“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.
References
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: http://www.hbs.edu/faculty/conferences/2013-corporate-accountability-reporting/Pages/default.aspx
BD. 2014. Mission statement. Retrieved from: http://www.bd.com
