Wednesday, January 28, 2015

The Motivation Behind a Mission Statement (The Role of Nonprofit vs. Public vs. Private Sectors)

Effective organizations are guided by a mission statement. A mission statement is both the anchor and the compass of the organization; grounding it in its purpose and determining which direction to go. It tells the story of an organization- why it exists, what it hopes to accomplish, and how it plans to achieve its goals.While organizations in the private, public, and nonprofit sectors may have similar goals, the motivation behind these goals is often vastly different. The significance of the nonprofit sector shines through in these differences.

“Do good, have fun, make money”- Epic

Epic is a private, for-profit company that creates medical software for health care organizations around the world. As demonstrated in the conclusion of Epic’s mission statement, organizations within the private sector exist to make money. While many businesses are dedicated to “doing good,” it is never their primary objective. These organizations need to make money in order to survive, and exist to benefit their owners financially.1 Some businesses, like Epic, choose to donate a portion of their profits to charitable organizations. Other companies completely abstain or encourage employees to give as they see fit.2

“Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.”-Internal Revenue Service (IRS)

Instead of existing to generate a profit like private sector businesses, the public sector aims to create a safe, orderly, and just society through government funded programs, like the IRS. The role of the government as a social safety net ebbs and flows based on public opinion as measured by voting outcomes. While public sector programs provide for a variety of needs, they do not have the resources to keep up with the demands of a growing, complex society, creating a gap in available services and resources. This is where the third sector, made up of nonprofit organizations, comes into play.

United Way improves lives by mobilizing the caring power of communities around the world to advance the common good”- United Way

The final sector, the nonprofit sector, exists to “maximize social welfare,” as demonstrated by the mission statement of the United Way.3 These organizations cover a multitude of goods and services, all on a not-for-profit basis. Unlike the private sector, any profit gained in a nonprofit organization does not increase the personal wealth of owners or stockholders, but instead cycles back into the agency to maintain and multiply the goods and services provided.

Nonprofit organizations are often partially or fully funded by donations, unlike private and public organizations. If the mission or vision of a nonprofit organization does not rally public support, the organization will have a difficult time finding the necessary financial support. In addition, nonprofit organizations must be trustworthy in order to gain public support. Organizations earn trust by acting with integrity, meaning the organization’s intentions and promises match its reality.4 Unlike the private and public sectors, organizations in the nonprofit sector are expected to always “do good,” and are often held to a higher moral standard.

Organizations in each sector of the economy have a variety of reasons to accomplish their stated mission. The nonprofit sector is unique because it can satisfy needs that neither the public sector nor private sector can accommodate. Organizations in the nonprofit sector are not motivated by financial gain like those in the private sector, nor are they constricted by government regulations like the public sector. Instead, nonprofit organizations are free to act where there is a need, and as a result provide the structure and support communities need to thrive.

1 Hopkins, B., & Gross, V. (2010). The legal framework of the nonprofit sector in the United States. In D. O. Renz (3rd ed.), The Jossey-Bass handbook of nonprofit leadership and management (pp. 42-76). San Francisco, CA: Jossey-Bass. 
2 Berman, H. (2002). Doing “good” vs. doing “well”: The role of nonprofits in society. Inquiry, 39, 5-11.
3 Hall, P. (2010). Historical perspectives on nonprofit organizations in the United States. In D. O. Renz (3rd ed.), The Jossey-Bass handbook of nonprofit leadership and management (pp. 3-41). San Francisco, CA: Jossey-Bass.
4 Jeavons, T. (2010). Ethical nonprofit management: Core values and key practices. In D. O. Renz (3rd ed.), The Jossey-Bass handbook of nonprofit leadership and management (pp. 178-205). San Francisco, CA: Jossey-Bass.