Interesting piece in the Sunday Times on organizations that are emerging which converge for-profit money-making with a nonprofit mission.

Referred to as the “fourth sector” because these hybrid organizations are distinct from those operating in the government, business and nonprofit sectors, these are organizations driven by both a social and financial bottom line and meld the models of the traditional company and that of the charity.

Proponents argue that current laws, tax structures and definitions of fiduciary responsibility encourage companies to shift costs onto society. “We have created cheap food by investing in huge agricultural conglomerates — but is it really cheap?” says Cathy Berry, an angel investor in a socially responsible business. “No. Look at the pesticides those businesses use and then look at the cleanup costs to society. Look at the health costs.” And people are making the case for tax breaks to offer incentives that compensate businesses for absorbing the social costs of their activities. (What a concept!)

While I was expecting to read of a new model here—one which is driven more by social mission than financial—they include several companies in this new list of “fourth sector” organizations which are merely more traditional businesses that have a social responsibility component, like General Electric — Jeffrey Immelt notably takes every opportunity to remind investors of the purpose behind the “good” in the Ecomagination strategy for GE: shareholder returns.

The article blends its discussion of for-profit organizations that are also doing some good, with the for-profit organizations that exist to do good. You could say its splitting hairs, but is it? What is the motivation behind the company’s board and its managers, and how do these differing approaches affect strategy and outcome? Is one inherently more socially responsible? This is quite arguable. Is it about doing good and doing well, or doing well and doing good? In other words, is the ultimate mission one of making profits, within the context of making positive social and/or environmental impacts along the way, or vice versa—doing well enough with the traditional bottom line that it drives the overall organization’s mission of doing good things in society?

All in all, we are so pleased to see what is becoming true integration of Corporate Social Responsibility (CSR) into corporate strategy. From the early 90’s, when CSR was in its “donating” stage of generating goodwill among employees and customers through corporate contributions, to the late 90’s, when CSR was used as a marketing tool to promote the company brand by linking corporate identity to desired qualities of the non-profit, CSR has truly come of age and now represents a holistic strategy to improve competitive position.

As Heerad Sabeti, co-founder of TransForms in Raleigh, N.C., says, “We want social responsibility to be completely embedded in everything we do, not something that occurs as a sort of sideline,…It has to be an integral part of our business.”

Praise the fourth way, or whatever you want to call it. We call it due.