Social entrepreneurship is one of the most popular terms in the nonprofit sector, and also one of the most misunderstood. It has been almost three decades since the Surdna Foundation’s executive director Edward Skloot first used the term “nonprofit venture” and Ashoka’s founder Bill Drayton adopted the term “social entrepreneurship,” yet there is still considerable debate about when and where the term applies.

Some use the term social entrepreneurship to describe any form of moneymaking...

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