Wednesday, January 25, 2017

The Three Sectors: A Call for Collaboration

The inauguration of a new president raises uncertainty for all sectors of our economy, namely each sectors role in society.  Generally, the private sector’s role is to meet the demands of consumers who pay for a good or service.  Similarly, the public and nonprofit sectors are accountable to their own “consumers”-tax payers and funders, respectively- to provide quality services with demonstrated outcomes (Renz, 104).  However, the private sector differs dramatically from the public and nonprofit sectors in its defining objective of generating a profit (Renz, 44). 



When a good/service is not profitable for a for-profit business, the public sector serves in helping to provide that good/service.  Economists argue the public sector helps correct “failures” of the private market, such as “free-riding” or refusing to pay for a good/service (Berman, 6).  The public sector also serves to protect consumers who may lack information about the quality of a good/service and may be taken advantage of by profit-seeking organizations not concerned with social welfare.  The public sector continues this watchdog role and can regulate the private sector from engaging in behaviors that may generate a profit for a few people, but are harmful from a societal perspective (i.e. pollution) (Weisbrod, 20).
The public sector operates with a focus on the majority, sometimes creating gaps in the services it can or chooses to provide.  Market theory suggests nonprofits arise to fill this gap between the goods and services offered by the public and private sectors (Renz, 191).  The nonprofit sector can focus attention on issues that aren’t addressed by the other sectors, such as providing services to people who do not quality for public welfare programs.  The nonprofit sector raises social capital by becoming a venue for collective community action, helping to focus resources and unite people around a common goal.  In effect, the nonprofit sector is a hallmark of the democratic system, providing a diverse venue for people to collectively act around a common goal for public interest.  “Nonprofit organizations are the means by which citizens who want more of some collective good or service can supply that need” (Weisbrod, 20).  The public expects nonprofits to be motivated by this commitment to public good (Renz, 196).
Historically, a conservative government results in a downward shift of power towards more local control (Renz, 24).  As the public sector shifts away from “big government policies”, nonprofits face a greater role addressing the “social welfare vacuum” (Berman, 6).  Resulting from a contentious election, further uncertainty and mistrust in the public sector put added stress on the nonprofit sector as people seek solutions outside the political arena.  Yet, as Berman states, “One sector cannot prosper without the others” (Berman, 9).  The three sectors are interconnected and interdependent.  The nonprofit sector relies on funding from both the public and private sectors.  Government policies themselves affect both the difficulties and successes nonprofits face and address.  An increasing commitment to corporate social responsibility links for-profit and nonprofit sectors (Berman, 7). 
The lines between the three sectors are becoming more blurred as neither sector can stand alone (Renz, 32).  The roles of the three sectors should continue to become more interdependent, interwoven, and collaborative to address societal problems.  There is a need to move away from the emphasis on “compliance-driven accountability” which focuses on short-term, quick, tangible impacts (Renz, 119).  Funders and service-providers spanning across all sectors must come together to discuss longer-term strategies to address root causes to complex problems and systemic issues (Renz, 119).  The roles of the three sectors should continue to intertwine to promote collaboration and collective action around research, education and, practice.


Sources:

Berman, Howard J. "Doing “Good” vs. Doing “Well”: The Role of Nonprofits in Society." INQUIRY: The Journal of Health Care Organization, Provision, and Financing 39.1 (2002): 5-11.

Renz, David O. The Jossey-Bass handbook of nonprofit leadership and management. John Wiley & Sons, 2016.

Weisbrod, B. A. The role of the nonprofit sector. Harvard University Press. Cambridge, Massachusetts. 1988.

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