The trinity of nonprofit sector: Time to revisit some assumptions?

The trinity of transparency, accountability and efficiency are also at play in the world of public health. In the book Governing Global Health by Chelsea Clinton and Devi Sridhar, that I am reading now, this theme comes up time and again. They both argue that among the various organizations that they have studied in the book, including World Health Organization, Gates Foundation; WHO comes up short on transparency measures.

They point out that WHO does not have a transparency policy and also does not report to the International Aid Transparency Initiative (IATI). They do point out to the presence of some measures such as livestreaming of Executive Board meetings as example of some transparency. While no one today would question the need for transparency, the question is how can people use it?  But does having more transparency really make all the difference? The assumption behind calling for more transparency is that it will enhance participation, questioning from all stakeholders and make the process more equitable. But what of the converse situation, where there may be more procedural transparency, but no substantive transparency; in that there is no actual recourse to using this information to correcting the perceived wrongs? This is an aspect that hasn’t been discussed in much depth.

Their recommendation is for the older institutions such as the WHO and World Bank to increase their stakeholder engagement and transparency to ‘regain their legitimacy and public trust.’ (p.160).

Is philanthropy inherently undemocratic?

I am reading Peter Frumkin’s Strategic Giving, a must read for anyone interested in understanding the current debates in the field of philanthropy and also teaching a course on Governance and civil society in the U.S. Together, these two sources are shaping my ideas about democracy, civic engagement and political theory. I will discuss the somewhat controversial idea that Frumkin raises in his book with a question: Is Philanthropy inherently undemocratic? Frumkin argues that it is so, and I will argue why I don’t agree with this premise. I present three of his ideas and my analysis of the same:

Source: wikinews.com
Source: wikinews.com
  1. Philanthropy is undemocratic because philanthropists are usually the rich and those with influence, who set the agenda for their work, with virtually no restrictions. It is not based on equal participation – as equal and fair participation is the basis of democratic theory. To quote Frumkin: “One conception of accountability is rooted in democratic theory- whether by vote. Philanthropy is profoundly undemocratic in that donors do not give their recipients the ability to recall them or reverse their behavior and in also that the power elites use their power and wealth to enact their own vision for the public good.”(Pg. 75). Frumkin further points out that: “The biggest fear is that philanthropy does not have adequate accountability mechanisms. Without real way to hold donors accountable, many leaders in the field worry that philanthropy will never have the impetus to improve its performance and become more effective (Pg. 71).

I disagree with Frumkin to the extent that donors, who are often quite vigilant about the activities of the nonprofit can, and often do change their priorities in giving, if they think that the mission of the organization is not being served. In this respect, I believe there is accountability in the sector. While control of agenda and accountability are problems and very real ones, they are not a mirage. There are structures of accountability that keep nonprofits from abusing the trust of the people they serve. While there is no one mechanism that can stop this abuse, I believe that as an overall system, taken together – with IRS, private audits, annual reports, donor vigilance can all keep the nonprofit in check.

2. Frumkin points out that philanthropy is private in scope and in agenda setting and this makes it problematic, since its impact is public. Also, he adds that philanthropy is different from other forms of private consumption in three ways:

a. It has tax breaks associated with it

b. Its impact on others

c. Power symmetries that result when one person or institution gives money to another person or institution

In these respects, philanthropists can act on their own free will and impact the public, through their private initiative. This giving as a very private agenda setting is considered undemocratic.

While this is true and Foundations can set agendas that go directly against government policies – think of George Soros in Eastern Europe for example – inherently, this can be considered democratic, in that it is free speech. While in the U.S. this is protected constitutionally, as long as it does not incite violence or is clearly illegal. The process itself is democratic and is just one of the rights given to a citizen. When it starts to subvert the system significantly, in terms of undermining systems of government or the constitution that is when it becomes undemocratic

3. The question of accountability: Given that philanthropists are not held accountable in the same way as is an elected official is, this can be considered an unaccountable system.

I argue that conversely, if one considers that ultimately the philanthropist is bound by social, legal and cultural norms and also audits by IRS, this system does show some level of accountability – though of a different kind. This is not the direct accountability structure that is prevalent in a participative democracy, but one of indirect checks and balances. While private foundations may have more leeway and freedom in doing what they please, other nonprofits are not as free. Also, one must remember that effectiveness, accountability and legitimacy are the three factors that he mentions as being at the heart of many debates in philanthropy. These are unresolved issues and will perhaps remain so, as long as philanthropists continue to do what they are doing. The question in my mind, is not whether philanthropy is democratic or not, but whether the organizations that philanthropists fund are true to their mission and do what they set out to do- with integrity, compassion and care.

 

References:

Frumkin Peter. Strategic giving – The Art and Science of Philanthropy. The uni of  Chicago Press. Chicago. 2006