Editors’ note: This article was adapted from The Resilient Sector Revisited: The New Challenge to Nonprofit America (Second Edition, 2015), and reprinted with permission from Brookings Institution Press. It comes from NPQ’s fall 2015 edition, “Making Things Work: Considerations in Nonprofit Strategy.”
A struggle is under way for the “soul” of America’s nonprofit sector, that vast collection of private, tax-exempt hospitals, higher-education institutions, day care centers, nursing homes, symphonies, social service agencies, environmental organizations, civil rights organizations, and dozens of others that make up this important, but poorly understood, component of American life.
This is not a wholly new struggle, to be sure. From earliest times nonprofits have been what sociologists refer to as “dual identity,” or even “conflicting multiple identity,” organizations.1 They are not-for-profit organizations required to operate in a profit-oriented market economy. They draw heavily on voluntary contributions of time and money, yet are expected to meet professional standards of performance and efficiency. They are part of the private sector, yet serve important public purposes.
In recent years, however, these identities have grown increasingly varied and increasingly difficult to bridge, both in the public’s mind and in the day-to-day operations of individual organizations. In a sense, America’s nonprofit organizations seem caught in a force field, buffeted by a variety of impulses, four of which seem especially significant. For the sake of simplicity I label these voluntarism, professionalism, civic activism, and commercialism, though in practice each is a more complex bundle of pressures.
What makes these four impulses especially important is that their relative influence can profoundly affect the role that nonprofit organizations play and the way in which they operate. Understanding this force field and the factors shaping its dynamics thus becomes central to understanding the future both of particular organizations and of the nonprofit sector as a whole.
Sadly, far too little attention has been paid to the significant tensions among these impulses. The nonprofit sector has long been the hidden subcontinent on the social landscape of American life, regularly revered but rarely seriously scrutinized or understood. In part, this lack of scrutiny is due to the ideological prism through which these organizations are too often viewed. Indeed, a lively ideological contest has long raged over the extent to which we can rely on nonprofit institutions to handle critical public needs, with conservatives focusing laser-like attention on the sector’s strengths in order to fend off calls for greater reliance on government, and liberals often restricting their attention to its limitations in order to justify calls for expanded governmental protections.
Through it all, though largely unheralded—and perhaps unrecognized by either side—a classically American compromise has taken shape. This compromise was forged early in the nation’s history, but it was broadened and solidified in the 1960s. Under it, nonprofit organizations in an ever-widening range of fields were made the beneficiaries of government support to provide a growing array of services—from health care to scientific research—that Americans wanted but were reluctant to have government provide directly.2 More, perhaps, than any other single factor, this government-nonprofit partnership is responsible for the growth of the nonprofit sector as we know it today.
Since about 1980, however, that compromise has come under considerable assault. Conservative critics, concerned about what they see as an unholy alliance between the once-independent nonprofit sector and the state, have called for a return to the sector’s supposed purely voluntary roots.3 Liberal critics have bewailed the sector’s departure from a more socially activist past and its surrender to professionalism.4 At the same time, the country’s nonprofit managers, facing an extraordinary range of other challenges as well—significant demographic shifts, fundamental changes in public policy and public attitudes, new accountability demands, massive technological developments, and changes in lifestyle, to cite just a few—have been left to their own devices and have turned increasingly to the market to survive. Through it all, nonprofit America has responded with considerable creativity to its many challenges, but the responses have pulled it in directions that are, at best, not well understood and, at worst, corrosive of the sector’s special character and role.
Despite the significance of these developments, little headway has been made in tracking them systematically, in assessing the impact they are having both generally and for particular types of organizations, and in effectively getting the results into the hands of nonprofit managers, policymakers, the press, and the public at large. [The book from which this article is adapted] seeks to fill this gap, to offer a clear, up-to-date assessment of a set of institutions that we have long taken for granted but that the Frenchman Alexis de Tocqueville recognized over 175 years ago to be “more deserving of our attention” than any other part of the American experiment.5 More specifically, the book makes available, in a more accessible form, an updated summary of a much larger inquiry into the state of America’s nonprofit sector that the present author carried out with an extraordinary team of collaborators and that was published in a prior volume.6
Perhaps the central theme that emerged from this larger project, and that is a central theme [here], is the theme of resilience, of a set of institutions and traditions facing not only enormous challenges but also important opportunities and finding ways to respond to both with considerable creativity and resolve. Indeed, nonprofit America appears to be well along in a fundamental process of reengineering that calls to mind the similar transformation that large segments of America’s business sector have been undergoing since the late 1980s.7 Faced with an increasingly competitive environment, nonprofit organizations have been called on to make fundamental changes in the way they operate. And that is just what they have been doing.
