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).

Do we need accurate data about Nonprofits in the US ?

Last weekend, I attended a conference / brainstorm hosted by the American University, in partnership with the Urban Institute. Titled  ‘Nonprofit Panel Data Symposium,’ the two day event attracted some of the top brains in the country, working in the nonprofit/ civil society sector. As a young scholar who is interested in the sector and whose work intersects with the nonprofit sector quite strongly, I had a big incentive to be there. While it is hard for me to share all the details that were discussed, I will offer a few insights, in the hope of answering the question I have just raised : Do we need accurate data about

nonprofits in the U.S.? 1

The short answer to this question is : Yes. The longer answer is to explicate why this is so. I will use my own research as a starting point to answer this question. First off, there is no ‘accurate data’ out there. As one skeptical participant raised the question : ‘Is the data we have worth shit’? That is a good question to ask, to begin with. The fundamental reason is that any data that is publicly available usually comes with a few caveats and limitations – what is disclosed, how much of it is disclosed and how current is this data? While Form 990s tell us part of the story, they don’t tell us the whole story.

On a related note, while statistics can inform us about the trends in giving, the impact of certain policies on how nonprofits respond, they usually conceal as much as they reveal.

While there are some excellent initiatives that have been ongoing, in the field of nonprofit data collection – at Urban Institute, Lilly School of Philanthropy among other institutes, the felt need among researchers is that of an ongoing panel data-set. Such a dataset does not exist for the nonprofit sector. In my research, I came across this problem too. While the groups Iam interested in studying for my doctoral degree are American Muslims, there is a lot of ‘issue’ based data, but no real panel dataset – either in quantitative or qualitative terms – that can offer us an analysis of how the nonprofit sector has changed over time. This temporal element is important, in many contexts, to tell a story.

Research is usually about creating a narrative that is compelling and also ‘true.’ While the facts may vary over time, having a long time-duration analysis evens out the fluctuations that are inherent in any organizations’ lifecycle and they can be analyzed and understood more clearly, over a period of time. To this extent, yes, a panel data set is a good idea. As bad and imperfect as any data source is, having something tells us something. Not having any data and just speculating, based on pre-existing theories or worse still, on hypothesis is the worst form of research or scholarship. And I have seen this, when it comes to scholarship on Islam or even philanthropy. Better to let the data speak, rather than let one’s imagination run wild. As Danial Patrick Moynihan famously said “One may be entitled to one’s own opinions, but not one’s own facts.”

Do we really need nonprofits in America? : Five arguments for the sector’s existence

 

Are nonprofit organizations redundant? Can the for-profit sector solve all our problems and usher in a world where poverty, disease and deprivation are things of the past? I read an article on the Forbes website yesterday that argued for dismantling of the nonprofit sector. This piece by Mr. Freedman sought to show, using two elite universities as examples, of how the entire sector is not really contributing to our lives and at best, it is a benefit that the sector does not deserve. I believe that in the U.S. (and many parts of the world) the nonprofit sector plays a key role in society and holds together social bonds, provides opportunities to those who cannot be part of the for-profit sector and finally, offers an opportunity in democratic participation.

Photo courtesy : eder671nonprofit.pbworks.com
Photo courtesy : eder671nonprofit.pbworks.com

Let us look at some of the arguments that are made in the Forbes piece, before we move on to analyze why I think the nonprofit sector is so important to America. While pointing out that most students at Harvard and Stanford, two institutions Mr.Freedman picks for analysis – are rich, isn’t it a total waste of tax payers dollars to subsidize them? He says: “But Harvard’s philanthropy is clearly questionable. Most of Harvard’s students are rich. (For that matter,all on average four year nonprofit schools skew upward in the wealth distribution, although not as much as many of the most elite).” But it would help to remind Mr.Freedman that most students in America don’t go to Harvard and Stanford. They actually go to community colleges, for a start. As this recent U.S. News article points out, there are over eight million students enrolled in community colleges. And from a recent lecture at Virginia Tech, I learnt that as many as 40% of graduate students have spent some time at a community college, before moving onto graduate level study.

Here are a few arguments, spanning various sectors for why we need the nonprofit sector and how it enriches our lives, in concrete ways.

  1. Incentivizing community action – As Alexis De Tocqueville, the French Aristocrat keenly observed in Democracy in America, the form of association is key to progress in America. “ In democratic countries, the science of association is the mother of science. The progress of all the rest depends on the progress it has made.” Tocqueville, 1845 [1945]:1. Lester Salamon of Johns Hopkins University contextualizes this development in the ideology of voluntary action that existed since the founding of the country. Voluntary action in the 19th century was seen as a middle way between rampant individualism and monarchial tyranny. The arrival of immigrants around this time also led to the development of self-help societies and voluntary groups, that provided crucial services to the newly arrived immigrants, he points out. This continues, to this day and one sees that the nonprofit sector benefits people from across all segments of society – the very poor, the middle class to the rich ( The National Football League (NFL) is an egregious example of a nonprofit that ‘serves’ some very wealthy interests).

