Thursday, January 29, 2015

The Necessity of Interdependence

When considering the nonprofit sector compared to the public sector and the private, for profit sector one may initially assume vast differences between the three.  On the surface, it may appear that each is working with its own set of values towards its own goals without consideration of the other sectors.  However, there is a unique interplay between nonprofits, government, and for-profit businesses that enable one another to be successful. 

The Jossey-Bass Handbook recognizes that non-profits vary greatly in structure and purpose.  Some nonprofits are small organizations with no employees and others are organizations such as “foundations, universities, religious bodies, and health care complexes” that boast thousands of employees and are working with billions of dollars.  Furthermore, while nonprofits are typically thought of as providing charitable goods and services, this is not a necessity in being a nonprofit and many various types of goods and services are provided through this sector.

The nonprofit, for-profit, and public sectors do each have differing structures and purposes.  As seen in The Jossey-Bass Handbook, the for-profit sector is distinguished in that its main objective is to earn money for its owners.  In contrast, the earnings of nonprofits are not allowed to be distributed to those who control it.  The public sector (government) is an entity which works to act in the public’s best interest and protect the public’s rights. 

Today, there is a unique interdependence between these three sectors.  First, although non-profits and businesses differ in their goals, the relationship that these two sectors have with one another contributes greatly to each one’s success.  As illustrated by Berman, nonprofits receive resources from businesses and business employees that are necessary for them to function.  Some businesses believe that their sole purpose is to generate a profit and leave it to their employees to support nonprofits with their incomes if they so choose.  Other businesses take a different approach, and believe that in order to have a successful business; it must be operating in a stable society.  Therefore, they choose to support nonprofits through financial or other means in order for them to function effectively and assist in helping to create the stable society that businesses need to thrive.  While nonprofits need the resources provided by businesses, the success of the for-profit sector is dependent on how well the nonprofits are able to deliver goods and services to society. 

Furthermore, there is a unique interdependence between the nonprofit and public sectors.  The government is in place to act on behalf of its citizens and its roles have changed over time.  Berman shows how the role of government drastically shifted during the Great Depression Era.  During this time, the government began focusing its efforts on social welfare, becoming a “safety net” for its citizens, and being an agent of economic recovery.  Like the nonprofit sector, the goal of the public sector is not to make money but to help create a better society.  While the structures of the government and nonprofit organizations are quite different, both of these sectors are currently working address the social welfare needs of the public.  Moreover, each sector is in need of the other in order to address these needs in the most effective ways possible. 

The overall structures and goals of the nonprofit, for-profit, and public sectors are quite different.  However, this does not mean that one sector is the “better” or “correct” sector.  In order for society to function as well as possible, each is needed.  Furthermore, interdependence and collaboration between these sectors is vital to the success of each sector.   

Berman, Howard J (2002).  "Doing Good vs. Doing Well: The Role of Nonprofits in Society."  The McNerny Forum, 39: 5-11

Renz, David O. and Associates (2010).  The Jossey-Bass Handbook of Nonprofit Leadership and Management.  San Francisco: Jossey Bass      

What Do Nonprofits Actually Do?

