The For-Purpose Enterprise (“FPE”) is an organisation that uses the power of business to serve its stated purpose.
The FPE has all three of these characteristics:
1. It is a business enterprise
The organisation is a private actor in society. It adopts a legal vehicle for business. It generates revenue by selling its products and/or services.
It is not a non-profit organisation or charity. Neither is it part of the public sector (government).
The organisation survives or fails by the market. However, due to its purpose-orientated nature, it can have legitimacy and support beyond the usual boundaries of markets. It stands to have resources contributed by volunteers, donors, supporters and others who wish to see it succeed.
2. It has a publicly stated purpose
The organisation has a defined reason for being. As such, the purpose is clearly set out.
The clarity of its purpose helps the organisation rally together people and organisations that care about it.
When an FPE publicly states its purpose, it is making itself accountable. This willingness to be vulnerable will, together with everything that the FPE does, gain trust. Trust is another type of valuable capital.
What kind of purpose? It would be any purpose for which the people behind the organisation came together to serve. It could be a social purpose such as providing livelihood to underprivileged youths, preservation of some cultural heritage, or the conservation of coral reefs. It could even be an unpopular purpose such as the protection of the human rights of the LGBT community within a conservative society. It can also have a secondary purpose of achieving financial security for the people behind the FPE.
An FPE competes on purpose.
3. It exists to serve that purpose
FPEs put purpose ahead of profits. Profits are important only because it is the means through which the purpose can be achieved.
If the purpose is no longer relevant, the FPE will cease operations. It will not be a zombie, consuming resources and operating for no other socially necessary purpose except to sustain itself.