Monday, January 26, 2015

The Role of Nonprofit vs. Government vs. For Profit Sectors

            Society’s three main sectors, the public, private, and nonprofit share commonalities and differences. First, let’s explore some of the nonprofit sector’s commonalities with the public and private arenas.  The public and nonprofit sector align more naturally at first examination with one another than either does with the for profit sector. The public and nonprofit sectors both work actively to create a stable and ideally fairer society. As Berman notes in Doing “Good” vs. Doing “Well”: The Role of Nonprofits in Society, the private sector, while benefiting from a more stable society, does not work to improve society at all costs. Rather, the bottom line for business is to create profit. 
            The public and nonprofit sectors also work with more budgets constraints than the private sector (although all three handle money differently). The different treatment of profit is the “fundamental distinction” between for profit organizations and nonprofit organizations according to David Renz in the Jossey-Bass Handbook of Nonprofit Leadership and Management (pg. 43). Money can go back to shareholders in a business, but profit MUST legally return to support a nonprofit’s mission rather than returning to board members. The public sector falls somewhere in between the private and nonprofit sector. In the public sector, money can go back to shareholders in a manner of speaking if we consider tax-cuts a return to shareholders.[1] Additionally, surplus money can also be re-directed to different governmental initiatives (or in other words, go back to support a mission of government).
            While the public and nonprofit sectors align in a number of ways, they also differ in key areas. The public sector is more subject to political and policy changes than the nonprofit sector. As political power shifts, so do priorities in governmental agencies. Because of these shifts, public sector programs may not have the longevity of nonprofit programming. If (and of course this is a big if) a nonprofit secures long-term funding for a program, it can continue indefinitely, regardless of what political party is in power and what policies are priorities in the government. Of course, if a topic is a focus of politicians or the public, a nonprofit’s funding may receive a boost from this attention.
            Although the similarities between the nonprofit and public sector are arguably more apparent than those with the for profit sector, commonalities do exist between nonprofits and for profits. Ken Miller writes in Greed is Good, “everyone is trying to make a profit.”  He argues that in the public sector, organizations should be greedy, fighting for profit just like businesses. He explains that these public sector profits are results such as cleaner air and safer neighborhoods. I would argue that many of these “profits” (or results) are the goals of the nonprofit sector too. In this way, the private, public, and nonprofit sector align in their drive for results.
            Although this drive for results unites the three sectors, the nonprofit sector does have its own unique challenges in our society today. Berman, sums up this challenging role when he writes in Doing “Good” vs. Doing “Well”: The Role of Nonprofits in Society about a “social welfare vacuum” created by a lack of alignment between the real needs of the people and the support of the government. Nonprofits, Berman explains, have the unique challenge in our society of filling this void with programming and education. I believe this need will continue to grow as our government continues to rely heavily on contracting out services and depending on other organizations and nonprofits to provide needed social services.


[1] I should note that the idea of the public as shareholders in the government comes from Ken Miller’s article, Greed is Good.

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