Wednesday, January 28, 2015

Nobody Puts Non-Profits in a Corner: Dispelling the Myth of Isolation Between the Three Sectors

As busy people, we like to look at things as black and white, divided carefully and completely into separate categories. This thing goes in that box. Check. Done. The goals and roles of various institutions are no different. When we think about the work of government, we try to categorize it into a few main boxes: collecting taxes, managing the military, doling out Social Security checks. For-profits (i.e. corporations) exist, we might believe, solely to make money by selling us something or performing some task for us. Check. Non-profits are tasked with handing out charity. Done.

In the minds of many, these three sectors stay in their own lanes. The reality of it, however, is that there is a much deeper interplay between them. Certainly, all three sectors are likely to have some different roles in our lives and our communities, but they ought not to be so rigidly categorized.

David O. Renz traces the history of this interplay from the founding of the United States, when voluntary associations, the precursor to modern non-profits, were distrusted as tools of the wealthy to increase their standing, to the dramatic rise of foundations and charitable giving in the 19th century, then embraced by Americans as they sought to enact social reforms. Over the last 100 years, as government has increased dramatically in both scope and in scale, the number of issues that have direct impacts on society, and have attracted dedicated supporters and detractors, has likewise skyrocketed. Non-profits have arisen as a powerful tool to enable citizens to influence government policy, in many cases serving as advocacy organizations rather than providing direct services to the needy.

As Howard Berman points out in The McNerny Forum, in today’s political climate, where the idea of government spending is often frowned upon by a majority of the electorate, non-profits are there to fill a void. Tight governmental budgets mean tough fights, and often even tougher losses, for program funding. Advocacy organizations, or non-operating organizations, fulfill their charitable role by working to bring about knowledge of the issues and the impacts of cuts to funding or inaction. Their work is to influence government, to humanize the political process and its ramifications. And when cuts are made, or when government simply cannot meet the social welfare needs of its citizens, operating non-profits yet again step in to fill this gap. In turn, government often recognizes the important role of non-profits, both as advocates for causes and groups who might otherwise go unnoticed and as providers of direct aid, through various funding structures that enable non-profits to exist. Each sector is deeply influenced by the other.

Similarly, the public and private sectors interact in ways that are not always readily apparent. Whereas most think of corporations as profit-seeking organizations, many for-profits employ the concept of corporate social responsibility – or, as Berman puts it, doing “good” instead of just doing “well.” Corporations have learned that a healthy, stable community is good for business, but typically not within the expertise of the corporation itself to undertake. Here again, non-profits fill a void. Their role as on-the-ground actors enables businesses that seek to do “good” in their communities to find the right ways to have a real effect on individuals.

These three sectors each function with their own roles within society. They do not, however, function within a vacuum. Instead, there is a delicate but omnipresent interplay between them. Where government may fall short, non-profits may step in to provide services. Where non-profits need institutionalized support, government may provide this in the form of funding. And where business seeks to expand its impact beyond profit for shareholders, non-profits may enable them to do so efficiently and for the greatest good.

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.