sector and/or the public sector. Such distinctions are not only relevant to theoretical and legal classifications but also crucial for reassessing the economic contributions of this extended notion of the nonprofit-third (social) sector. The United Nations System of National Accounts (SNA), which sets the international standards for how to compile measures of national economic activities, has put forward new guidelines in 2008. These included a recommendation to national and intergovernmental statistical offices to reconsider the satellite accounts for nonprofit contributions with a more inclusive classification on socially beneficial organizations. These reclassification guidelines have been more recently integrated in the UN Handbook on Satellite Account on Nonprofit and Related Institutions and Volunteer Work (2017) which extends the scope of the 2003 UN Handbook on Nonprofit Institutions elaborated by the John Hopkins Center for Civil Society Studies. The new criteria for classification now embraces not only NPIs but also TSIs as social economy organizations such as cooperatives, mutual societies and social enterprises that meet a public purpose and shared governance criteria such as (1) The limited profits distribution criterion, (2) The democratic governance criterion, and the (3) The self-help/mutual benefit criterion. Although there has been numerous advancements in the reconciliation of American and European with International standards of accounting classifications the presentation of the challenges and opportunities of these processes are reviewed under the lenses of social and sustainability contributions outside the for-profit (business) specific and government (public) specific economic contributions. This study pertains to the reclassification of the contributions of the sectors with appropriate national governance criteria following the international standards in accounting for social and environmental contributions for what some have called "the fourth sector." It reviews and discuss the recent developments for understanding social economy that can reassess policies strategies and legal developments for the promotion of business practices that are centered around environmental, social and good governance benefits.