What do nonprofits actually do? If you’ve lived in the U.S. any significant amount of time you’ve likely heard of the term nonprofit. You also probably know you can claim a tax deduction by donating to your local Goodwill (if you made a donation last year and this is news to you I hope you kept those donation receipts for tax season!) and you may have even heard of the term 501(c)3, but why do you get that tax deduction and what role do nonprofits play here in the U.S.? Well, the answers to these questions are related.
In the U.S. we can think of the current political economy as consisting of three sectors: government, for-profit, and nonprofit.1 Although each of these sectors are distinct in many respects, they are inherently tied to one another and mutually influence eachother.1 The government creates and enforces laws, adjudicates disputes, and ensures the maintenance of the state as an entity. For-profit firms can be extremely diverse but have as their unifying feature a primary goal of generating earnings as income for owners or shareholders. Nonprofit organizations can be extremely diverse themselves, but can be seen as similar to one another in that they have as their end goal the provision of some type of social service to a particular group of people and/or to society at large,2 and any excess earnings they generate cannot be paid out as a form of income.3
It is really through the scope of social services provided to people, communities, and the nation that we can gain an appreciation for the role of the nonprofit sector in today’s society here in the U.S.  Although the U.S. government has many social programs, over the course of U.S. history the government has played a variable role in ensuring the general wellbeing of its citizenry, at times utilizing government resources to sponsor huge initiatives related to social welfare and at other times limiting or cutting governmental programming designed to assist those in need.4 Although some for-profit entities may believe in corporate social responsibility and the need to support the wellbeing of the peoples and communities with which they interact, the for-profit sector’s motivation to increase earnings lends itself to wealth generation more so than work specifically targeted at curing social ills.1 It is the role of the nonprofit sector to fill the social needs gap created by variable government support of social welfare programs and the profit generation focus of for profit entities.1
In supporting the role of nonprofits in addressing social needs the government has granted nonprofits a tax-exempt status,4 which can mean different things depending on the specific tax laws applicable to a specific nonprofit but for the purposes of illustration I’ll use 501(c)3s as an example. Remember the Goodwill example from earlier? Well Goodwill is a nonprofit organization and, more specifically, a 501(c)3. This status allows Goodwill to not only avoid having to pay certain taxes it also allows individuals or business to donate to Goodwill and use their donations as tax deductions. While a small donation may not mean much in terms of tax deductions, on the larger scale of individuals accumulating great deals of wealth through the for-profit sector, nonprofits provide a legal and socially constructive way to avoid taxation through donation to an organization working to do good for the public.
While the roles of all sectors may overlap from time to time, the role of nonprofits in today’s U.S. society is to focus on consistent social service provision in a way the government and for-profits cannot.

1. Berman, Howard J. "Doing “Good” vs. Doing “Well”: The Role of Nonprofits in Society." INQUIRY: The Journal of Health Care Organization, Provision, and Financing 39.1, (2002): 5-11.
2. Jeavons, Thomas H. "Ethical nonprofit management." Robert D. Herman & Associates. The Jossey-Bass Handbook of Nonprofit Leadership and Management 3. Ed. David Renz. San Francisco: Jossey-Bass, 2010. 178-205. Print.
3. Hopkins, Bruce R., and Virginia C. Gross. "The legal framework of the nonprofit sector in the United States." The Jossey-Bass Handbook of Nonprofit Leadership and Management  3. Ed. David Renz. San Francisco: Jossey-Bass, 2010. 42-76. Print.

4. Hall, Peter Dobkin. "Historical perspectives on nonprofit organizations in the United States." The Jossey-Bass Handbook of Nonprofit Leadership and Management 3. Ed. David Renz. San Francisco: Jossey-Bass, 2010. 3-41. Print.

Why the nonprofit sector is unique

Non-profits in America are unique in that they give voice and place to some of society's most extraordinary needs. Nonprofits complete the web of work that we as a collective do, by supporting special interests, providing relief and developing community. Did you know that nonprofits exist in Colorado whose sole purpose is to provide bear-proof trashcans to citizens?1 There is an organization called the "National Odd Shoe Exchange" that specializes in providing one shoe for those who have a particular need. 2 Or take the cat allies nonprofit near Franklin County Florida that only serves the well-being of cats and cat allies on St. George Island. 3 The sector is diverse indeed.

Over 1.5 million nonprofits exist in the United States 4 and they are very different from their public and private sector siblings. Oftentimes nonprofits are encouraged to work more like organizations in the private sector who benefit from: quantifiable results, fewer budget constraints and more centralized processes. Americans have an affinity for efficiency, and when we see it happening in one place we wonder why it can't happen everywhere. I should admit that after having worked for nonprofits for eight years I too fell in and out of this mind trap. "If only we could be better at x, y, z... if only we had more money or more agile members... why can't my boss just delegate these tasks so that there is one direct person responsible for every project!!?" Well, there are a host of reasons why, and listing all of them would overwhelm this week's blog post. Additionally, my classmates presented strong contributions on the overarching attributes of nonprofits, so instead I will aim to drill down on one specific to example to illustrate the unique nature of nonprofit organizations. 