The problem, however, is that, although the sector’s organizations have been responding resiliently, those responses are taking a toll on their ability to perform some of their most important functions. As a consequence, nonprofit America is ironically endangered by its own resilience. In a sense, nonprofits have been forced to choose between two competing imperatives: a survival imperative and a distinctiveness imperative, between the things they need to do to survive in an increasingly demanding market environment and the things they need to do to retain their distinctiveness and basic character.8 In recent years, the survival imperative seems to have gained the upper hand. The question for the future is whether it will continue to do so, or whether the nation’s nonprofit sector will find better ways to balance these demands, and how much understanding and help they will receive from the broader society to allow them to do so.
Any account of the future of nonprofit America must therefore be a story in three parts, focusing, first, on the challenges and opportunities that America’s nonprofit sector is confronting, then examining how the sector’s institutions are responding to these challenges and opportunities, and finally assessing the consequences of these responses both for individual organizations and subsectors and for nonprofit America as a whole. Against this backdrop, it will then be possible to identify some of the steps that might be needed to help America’s nonprofit organizations evade the dangers they face. […] To set the stage for [such an account], however, it may be useful to remind readers what the nonprofit sector is and why it is so deserving of our attention.
Four Impulses Shaping the Future of Nonprofit America
While the key nonprofit functions of delivering services, influencing policy, giving expression to multiple interests and views, building community, and guarding crucial values […] continue to characterize the nonprofit sector, powerful forces are at work challenging and reshaping a number of them. Indeed, as noted earlier, the nonprofit sector appears caught in a difficult force field controlled by four conflicting impulses—voluntarism, professionalism, civic activism, and commercialism—that are pulling it in somewhat different directions. These impulses have implications, moreover, for a broad swath of nonprofit features, from the roles that nonprofits play and the strategies they use to their style of operation, their principal reference groups, their organizational structure, their management style, and their resource base. The power of these impulses is hardly identical in all fields, or in all organizations even within fields, but there is enough commonality to the impulses to warrant a general characterization of their major features as a prelude to examining the drivers that are supporting or retarding each.
Perhaps the most fundamental of these impulses, and the one that has fixed itself most securely onto popular conceptions of the nonprofit sector, is the voluntaristic impulse. This impulse carries much of the distinctive value claim of the nonprofit sector—its function as the vehicle through which individuals give expression to a wide assortment of social, cultural, religious, and other values and exercise individual initiative for the common good. But in recent years the voluntaristic impulse has come to be associated with a more stridently ideological conception of this sector. Indeed, as historian Waldemar Nielsen has shown, a “simplistic folklore” has attached itself to the American belief system with regard to this impulse. According to this folklore, the sectors of American society, particularly the nonprofit sector, “are neatly separated and exist in a static, ideologically partitioned relationship to each other, always have been, and ideally always should be.”9 This is has given rise, including particularly in conservative circles, to an ideal image of a nonprofit sector that eschews involvement with government; is mostly staffed by selfless volunteers, many of them religiously inspired; and is wholly, or nearly wholly, supported by charitable giving.10
Whether in its more ideological or its more balanced forms, this voluntaristic impulse continues to exert a strong gravitational pull on public perceptions of the nonprofit sector, if less so on the actual operations of the sector’s organizations. More specifically, as summarized in the table below, the voluntaristic impulse has come to be associated with a nonprofit sector whose primary role is to express and inculcate values.
