Welcome: Please, Allow Us to Introduce Ourselves

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Please, allow me to introduce myself… I am not your mother. I am not your old school chum, the girl next door or that pesky neighbor from the corner. Nor, to be even more specific, am I Mick Jagger, Dr. Livingston or Bond, James Bond. Do you know who I am yet?

What do I do? Well, I don’t make widgets for private use, struggle for market domination or distribute the profits to stockholders. I don’t command armies, sign treaties or tax my citizens. In this country I’m known as the nonprofit sector, elsewhere, non-governmental is the label of choice. So, who am I? I’ve just told you who and what I am not-but have I confided anything meaningful about what motivates me, about the qualities defining my unique role in society?

The so-called third sector occupies a somewhat ambiguous space outside of government and business. Traditionally, sharing government’s interest for the common good, voluntary associations have produced goods and services considered unprofitable or politically risky. In recognition of this charitable function, the state granted tax-exempt status enabling these organizations to solicit private donations. Moreover, nonprofits often organize and speak on behalf of “We the people”-the demand side of the public interest equation. Still, for some reason, nonprofit organizations continue to labor under an identity stated negatively, in terms of what they are not. But times are a-changing.

With globalization and devolution, the sector’s growth and shifting revenues have created a very different operating environment for many nonprofit organizations. As nonprofit leaders grapple with transforming and adapting their organizations to meet these new challenges, the sector has lapsed into alternately being dazzled or overwhelmed by calls to adopt practices from business and government. The volume and pace of successive waves of externally promoted reforms is dizzying, but savvy nonprofit executives are expected to be conversant in all of them.

Does it make sense for us to mimic the practices of other sectors? Are we really so inept or inadequate? If nonprofits are really so different from the government and business sectors, then why are nonprofit leaders so eager to walk and talk the language and management practices of business? Or is this a case of extraneous ideas rushing into a vacuum of our own creation? The question seems to be surfacing more and more in conversations all over the sector.

Witnessing these contortions, a reasonable person might ask if the sector is finally becoming a “player,” or just being “played.”

Ironically, as nonprofits rush to respond to demands to act more “businesslike,” the business sector has begun adopting associative management practices originating within our sector and designed to facilitate greater engagement of stakeholders, more flexibility, agility and innovativeness, and an enhanced ability to collaborate in worldwide markets and strategic alliances.

As we explored this topic with Paul Light, our guest editor, we realized the nonprofit sector lacks agreement around a powerful affirmation of identity distinguishing it from the other two social sectors. This has created the vacuum into which is being sucked every fad that business or government takes up-many of which, Paul reminds us, have failed in their native settings. This issue of the Nonprofit Quarterly attempts to unbundle the more than occasional dissonance we feel when trying to replicate the reform-du-jour. Our conclusion is that we must get clearer, in all of our diversity, about what makes us unique as a sector, communicate that with vigor and intention and then create management systems that reflect those values.

Light takes up this very quest in his opening essay, examining the importance of our use of language. What does it mean, for instance, when sector organizations are urged to be more businesslike? Nonprofits don’t exist in the textbook marketplace where the buyer is the same as the end-user-what potential negative effect does being businesslike have in our more complex environment? Light suggests that if we were to hone in on the characteristics of stellar organizations in our own sector, “nonprofit-like” would include high levels of innovation and entrepreneurship.

Mark Rosenman of the Union Institute and Jon Pratt of the Minnesota Association of Nonprofits also ponder the unique qualities of the nonprofit sector in light of the businesslike buzz. Rosenman asserts that mercantile tendencies can limit the expression of other, more essential roles such as change agent, organizer, convener and advocate. He is concerned that nonprofit leaders are leaning more toward enterprise management at the expense of mission-based, public service leadership. Jon Pratt explores the associative nature of nonprofit operations. Nonprofits intuitively construct dense networks of relationships where information and resources are openly exchanged to achieve shared goals. He suggests the sector can generate its own mature management practices from these attributes–we just need to take the time to do it.

The remaining essays narrow in on some of the leading buzz-words and catch phrases of the times: customer-centered, efficient, entrepreneurial, competitive, faith-based, and venture philanthropy. Each author takes a word and explores the congruency of that business attribute to a mission-based, public service organization. Richard Harwood, for example, insists that adopting a customer-centered model ignores the very notion of “public-ness.” He argues that we should concentrate on developing a sense of common goals and betterment, rather than servicing the private needs of individuals. He proposes replacing the customer-centered mindset with a “thinking publicly” frame.