Evaluation. It cannot be overlooked that measurement and evaluation is very different for nonprofit organizations than it is for private and public sector organizations. Timelines for change and work with human services make determining outcomes tricky business. The work that nonprofits do does not often lend itself well to neat and tidy forms of measurement (the public sector can relate to this challenge as well, though I would argue that adding the public as a vested stakeholder whose dollars are at hand might put the public sector in an even more difficult place than many nonprofits). How can you linearly track the progress of individuals when so many factors have been involved in their growth? Collaboration is a key component of non-profits and is essential for budgeting, so which organization had the most impact or which organization deserves the kudos for the outcome? In a world of numbers, will quotes, pictures and success stories have as much of an impact? These strategies frequently work for public and private sector organizations and do not transfer as easily to many nonprofits.

Its also true that answers to these questions vary by organization. Therefore, what can the nonprofit do that its stepbrothers and sisters cannot? The nonprofit can have a nimble approach to its challenges. It is not the public or private sector and it must operate differently. In other words, it gets to operate differently! Approaching the sector this way reminds us of the void it fills in our nation's infrastructure- thus divinely pairing with the public and private realms of life. 

Additional sources:Renz, David O, ed. 2010. The Jossey-Bass Handbook of Nonprofit Leadership and Management. Jossey-Bass. San Francisco, CA. 

Nonprofits: Filling in important gaps

The nonprofit sector has a unique and significant role to play in our society—a role which has changed over time.  Renz (2010) offers a basic definition of a nonprofit: an organization who serves the public, is privately operated, has no profit motive, and is formed to serve the public in some capacity.  Rentz follows their development from voluntary associations to tools of the wealthy to the creation of foundations to the diverse body of modern nonprofits.  Currently, nonprofits work on issues and provide services for many diverse needs, including health services, education, social and legal services, civic and environmental advocacy, international relations and development, arts and culture, and I will add in, research and data. 

The nonprofit sector has a large impact on the economy: the Urban Institute reports that in 2010, nonprofits added $779 billion to the United States economy or 5.4 percent of GDP, accounts for over 10 percent of jobs in 2009, and is growing faster than both business and government sectors, adding 25 percent more organizations between 2001 and 2011, reaching over 1.5 million organizations.

All three sectors share some commonalities.  Similarities between the three sectors include:
  • The United States is a complex, growing society with important and changing roles for each of the three sectors. 
  • All three sectors reinvent or change themselves over time to serve changing societal needs. 
  • All three sectors face limits in resources and challenges in how to remain sustainable.

Similar to the for-profit sector and unlike the government sector, nonprofits have to complete with both other nonprofits for funding and in the case of social enterprises, private industry (Berman 2002) for providing services.  Nonprofits have access to unique funding streams, including donations, volunteer time, and grants from other non-operating nonprofits. 

While the government sector does not rely on donations or generating earning with its taxing power, it faces changing perceptions of its actions: government spending is now out of favor since the post-WWII years but its role is increasing in protecting the environment and individual health and welfare.  As government provides less with less resources available, the non-profit sector fills in to cover the still-existing needs (Berman 2002).

Nonprofits have a unique relationship with the for-profit sector.  Nonprofits rely on individuals working in the private sector to donate to important causes.  In the era of corporate social responsibility, the for-profit sector also is increasingly recognizing their responsibility to the community.  In fact, business relies on stable communities to effectively operate and generate profit, creating economic justification for their investment in the community and the nonprofit sector.   The for-profit sector relies on nonprofits to tackle challenges that they and the government sector do not or cannot tackle and to work toward a stable society.

Our society today depends on all three sectors to work together, compete, and fill the gaps that the others leave, creating a synergy between the three (Berman, 2002).  Overall with government’s changing role (and lessening role in some areas) and for-profit recognition of the need for a stable society, nonprofits’ unique fit has become even more important.

Renz, David O, ed. 2010. The Jossey-Bass Handbook of Nonprofit Leadership and Management. Jossey-Bass. San Francisco, CA. 

