No Distinction Without Difference

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You can’t go to a nonprofit conference without hearing an excited buzz about the “blurring lines” between charity, business and government. Workshops are spreading the gospel of social entrepreneurship, venture philanthropy, or the coming of a melded fourth sector. Panels and commentators tout business resources for social innovation, celebrate cross-sector partnerships, and promote nonprofit branding along with e-charity and a variety of post-devolution subcontracting and commercial outsourcing opportunities. Nonprofit leaders become desperate to keep up with the latest trends and to make sure that their organization stays competitive by developing new services that can quickly bring to scale, thus assuring their organizations’ future.

Alarmingly, the ideological, political and economic dynamics driving these changes in the nonprofit sector generally remain unacknowledged and unchallenged. The sector and its leaders act as if they face invisible and immutable forces so much more powerful than mere charity that there is no choice but to accommodate them. Too many nonprofit leaders act as if their principal dilemma is organizational growth and survival. Laudably, they want to build effective, cost-efficient enterprises that will deliver services to the largest numbers of people. Yet, enterprises and organizations are not the same thing. Too many nonprofit executives are sliding away from organizational leadership and into enterprise management. In doing so, they may well be missing mission.

These approaches erode distinctions between nonprofit and commercial enterprise. Nonprofits take on the thinking and practices—and sometimes the values—of the market, sometimes reducing services to little more than individual commodities. Importing lessons learned in capital markets and the corporate arena, nonprofit leaders too often obscure, or fail to remember, fundamental differences in the needs, purposes and values of the charitable world.

Still, nonprofits insist that they should be distinguished from business. When prodded to identify what in fact distinguishes them, nonprofit leaders usually mention market failure, saying that they fill program areas that can’t generate sufficient profit to interest business. And when enough profit potential presents itself to lure businesses into competition (child care, substance abuse treatment, job training, education, etc.), nonprofits resort to claiming that their distinctive role lies in a vaguely defined—and apolitical—relationship to social capital and civil society, a relationship that assertively political business does not enjoy. Meanwhile, nonprofits are striving to be more businesslike, to create partnerships with business, or to develop their own efficient enterprises in order to compete with businesses and with one another. It sounds circular and it is.

Certainly there is much to be gained by operating more like businesses but there is even more to be lost—not the least being the essential role of change agent, of organizer, convener and advocate.

Rather than bringing a critical vision to their work, taking on the terrible and awesome tasks of changing the world, nonprofits are thinking more and more like the product-producing businesses. Too frequently they fail to maintain their group’s originating mission or to advance the sector’s essential role in serving the broadest public good, aspiring instead to become businesslike service providers for particular people and localities. Too many nonprofit leaders want to insist on distinction but deny differences, but without difference there can be no distinction.

Mark Rosenman is a vice president and graduate professor of The Union Institute, where he founded the university’s Office for Social Responsibility and its Center for Public Policy. He sees his current work on strengthening the nonprofit sector as an extension of earlier professional efforts in the civil rights movement, urban anti-poverty work, international and domestic program development, and in higher education.