Safeguarding Purpose: Policy Frameworks for the Fourth Sector in Italy and the Philippines

Abstract

Fourth Sector organizations, meaning hybrids that pursue social and environmental missions through market means, are increasingly promoted as vehicles for inclusive and sustainable development. Their dual orientation, however, exposes them to mission drift, and recent scholarship suggests that the ethical commitments they profess may rest on an uncertain foundation. This article asks how public policy can safeguard the social purpose of hybrid organizations, and what enabling frameworks developing economies require to do so. Building on the principles of the common good and subsidiarity, and on the economics of nonprofit and hybrid governance, it derives five policy design criteria: legal recognition, mission lock, accountability for impact, participatory governance, and incentives that support rather than substitute for intrinsic commitment. These criteria are applied in a comparative documentary analysis of Italy, where social cooperatives, the reformed social enterprise, the Third Sector Code and the benefit corporation form a layered legal architecture, and the Philippines, where a large and diverse social enterprise sector still lacks dedicated legislation. On the legal texts examined, Italy ties its most generous support to its tightest legal obligations, whereas the main pending Philippine bill pairs extensive incentives with comparatively weak safeguards. The Philippine bill, however, articulates a fuller vision of the poor as agents and co-owners, while Italy provides the thicker institutional machinery. On this basis, the article argues that mission protection requires proportionality between public benefits and safeguards, and that institutional design can support, though not replace, the value commitments on which hybrid organizations depend.