Berman, Howard J. 2002. Doing "Good" vs. Doing "Well": The Role of Nonprofits in Society. Inquiry 39: 5-11.

Do We Really Need Nonprofits?

While religious organizations and charities have existed for thousands of years, nonprofits as we understand them today have only become prominent in the past few decades. Now, the world’s many nonprofit organizations operate as a coherent sector separate from (though closely linked to) government and business. Why does such a large third sector exist? Can’t society get what it needs from businesses and government alone, with the government providing social services to those in need?  The short answer: absolutely not. Today, nonprofits play a key role in bolstering society and, perhaps surprisingly, the economy. The relationship that nonprofits have with business and government is one of interdependence and synergy; a quick look at these relationships will demonstrate the importance of nonprofits to our nation and world.


The for-profit sector exists, at its most basic, to make money. Business owners seek to increase their own wealth, and many believe that this is where their responsibility ends. However, the idea of “corporate social responsibility” has caused many businesses to become intricately involved with the nonprofit world.
Corporate social responsibility argues that businesses should give back to the communities in which they operate, not for necessarily philanthropic reasons but because businesses need stable societies in order to make money. When a community is broken and its residents vulnerable, those residents do not seek to spend their money on the services and goods businesses provide. With this in mind, many businesses have begun to organize charity drives, provide in-kind services to nonprofits, encourage their employees to volunteer, and more.

Governments also interact with nonprofits by providing grants, allowing tax deductions for charitable contributions, and providing “tax exempt” status to nonprofits regarding investment income, property tax, and sales tax. The government arranges for these concessions because it recognizes that nonprofits address a variety of social welfare issues that the government cannot fully undertake. 

Businesses need stable government as well, for very similar reasons; the government, in turn, needs the nonprofit sector to help keep society anchored and strong. The government often “contracts out” services to nonprofits. For example, it may pay an adoption agency to help facilitate adoption and foster care services; in turn, the nonprofit must stick to regulations spelled out by the government. It is often more cost-effective for the government to contract out services versus attempting to provide those services in-house.

We need nonprofits not only for the social welfare services they provide to citizens, but because they strengthen and assist the two other major sectors of our world: business and government. These three sectors work together to keep society and the economy stable. 

Berman, Howard J. 2002. Doing "Good" vs. Doing "Well": The Role of Nonprofits in Society. Inquiry 39: 5-11.Renz, David O, ed. 2010. The Jossey-Bass Handbook of Nonprofit Leadership and Management. Jossey-Bass. San Francisco, CA. 


The non-profit, for profit and government sectors in American society are intertwined and interdependent.[1]  A recent example of how these sectors behave synergistically is the change in   leadership of the government’s second largest t agency, the Department of Veterans Affairs, from a venerable and highly decorated military general, Eric Shinseki, to a corporate business manager.  In August 2014, Robert McDonald became secretary of veteran’s affairs after a 30-year corporate executive career at Procter & Gamble.  Following scandals of poor management, cover ups regarding enormous waiting lists for health care benefits for Afghanistan and Iraqi veterans and a whistle-blower’s disclosure that delays in care had led to deaths at the VA’s medical center in Phoenix, Arizona, McDonald was appointed by the Obama administration and confirmed by the United States senate to lead an agency whose information processing technology dated back to the 1980s. 
Using a business perspective, McDonald proposed an aggressive restructuring of the VA that would give veterans a single point of contact for health care and other services and consolidate functions under a smaller number of regional executives to make it easier to manage problems locally.[2]  He increased the salaries of VA physicians and nurses.  Understanding the paucity of physicians and psychiatric and mental health professionals in the VA, McDonald started an aggressive recruiting campaign of students and medical residents by personally visiting medical schools across the country.  His plan was to offer competitive salaries and school debt forgiveness up to $120,000.
What is most interesting about the intersection of corporate and government expertise is that McDonald opposed privatization trends advocated by Republicans in Congress, some of whom advocated decreasing the breadth of services and employees of the VA by substituting a voucher system that would allow veterans to access private physicians.  McDonald argued that a voucher system “would erode the three independent VA missions of treatment, research and teaching.”[3]  In this instance, legislators promoted a “fiscal bottom-line” approach while the erstwhile business executive encouraged solutions based on non-profit principles and purpose.
However, Congress decided to pass the Restoring Veterans’ Trust Act introduced by Democratic Senator Bernie Sanders and Republican Representative Jeff Miller, to allow veterans facing long delays to get care outside the VA, if VA doctors are unable to treat patients within fourteen days, at private doctors' offices, military bases or community health centers.   This expanded funding opportunities for  non-profit service and advocacy organizations like Iraq and Afghanistan Veterans of America, Wounded Warriors Project and Disabled American Veterans to name a few.
This example underscores that for profit, nonprofit and government sectors must rely on each other to prosper.[4]  

