Abstract

Social entrepreneurship projects are undertaken for reasons that are not necessarily purely economic; nevertheless, all such projects require scarce economic resources that have an opportunity cost. Whereas private entrepreneurship projects require that private revenue exceed private cost, social entrepreneurship projects require that social benefit exceed social cost. The commonly used criteria that net revenue not be less than zero, even allowing for donations, grants, and volunteers, still results in rejection of some social entrepreneurship projects.

This paper explores a sub-class of those social entrepreneurship projects not undertaken that has these characteristics: (a) private revenue is less than private cost; (b) total revenue by the social entrepreneurship organization is less than net cost, (c) social benefits, properly accounting for external benefits, exceed social cost. The question to be answered in the paper is “under what conditions should such a social entrepreneurship project be undertaken based on purely economic grounds?”

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