The field of social enterprise is long on stories but short on numbers. Baorong Guo, an assistant professor in the School of Social Work at the University of Missouri-St. Louis, is trying to change that. Her research article in the March 2006 Nonprofit and Voluntary Sector Quarterly is one of the first to explore empirically how commercial income affects human service agencies.

Guo’s numbers tell a mixed story. On the one hand, commercial revenues do not help organizations fulfill their missions, deliver their services, or attract donors or volunteers, report the survey’s participants. These findings jibe with neither the hype nor the early reports, which lauded venturing as both a sharpener of mission and enhancer of services, Guo says. She speculates that earned income does not translate into improved programs, because organizations are often thrown off balance by the demands of managing a business.

On the other hand, generating income gives organizations greater self-sufficiency, helps them attract and retain staff, and bestows on them a better reputation. Guo further finds that improving an organization’s reputation creates an enterprising cycle, whereby the improved reputation increases sales, and increased sales improve reputation. These findings are “consistent with the prevailing view” that venturing helps nonprofits, she notes.

Guo’s data come from a survey of nonprofit business ventures, which was conducted by the Yale School of Management and the Goldman Sachs Foundation. For the survey, one manager or employee from each of 519 organizations answered questions about the nonprofit’s characteristics and outcomes. Guo concentrated only on data from the study’s 67 venturing human service agencies.

The study has its shortcomings, notes Cynthia Massarsky, former co-director of Yale University’s Partnership on Nonprofit Ventures and one of the original survey’s researchers. First is that its sample is not representative of income-generating nonprofits, and so its findings may not accurately reflect their usual experiences.

She also cautions that many venturing nonprofits “would not want to give anyone the impression that commercialization affects [their mission or service delivery] in any way – either positively – because they are already doing a bang-up job – or negatively – because they don’t want people to frown upon their taking these entrepreneurial steps.” Moreover, she notes that “many of those engaging in earning income hesitate to attribute additional benefits to the activity for fear that this newfound source of support will cause donors and volunteers to feel they’re no longer needed.” And so what the managers and employees said on the survey may not tap what’s actually happening on the ground.

Guo likewise acknowledges that her data are not ideal. “For a long time, this topic has been discussed only by practitioners and researchers in business. I wanted to look at it from a social work perspective, which focuses on the needs of clients, especially poor clients. But to my knowledge, there are no data from the clients’ perspective,” she says. In lieu of those data, Guo concentrated on the nonprofits’ point of view.

And so “this is not the final conclusion,” she says, “but it is the start of empirical evidence in this area.”

Read more stories by Alana Conner Snibbe.