[1] Berman, H.J., “Doing ‘Good’ vs. Doing ‘Well’: The Role of Nonprofits in Society,” Inquiry 39: 5-11, Spring 2002.
[2] A single regional framework plan-MyVA Initiative-was officially announced by the VA on January 26, 2015.  Office of Public and Intergovernmental Affairs,
[3] Richard Oppel Jr., “V.A. Creates Plans to Consolidate Services,” The New York Times, November 11, 2014, page A20.
[4] Berman Inquiry 39: 5-11, Spring 2002; Hall, P.D.; Van Til, J., The Jossey-Bass Handbook of Nonprofit leadership & Management, Chapters 1 &2, Second Edition, Herman, R.D. & Associates, 2005, John Wiley & Sons, Inc., San Francisco, CA.

4 Things You Need to Know about the Nonprofit Sector

Philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice which make philanthropy necessary.
Martin Luther King, Jr. 

Nonprofit organizations today operate in an increasingly complex and interconnected environment. In order to understand the role of nonprofit organizations today, it is helpful to look at the nonprofit sector as it relates to the public sector (government) and the private sector (business).

1. Nonprofits step in where Government and Business left off

Government offers basic services to address social needs such as the Food Share program, subsidized healthcare and public transportation. However, in a political climate of demands for tax cuts and a smaller government, the role of government in addressing social needs is shrinking. In his article, “Doing ‘Good’ vs. Doing ‘Well’: The Role of Nonprofits in Society”, Berman notes that although the role of government may decrease, the needs of society do not decrease correspondingly (Berman, 2002).

Businesses vary greatly in their social impact, but businesses simply cannot exist in the long run if they don’t make a profit. Making a positive societal impact must take the back seat to profit in a business.  Social welfare cannot be realized by the public nor private sector in these circumstances. There is a real and pressing need for nonprofit work. 

2. Nonprofits Make a Profit
Nonprofit organizations are not legally prevented from making a profit. The key difference is what they are legally permitted to do with that profit. Nonprofit organizations, unlike government and business, are subject to the doctrine of private inurement. Basically, this ensures nonprofits are operated for the benefit of those they serve, by preventing nonprofits from passing their profits on to employees and the board.

This makes nonprofits unique. Successful businesses make a profit and pass it on those with an interest in the business such as shareholders/owners and employees (though not usually in equal proportion). Moreover, we’ve surely all heard by now condemnation of the government deficit. The government ought to make a profit, too, though it is not always distributed in the same manner as in businesses (Renz, 2010).

3. Businesses have stockholders, Nonprofits have stakeholders
Businesses are ultimately accountable to their owners. The government is (supposed to be) ultimately accountable to its citizens. The nonprofit accountability arrangement varies greatly. Nonprofits based on membership (such as the American Association of University Women or the National Association for the Advancement of Colored People) are accountable to their members. Organizations that provide a service are accountable to those they serve, although this may be ineffective. Policy advocacy networks such as the Sierra Club and Amnesty International have some accountability to their members, who pay dues, and their volunteers. Other nonprofits seem to only be accountable to whichever members of society they claim as their stakeholders. The relationship is much less defined (Renz, 2010).