While a wide assortment of values can find resonance with this impulse, in recent years an especially strong current has arisen from the religious right and has found expression in the faith-based charity movement. Adherents to this perspective tend to attribute a wide range of human problems to the absence or underdevelopment of appropriate normative values. The strategies of intervention associated with this impulse therefore often emphasize counseling and self-help, coupled with temporary material assistance until the needed value messages are internalized and absorbed.
The style of intervention emphasized in the voluntaristic impulse therefore tends to be pastoral, normative, nonprofessional, holistic, and at times paternalistic. The stakeholders or reference groups most closely associated with this impulse are often individual donors and volunteers, who serve as role models for the disadvantaged and whose religious faith and values of hard work and personal responsibility are to be transmitted to those lacking them. The organizational structures associated with the voluntaristic impulse tend to be fluid and ad hoc, and the management style flexible and informal, as befits a volunteer-based staffing pattern. Finally, the resource needs of organizations imbued with the voluntaristic impulse are different in both scale and kind from those of other types of organizations, relying much more heavily on volunteers and charitable contributions than fees or government support.11
While the folklore of voluntarism remains dominant in much of the belief system surrounding the American nonprofit sector, a second impulse has profoundly shaped the reality of nonprofit operations. This is the impulse of professionalism. By professionalism, I mean the emphasis on specialized, subject-matter knowledge gained through formal training and delivered by paid experts.12
Professionalism has had a profound effect on the nonprofit sector, strengthening its capacities in important respects but at least partially displacing the sector’s voluntaristic character.13 While many of these effects have been attributed to the sector’s involvement with government, in truth professionalism has probably had as much impact on government as government has had on professionalism, since a push by professionals to establish government licensing or program-staffing requirements is one of the crucial steps in establishing a profession.14 At the least, the rise of professionalism within the nonprofit sector clearly predated the expansion of government involvement in the fields in which nonprofits are active. The transformation of private hospitals from small community institutions addressing the primary-care needs of communities into large bureaucratic institutions dominated by professionally trained doctors took place between 1885 and 1915, decades before Medicare and Medicaid had even been contemplated.15 So, too, the professionalization of social work and the rise of “case work” rather than community organizing and social reform as the primary social-work mode of intervention was well along by the turn of the twentieth century and firmly in place by 1920.16 What is more, the engine for this change was private philanthropy (in the form of local community chests) rather than government, as the scientific charity movement sought to replace what was widely perceived to be the inadequacies of well-meaning volunteers with the “trained intelligence” of professionals.17
While government did not introduce the professional impulse into the nonprofit sector, it has certainly helped to nurture and sustain it, both by providing professions a mechanism through which to enforce professional standards in government-funded programs and by providing the funds needed to hire professional staff. In the process, it has helped push nonprofit organizations in directions quite different from those imparted by the voluntaristic impulse. While it shares with voluntarism a deficit model emphasizing individual shortcomings as the cause of human problems, professionalism emphasizes not normative shortcomings but social, educational, physical, and psychological ones. The role of the nonprofit sector in this view is thus to offer professional services to disadvantaged clients. “Not alms but a friend,” the long-standing slogan of the voluntaristic Boston Associated Charities, thus came to be replaced in professional social-worker circles by the mantra, “Neither alms nor a friend, but a professional service.”18
Professionalism’s strategy thus relies on a medical model, treating beneficiaries essentially as “patients” needing some form of “treatment,” whether physical, educational, or psychological. Unlike the pastoral and holistic operating style characteristic of the voluntaristic impulse, the professional style is thus therapeutic, technocratic, segmented, and secular. The principal reference group for the professional impulse is not donors or beneficiaries but professional staff and the profession itself. Consistent with these features, professionalism creates organizational structures that are hierarchic and segmented; uses a management style that tends toward the bureaucratic, formal, and rule-bound; and requires the more ample and reliable resources of government and fees for support.
Far different from both the voluntaristic and professional impulses is a third impulse coursing through the nonprofit sector: the impulse of civic activism. According to this perspective, the real source of the social ills besetting significant segments of the American public does not lie in the values, or in the psychological or skill deficits, of disadvantaged individuals. Rather, it lies in the structures of social, economic, and political power that such individuals confront in the broader society and in the unequal access to opportunities that results. The solution to these social ills therefore does not depend on moral preachment by well-meaning volunteers or on treatments administered by trained professionals but on the mobilization of social and political pressure to alter the structures of power and correct the imbalances of opportunity.19
The settlement house movement of the late nineteenth and early twentieth centuries clearly embodied this approach. Although providing immediate services to residents of the neighborhoods in which they were located, the real focus of the settlements, according to their historian, was to “bring about social reform, thus alleviating the underlying causes of social problems.”20 Seventy-five years later, this perspective remained uppermost in the mind of the first president of Independent Sector, the national umbrella group for American nonprofit organizations, who referred to “efforts to influence public policy” as “the role society most depends on [the voluntary sector] to perform.”21
Instead of expressing values and transforming individuals, the civic activism impulse thus sees the fundamental role of the nonprofit sector to be eliminating the need for services by changing the balance of power in society and opening channels of opportunity to a broader swath of the population. Unlike the deficit strategies embodied in both the voluntaristic and professional impulses, the civic activism impulse embodies an asset model, using a strategy that sees in the disadvantaged population an enormous resource that can be mobilized and organized to bring about significant societal change. The basic operating style favored in this impulse is thus at once participatory, empowering, and confrontational, bringing pressure to bear on the powers that be to establish worker rights and offer access to education and other services that those on the bottom of the economic pyramid are unable to secure through market means. The principal reference groups for advocates of this perspective are ordinary citizens and those in greatest need, plus, where available, the media, to amplify the voices of otherwise voiceless constituencies. To achieve its empowerment objectives, the civic activism impulse fosters a modular organizational structure, with multiple linked nodes of action and mobilization. Its management style is consensual, participatory, and, where possible, collaborative, building alliances wherever willing partners can be located. And its resource base tends to be engaged individuals and, paradoxically in recent decades, government support.
Finally, in the past several decades, a fourth impulse has burst upon the nonprofit scene, commercialism, and its next-of-kin, managerialism.22 This impulse, too, has its distinctive features and its distinctive implications for the operation of nonprofit organizations, some of which are consistent with the other impulses, but others of which are clearly in tension with them. The role that the commercial impulse presses on the nonprofit sector is a service role, but one that emphasizes managerial efficiency, innovation, and cost containment—dimensions that run counter to professionalism’s emphasis, first and foremost, on effectiveness. The strategy embodied in the commercial impulse is the injection of a different type of professionalism into the operation of nonprofit organizations—not the subject-matter professionalism of doctors, social workers, and educators but the business-oriented skills of the managerial professional. This includes the use of strategic planning, quantitative measurement of outcomes, identification of market niches, and heightened attention to operational efficiency.
The operating style emphasized by the commercial/managerial impulse is entrepreneurial and businesslike, efficiency oriented and measurement driven. The principal reference group for those espousing the commercial impulse consists of business leaders, entrepreneurs, and actual or potential beneficiaries of an agency’s services, who are reconceptualized as “customers.” The commercial/managerial impulse calls for organizational structures that are focused on individual “products” or “lines of business,” with metrics that track each line of business separately and network structures that encourage coordination but allow considerable autonomy for “product managers.” The management style consistent with this impulse emphasizes clear lines of authority and disciplined performance, which is achieved through regular measurement against preset targets and the flexibility to advance and dismiss staff on the basis of performance rather than professional credentials. In terms of its resource base, the commercial impulse drives its adherents to search out sustainable revenue streams that can attract private investment capital for start-up and expansion. This means fee income and government entitlement program support, particularly such support delivered through vouchers and other market-based, consumer-side subsidies.
Conclusion: Navigating the Force Field
To be sure, these brief descriptions cannot do justice to the nuances and complexities of these various impulses. They are presented here as heuristic devices to suggest some of the major pressures to which nonprofit organizations are being subjected. What is more, while the impulses are in some tension with each other, there are also clearly points of mutual reinforcement. For example, professionalization and the growth of nonprofit paid staff may not have displaced the nonprofit involvement in advocacy, though they may have changed its character in certain ways. Similarly, the emergence of social entrepreneurs and social ventures, while a manifestation of the commercial impulse, also reinforces the voluntaristic impulse emphasizing private initiative in the common good. The challenge, therefore, is not to find the single best impulse to follow but rather the combination that produces the most meaningful and appropriate balance needed to allow organizations to survive and grow while still holding true to their distinctive attributes.