Similarly, Peter Frumkin believes we need to think more about effectiveness and commitment rather than measuring our successes by cost-efficiency. Accordingly, a community organization’s strategic advantage will reside in the underlying values that drive the desire to meet social ends. Thus, values and a concern for being effective are far more enduring than the shallow concept of cost-efficiency.

Having just scanned the horizon for her forthcoming book, The New Urban Leaders, Joyce Ladner explores the concept of social entrepreneurs and entrepreneurial organizations in our sector. She suggests that being entrepreneurial necessitates a deep concern for mission, constituencies, learning, effectiveness and resourcefulness-all long-held attributes of the sector.

Bryna Sanger shares her observations of the relatively new phenomenon of nonprofits competing with large for-profit corporations, such as Lockheed-Martin, for human service government contracts. In the four cities where she studied the occurrence, bidding tended to favor larger sized organizations possessing sophisticated information systems and political weight-pushing out smaller, often more competent organizations. Nevertheless, she notes that some nonprofit innovators have overcome these odds and won contracts. We can look to efforts such as SEEDCO of New York City, Catholic Charities of San Diego and a Milwaukee-based YMCA to learn more about how they creatively maximized their community values.

Ruth McCambridge considers the role the nonprofit sector plays in ensuring pluralism in our democracy as she looks at the slippery slope of government contracting. She argues that contractual expectations often impose conditions and assumptions limiting the participation of constituents to passive beneficiaries of largesse. Yet, the sector has traditionally provided ways for ordinary people to organize themselves and create systems enriching their lives-often while protecting them from the excesses of business and government. If the sector is to lay claim to this role, nonprofit leaders must honor their obligation to actively promote the dreams and desires of constituents. And if that means declining resources from public or private sources because the contract requirements violate the best interests of constituents, then so be it.

Scrutinizing the latest political love affair, faith-based organizations, Thomas Jeavons steps back from the hype to consider what it means to be faithful. He points out that secular nonprofits generally operate within a values-based framework of being faithful to the ideal of serving the public good-differing from their religious counterparts mostly on “the best way to achieve it.”

Journalist Clive Thompson investigates the unusual relationship between New Profit, a venture philanthropy organization, and Citizen Schools, a nonprofit running after-school programs throughout Boston. New Profit committed a four-year, $1 million grant to Citizen Schools, imposing intrusive management advice and strict quarterly and annual performance procedures on them as well. Thompson uncovers the underlying intentions of venture philanthropists as well as related criticisms.

Thoughtful offerings from regular contributors Jonathan Spack, Steve Williamson and Pablo Eisenberg also touch on the theme of defining and preserving a nonprofit identity. Jonathan comments on the uneasy relation between the immediate concerns of running a nonprofit and the longer-term implications of “the big picture” but insists that this focus is essential to the sector’s continued viability. Meanwhile, both Steve and Pablo caution against not looking a gift horse in the mouth. For Steve, the notion of accepting the assumptions behind the bureaucracy’s rigid notions of accountability-using them to assess staff-is a clear manifestation of distorted thinking. Likewise, Pablo casts a critical eye on the latest craze among funders, capacity building, asking if a course of action diverting foundation support to a growing service industry is truly being responsive to the needs of nonprofit organizations and their constituents.

Sensing the sector’s vulnerability, detractors seemingly take every opportunity for a cheap shot at what nonprofits allegedly don’t do well enough. When asked to scrutinize the widespread claims of glaring inaccuracies in nonprofit financial reporting on the IRS Form 990s, researchers Linda Lampkin and Thomas Pollak of the National Center for Charitable Statistics (NCCS) report finding more anecdote than fact.

It’s hard to imagine a struggling nonprofit rejecting outside financial support, but we discovered that the founding members of Alcoholics Anonymous did exactly that. In fact, declining contributions from non-members is a guiding principle that has guaranteed the organization’s independence and mission-centered practice from the beginning.

In part two of a discussion begun in our last issue, Internet strategist Marc Osten explores the difficulties of assessing the value of the new information technology in a typical nonprofit organization. Marc uses case studies to illustrate how three distinct technology strategies enhanced the mission-effectiveness of this diverse sample of third sector organizations.

Our advocacy section appraises the mushrooming national phenomenon of grassroots public policy efforts. For the editors, the inspiring case studies presented by author-activist Makani Themba in Making Policy, Making Change suggest that community-based nonprofits might be the most natural medium for this kind of activism.

Finally, we are pleased to introduce in Spirit of Our Work, Gale Walker, former welfare mom, now a successful San Diego businesswoman, whose award-winning day care enterprise was founded on determination, “mother-wit,” and the vision of an inclusive, caring community shared with her neighbors-proof that being nonprofit-like means something more than having a tax-exempt status.