4. There’s no such thing as “one size fits all” in the Nonprofit Sector 
There is an incredible amount of nonprofit organizations today. These include charitable, educational, religious, scientific, social and political organizations, among many others. (Did you know the NFL is a nonprofit?) Moreover, there are many nonprofits that resemble businesses (such as microfinance organizations, like KIVA) and nonprofits that maintain a close relationship with government. Keep in mind, when considering the nonprofit sector, that nonprofit interests, goals and activities constitute a very wide range (Renz, 2010).

Berman, Howard J. 2002. Doing "Good" vs. Doing "Well": The Role of Nonprofits in Society. Inquiry 39: 5-11.

Renz, David O, ed. 2010. The Jossey-Bass Handbook of Nonprofit Leadership and Management. Jossey-Bass. San Francisco, CA. 

Filling the Void: The Unique Role of Nonprofits in Today's Society

As with most things political, President Obama’s latest State of the Union address was met with mixed reviews by members of the nonprofit world. While the folks at Nonprofit Quarterly were irate that Obama never overtly mentioned the role of nonprofit organizations in larger society, others perked up at the President’s allusion to the implementation of a higher estate tax—a move that is predicted to “spur more charitable giving in the form of bequests and charitable trusts.” But perhaps the most notable “nonprofit moment” of Obama’s speech was his explicit shout-out to a Minneapolis-based nonprofit, the Institute for Local Self Reliance.
Founded in 1974, the Institute for Local Self Reliance, or ILSR, has championed “the need for humanly scaled institutions and economies and the widest possible distribution of ownership.” In pursuit of this mission, ILSR must both collaborate and compete with government, for-profit business, and other nonprofits, on a variety of issues, including:

  • Energy: ILSR lobbies government representatives to promote renewable energy and adopt a decentralized power grid that more equitably distributes the economic benefits of energy generation.
  • Local Business: ILSR works with local businesses to revitalize commercial districts and combat market domination by corporate conglomerates. Additionally, businesses (and their employees) provide charitable donations to fund ILSR’s work.
  • Waste Reduction: ILSR competes against other non-profit providers for federal grant funding to research a variety of waste reduction methods such as composting and recycling.

Although this is just one case example of a nonprofit’s functions, it is certainly representative of the larger scale relationship between government, nonprofits, and for-profit businesses across the country. Each of these three economic sectors is both interconnected and interdependent with respect to the others. We cannot fully understand the unique role of the nonprofit sector in today’s society without comparing and contrasting its role to that of the government and business sectors.

Nonprofits and government: Throughout our nation’s history, government has served to regulate society. However, the form and focus of government regulation fluctuates over time, contracting or expanding in response to public opinion around the appropriate limit of government intervention. However, as Berman (2002) explains, “as government’s role contracts, or remains constant, society’s needs do not contract automatically” (p. 6), requiring the nonprofit sector to consistently fill the gap between the regulations/services provided by government and the unmet social, economic, and educational needs presented by individuals and communities.

Nonprofits and business: Boards are the driving forces behind both nonprofits and businesses (Berman, 2002). These groups of members, through collective action, work toward a shared mission (2002). However, the missions of businesses and nonprofits differ with respect to motive. For-profit businesses exist to make money within the context of a market economy; nonprofits exist to serve the needs of society that cannot be met through economic competition alone (2002). While businesses can adopt a stance of corporate social responsibility, they are still inextricably tied to the goal of making a profit (2002). While nonprofits must also generate enough revenue to be sustainable, their goals, by definition, extend beyond that of making a profit, and instead function to realize society’s unmet social welfare, economic, and educational needs (2002).

Clearly, each of these three sectors plays an important role in our society. However, nonprofits are unique in their function of providing and equitably distributing collective goods and services demanded by citizens but not supplied by business or government. In this way, nonprofits essentially function to afford access to necessary resources not consistently provided by the other sectors.

Reference: Berman, H. J. (2002). Doing "Good" vs. Doing "Well:" The Role of Nonprofits in Society. Inquiry, 39, 5-11.

