Public sector, non-profit and for-profit organizations
each have distinctive roles, but work together to form national and global society.
The public sector – or the state – is primarily concerned with
governing. The state exists at the point of intersection between its own
domestic society and the wider international system of sovereign states.
Because of this, the public sector must be mindful of their own material
interests as they function alongside other states. The state is Janus-faced and
is dually anchored in both the domestic and the international system (Skocpol
1979, 32). The state is accountable to public interests and ought to seek “the
good” of its people, while balancing these interests with global demands.
Governments enact policy, which can favor the interests of businesses or the
interests of services for citizens. The organizations of the for-profit sector
are primarily concerned with offering desirable products or services that are
profitable. Companies are accountable to stockholders and consumers, and tend
to expand their profit as far as the market and policy will allow. Organizations
that comprise the non-profit sector generally have ethical underpinnings,
taking on work that is considered to be contributing to a public good. These
roles are often privatizations of work that had once been undertaken by the
state, or new needs that have come into public awareness. Nonprofits are
accountable: upward to funding sources and donors, as well as downward to their
clients (Ebrahim).
In recent years, there have been significant
shifts in the role each sector plays, with the non-profit sector expanding, the
for-profit sector manufacturing globally, and the state favoring free trade and
for-profit interests. An expanded role of nonprofits – both domestically and
globally – took root when states became more reliant upon the nonprofit sector
for service delivery, which can be traced to the 1980s Reagan and Thatcher era
politics. Many countries in the developing world defaulted on their international
loans and faced financial crisis. Washington, DC-based institutions drafted the
“Washington Consensus,” which put forward a set of economic policy
prescriptions for these developing countries (Williamson, 1993). These
prescriptions opened markets to foreign for-profit organizations and limited
state interference in trade. Greater conditionalities became attached to new
and restructured IMF loans, and indebted governments were required to
liberalize their economies, reduce market protections and implement austerity
programs. These austerity programs reduced government social service provisions
and contributed to increased poverty in these countries.
This resulted in more off-shore production for large
companies, which cut their production costs. Production provided manufacturing jobs
in developing countries, but also spurred a “race to the bottom” for these
countries, with governments offering their citizens’ labor for decreasing
wages. Humanitarian non-profits (largely from the global north) began to fill
the gaps that arose in service provision, providing education, healthcare and
food provision where state services were assessed to be lacking. These
organizations were charged with civilizing and democratizing their
constituents, combating government corruption, and delivering social services
more honestly than state agencies. As a result, there was a boom in the number
of nonprofits working in the global south known as NGOization (Dobkin Hall).
Going forward, I think this trend of global manufacturing
and increased reliance upon nonprofits for public services – both domestically
and internationally – will continue. Since for-profit organizations can reduce
production costs by reducing wages, companies will continue to seek cheaper
labor as long as government policy permits. Non-profits may achieve their goals
more effectively from a bureaucratic standpoint because they are smaller and
more specialized in their focus. States can effectually outsource some public
service responsibilities to nonprofits, and citizens can fund a public good
that may be overlooked or ignored by their state. A major weakness in this
model of service provision is that nonprofits have less consistent funding than
states, and the insecurity of funding may weaken a nonprofit's responsiveness
to their clients needs (Ebrahim). Donors place expectations upon nonprofits and
evaluations often focus on metrics of effectiveness that are comparable to the
expectations stockholders place on for profit companies.
Dobkin Hall P. “Historical
Perspectives on Nonprofit Organizations in the United States.” The Jossey-Bass
handbook of nonprofit leadership and management. John Wiley & Sons, 2016. Pg. 3-42.
Ebrahim A. “The Many
Faces of Nonprofit Accountability.” The Jossey-Bass handbook of nonprofit
leadership and management. John Wiley & Sons, 2016. Pg. 102-124.
Skocpol T. States and Social
Revolutions: A Comparative Analysis of France, Russia, and China.
New York and Cambridge: Cambridge University Press; 1979.
Williamson J. Democracy and the
“Washington consensus”. World Development, Vol. 21, Issue 8. August 1993, Pg.
1329-1336.