These impulses are not, moreover, disembodied concepts floating in space. Rather, they take concrete form in the actions of the sector’s stakeholders—those who provide the resources, set the regulations and incentives, serve on the boards, operate the organizations, frame public perceptions, and lend their support in countless other ways. Lacking the firm anchor of a single clear, dominant raison d’être—such as maximizing profit in the case of business and securing popular political support in the case of government—nonprofits are especially vulnerable to being pulled this way and that by whichever pressure is dominant at the moment.
And this is just what appears to be happening at the present time. Responding brilliantly and resiliently to a variety of dominant challenges and pressures, significant components of the nonprofit sector have moved far from the sweet spot that has historically earned the sector public trust, and too little attention has been given to bringing public understanding in line with operating realities or to finding a more appropriate balance among the impulses that are pressuring the sector and its leaders. In a sense, to survive in a demanding environment, nonprofit organizations are being forced to surrender what may be too many of the things that make them distinctive and worthy of the special advantages they enjoy. Of special note in recent years has been the growing impact of the commercial/managerial impulse, eclipsing the professional emphasis on effectiveness and the voluntaristic emphasis on expressiveness, and potentially undermining as well much of the sector’s historic attention to civic activism.
Nonprofit leaders are not without choices in this process, of course. But their choices are highly constrained by the balance of challenges and opportunities they face. Any account of the “future of nonprofit America” in the face of these impulses must therefore be a story in three parts, focusing first on these challenges and opportunities and the extent to which they support or retard these impulses, then examining how the sector’s leaders have responded, and finally assessing the consequences of these responses both for individual organizations and subsectors and for nonprofit America as a whole. Only then will it be possible to suggest what alternative options might be worth considering in order to achieve a more appropriate balance among the impulses at play than seems to be emerging.
- David A. Whetten and Paul C. Godfrey, Identity in Organizations: Building Theory Through Conversations (Thousand Oaks, CA: Sage Publications, 1998); Mary Ann Glynn, “When Cymbals Become Symbols: Conflict over Organizational Identity within a Symphony Orchestra,” Organization Science 11, no. 3 (2000): 285–98.
- For a discussion of this partnership, see Lester M. Salamon, “Partners in Public Service: The Scope and Theory of Government-Nonprofit Relations,” in The Nonprofit Sector: A Research Handbook, ed. Walter W. Powell (New Haven: Yale University Press, 1987), 99–117; and Lester M. Salamon, Partners in Public Service: Government-Nonprofit Relations in the Modern Welfare State (Baltimore: Johns Hopkins University Press, 1995).
- Michael S. Joyce and William A. Schambra, “A New Civic Life,” in To Empower People: From State to Civil Society, ed. Michael Novak, 2nd ed. (Washington, DC: AEI Press, 1996), 11–29; Robert A. Nisbet, Community and Power, 2nd ed. (New York: Oxford University Press, 1962).
- Carmen Sirianni and Lewis Friedland, Civic Innovation in America: Community Empowerment, Public Policy, and the Movement for Civic Renewal (Oakland, CA: University of California Press, 2001); Harry C. Boyte, Commonwealth: A Return to Citizen Politics (New York: Free Press, 1989); John McKnight, The Careless Society: Community and Its Counterfeits (New York: Basic Books, 1995).
- Alexis de Tocqueville, Democracy in America, vol. 2, trans. Henry Reeve, rev. Francis Bowen, ed. Phillips Bradley (1835; revised ed., New York: Vintage Books, 1945), 118.
- For the full results of this larger project, see The State of Nonprofit America, ed. Lester M. Salamon, 2nd ed. (Washington, DC: Brookings Institution Press, 2012). The present book from which this article is adapted originally appeared in somewhat abridged