Who Fills the Social Welfare Vacuum? – Comparing the Three Sectors

“Helping all people live healthy lives” and Improve the health of people around the world by advancing technologies, strengthening systems, and encouraging healthy behaviors”– one mission statement belongs to a nonprofit organization, the other to a Fortune 500 company.  What actor will fill the “social welfare vacuum” created when the government sector does not have the capacity or capability to cover the needs (Berman, 2002)?  The possible ambiguity provided by the mission statement resulted in the questions 1) What and who is the focus? 2) Who pays, to whom are they accountable?, used to define the government, for profit and nonprofit sector.

1. What and who is the focus?

The focus of the government sector is to provide regulation and a social welfare net for the citizens – but to what extent this should be done varies with public opinion (Berman, 2002).

The for profit sector’s primary focus is to make financial profit, and this profit can either be reinvested, or divested to its stockholders as dividends.  Some argue that this should be the for profit sector’s sole focus – while more businesses realize the value of taking responsibility beyond short-term profits. Corporate Social Responsibility is a unifying term for extending the focus to include secondary stakeholders such as the community – which is also a way to secure the long-term interests of the company (Berman, 2002).

The nonprofit sector is driven by the cause and the social return. Nonprofits can make financial profits –but if so, they are reinvested. Nonprofits provide services to target groups that have greater needs than the government (and to some extent business) sector is able to fulfill. It includes a wide range of actors – from educational institutions to social entrepreneurs solving society’s most pressing issues. (Berman, 2002)

The boundaries between the nonprofit and for profit sector became less distinguished when businesses were invited to compete for the same contracts as nonprofits. Consequently, nonprofits became more commercial, but the sector is still unique in its ability to address market failures - when the government is not able to provide a service for the needs of a group and for-profits stay out because of insufficient returns. In return for serving the public good, the public benefit nonprofit receives special standing and legal advantages. (Dobkin Hall, 2010; Jeavons, 2010)

2. Who pays? To whom are they accountable?  

Citizens and corporations finance the government operations and spending with taxes. The government is held accountable through mechanisms of evaluation and participation – exercised through elections.

The focus on the target group, or the customers, is an inherent mechanism for the for profit sector – since the target group are also the ones who pay. The for profit is first and foremost accountable to its shareholders, but many companies are extending this focus to other shareholders – and businesses will meet the complexity of being accountable to multiple actors, an inherent complexity of the nonprofit sector. (Ebrahim, 103; Henderson et. al, 2013)

The nonprofit’s operations are financed by money from the government, donors and foundations. In other words, the services are not paid for by the users, which makes the sector significantly different from the for profit sector, and somewhat different from the government sector. (Jevons, 186) The sector’s focus on upward accountability to donors is driven by their ability to pay (Ebrahim, 103). 

Today, strong relationships with multiple stakeholders have become a key determinant of survival for actors in all sectors. Opportunities are evolving at the intersection of the three sectors and expectations on leaders have never been higher. It is a time to to acknowledge and sustain the competitive advantage of each of the sectors – because it is the interdependence of three strong sectors that make society prosper. Generic mission statements do not – but the second, more comprehensive belonged to the nonprofit.


Berman, Howard J. 2002. Doing "Good" vs. Doing "Well": The Role of Nonprofits in Society. Inquiry 39: 5-11.

Dobkin Hall, Peter. Historical Perspectives on Nonprofit Organizations in the United States. In: Renz, David O, ed. 2010. The Jossey-Bass Handbook of Nonprofit Leadership and Management. Jossey-Bass. San Francisco, CA. 

Ebrahim, Alnoor. 2010. The Many Faces of Nonprofit Accountability. In: Renz, David O, ed. 2010. The Jossey-Bass Handbook of Nonprofit Leadership and Management. Jossey-Bass. San Francisco, CA. 

Jeavons, Thomas H. Ethical Nonprofit Management – Core Values and Key Practices. In: Renz, David O, ed. 2010. The Jossey-Bass Handbook of Nonprofit Leadership and Management. Jossey-Bass. San Francisco, CA. 

Henderson, Rebecca M. et al. Conference on "Research in Corporate Accountability Reporting. Retrieved from:

BD. 2014. Mission statement. Retrieved from:

PATH. 2014. Mission statement. Retrieved from: