Pope Benedict XVI’s recent encyclical, Caritas in Veritate, calls for businesses to play a role in authentic human development. One of the pope’s ideas is for firms to pursue both profits and the common good with equal fervor. This article categorizes possible types of such hybrid firms and explores the institutions necessary for promoting them. It suggests that a robust civic space, careful attention to tax policy, and an emphasis in business education on social entrepreneurship would promote the formation and growth of hybrid firms. Further work is necessary to quantify the optimal distribution of profits of these firms among their respective stakeholders.