At the heart of this associationalism was a distrust of state authority and a belief that people are able to take care of their own needs, if left to their own devises. The legal status that nonprofits enjoy and the tax exemptions that they get is in part incentivization for this sort of associationalism.

2.Community Colleges – The surprisingly large number of students who attend community colleges is not well known. Their crucial role in preparing students for future education or work should not be discounted, nor is their funding mechanism, much of it modelled so that the fees don’t leave a big debt on those attending these institutions. As I have pointed out above, the sheer number of students who attend them is testimony to their continued relevance.

3. Employment in the nonprofit sector – As this recent article points out, millions of people are employed in the nonprofit sector and it contributes roughly five percent of the American GDP, every year. A recent report from the John Hopkins University’s Center on Nonprofits points out that about 10.1% of total America’s workforce is employed in the nonprofit sector. This is third in line, behind retail and manufacturing.

4. Democracy and philanthropy – Anyone familiar with American history will acknowledge the key role that civil society institutions have played in forming American democracy and sustaining it. Payton and Moody further argue that Philanthropy is crucial for Democracy. “The future of a free, vibrant society is linked to vitality of the philanthropic tradition,” they point out. (Payton and Moody, 2008. Pg.88). The advocacy and civic role of philanthropy are clearly essential in democracies, but other activities – helping to meet public needs and responding to human problems, shaping the moral agenda, and expressing cultural values are all part of building a stable democracy, they say. The notion that culturally, Philanthropy fosters democracy is an idea that has persisted since Alexis de Tocqueville pointed this out in his classic work Democracy in America. Payton and Moody build on Tocqueville’s argument in that Democracy needs philanthropy as it is also a cultural value, fostered by civic institutions

 

5.Cultural argument – One must also remember that individualism and freedom are at the heart of the American character, as Robert Bellah et al have argued in their book Habits of the Heart. In this book, they start off with case studies of four distinct individuals, leading very different lives. But what ties them together is how they make sense of their lives. As they say: “Brian Palmer finds meaning in marriage and family; Margaret in therapy. Thus both of them are primarily concerned with family life. Joe gives his life coherence his active concern for the life of his town; Wayne Bauer finds similar coherence in his involvement in political activism. Whether chiefly concerned with private or public life, all four are involved in caring for others. They are responsible and, in many ways, admirable adults. Yet when each of them uses the moral discourse they share, what we call the first language of individualism, they have difficulty articulating the richness of their commitments. In the language they use, their lives sound more isolated and arbitrary than as we have observed them, they actually are.”

As many keen observers of American society, from Alexis De Tocqueville to Robert Bellah and more currently Robert Wuthnow, have pointed out, civil society and its functioning is crucial for American democracy. The way in which individual agency has shaped American ethos is quite unique and offers all of us – should we choose to, to participate in making our ‘own world’ in our communities, both locally and at the national level; with limited interference from the state apparatus.

 

The libertarian argument against nonprofits in general is predicated on cutting back on any subsidies to those who ‘do not produce’. This is fallacious, as it defines productivity in a very narrow sense. Are the services of an NGO engaged in employment generation not valuable? What of the local community college or research institution? And I am not even bringing up the soup kitchens and other self-help groups that save lives, provide shelter and provide social services that many welfare states do. How does one quantify the results of some of the intangibles such as community action and mobilization, that several NGOs’ work towards?

Taking a cue from this, the discourse of ‘fixing the world’ through for-profits alone misses out on this sense of commitment, social bonding and cohesion that seems to exist in American society; and much of this exists in the nonprofit sector, where the motive to serve exists, even if in a flawed way. This social capital is the basis of how civil society has evolved in the U.S. Taking this away would mean taking away something at the heart of the American ethos. And unfortunately, much of this social capital is not “for-profit”.

Not everything that can be Counted Counts, and Not Everything that Counts can be Counted: Notes from ARNOVA, 2013

 

I left Hartford, CT on Saturday after three grueling days of intense thinking and engagement at the 42nd Annual Association for Research on Non-profit and Voluntary Action (ARNOVA), the Mecca for nonprofit theorists and practitioners. For over four decades the organization has been the meeting ground for anyone interested and engaged in this sphere. The three days of discussions, debates over coffee, lunch and dinners and intense panel discussions brought forth one key fact for me – data has finally trumped values as the epistemic framework for nonprofit management. And I am not convinced this is an entirely positive thing. Let me explain.

Photo Credit :  Sabith Khan
Photo Credit : Sabith Khan

IMG_3025 IMG_3028 IMG_3029 IMG_3040 IMG_3052 IMG_3056

Of the various sessions I participated in, and also chaired- I ended up chairing two sessions, one  on Understanding and Measuring Capacity in the Nonprofit Sector and the other being The Relationship between Performance Management and Nonprofit Outcomes. One of the discussants in the first panel, Celopatra Grizzle, from Rugters University pointed out that donors don’t care about efficiency of the projects/ organizations that they donate to, but rather its legitimacy. This goes against the utility maximization theory that is used by Economists and those in the profession, who are interested in measuring the effectiveness of philanthropy. Chongmyoung Lee discussed his project of measuring outcomes in nonprofits and the perennial challenge of doing the same.

Lilly School of Philanthropy, an institution that is at the forefront of research in the field of Philanthropy was extremely well represented. Almost its entire research team was here and having worked with them this summer, I was personally excited to see that they turned out in great numbers. Dr.Amy Thayer presented her research on philanthropy and meaning making practices in education among K-12 students. One of the findings of this pilot study is that participation in philanthropic education programs enhances emotional maturity and also participation in these programs is linked to grants being available. This is not surprising, given similar results from a longer program, that has been ongoing at Center for Arab American Philanthropy, part of ACCESS, in Dearbon, MI; targeting a similar demographic among Arab American Youth, through the Teen Grant Making Initiative ( TGI).

Yuan Tian, a doctoral student at the Lilly School of Philanthropy presented her research on International Giving in the High Net Worth givers category. This has been compiled and is documented on an on-going basis through the Million Dollar List, a public list of gifts over a Million dollars made by individuals, in the U.S. She pointed out several interesting findings from the list, showcasing trends in giving and also some unique insights including that the highest donations to the international sector went to Healthcare, Education and Arts. These insights are helpful for both planners and those working in the international affairs sector.

Among the sessions dealing with values, religion and faith – I managed to attend two. One was a meeting of the Values in Philanthropy group, that sought to understand and research the “dark” and the “light” side of Philanthropy, including the activities that are not often brought up , i.e, funding of illegal or anti-social activities through the institution of philanthropy. It could be either the Church support of the Irish Republican Army or support by certain faith based groups in helping Al-Qaeda. The group has decided to further this approach and is seeking inputs on these issues, as they plan the agenda for the upcoming year. I was part of this lively discussion and contributed a few insights.

Finally, I managed to hear Shariq Siddiqui, the Executive Director of ARNOVA and Dr. Mounah Abdel Samad of San Diego State University, who spoke about Civil Society Legislative Advocacy in Morocco, based on his survey of legislators in the country and how much they trusted civil society organizations. Siddiqui spoke about his research on the American Muslim giving experience and this was captured through the example of Islamic Society of North America, the national representative body of American Muslims.

Overall, this was a vibrant atmosphere, and the conference itself addressed philanthropy, voluntary action from various perspectives – both quantitative and qualitative. There were researchers focusing on all sorts of issues – domestic, international, big and small. But one could not miss the heavy focus on quantitative methods and the frameworks leaning towards this mode of enquiry. Amidst the hundreds of presentations, a handful were purely qualitative studies and perhaps this is an indication that researchers are not asking the often harder questions of ‘why’ certain things are the way they are, and are focusing more ‘what’ and ‘how’, that are more easily answered through regression models and quantitative analysis.

 

Nonprofit outlook : Where’s the light at the end of the tunnel ?

Nonprofit outlook : Where’s the light at the end of the tunnel ?

Is there a new normal for nonprofits ?  What is the role of government in regulating and working with non-profits ? What does a movement such as Anti-wall Street represent to us as a society ? These and other questions formed part of the thinking at the “Nonprofit outlook : Where’s the light at the end of the tunnel”, panel discussion at the Urban Institute, Washington DC today. The panel brought together eminent practitioners as well as thinkers in the field of non-profit management.

“This is no doubt a hard time for nonprofit managers and even for the boards. The need to be accountable and focused, has never been so important. The civil society’s role is also changing, with changing nature of our society. Do we have the fiscal-financial infrastructure to support this change ?” asked Marta Urquilla, Senior Policy Advisor to the White House Domestic  Policy Council’s Office of Social Innovation and Civic Participation.

She added that in many ways, we can’t keep pouring money into ways of doing things,  when they aren’t producing results. It has value only in a broader context. Only to the extent that this adds value to other related things. Is there success or results ? Do we help organizations to build themselves over time ? Are they on firm footing. Can we invest in the  young leaders ?

While others such as Howard Husock, VP for Policy Research at the Manhattan Institute pointed out that the non-profits are actually competing with the government in provision of some of the same services that the government does. “The government should looking at what is working and what is not, and what is really out-moded. Will such thinking happen is the question”, he said.

Stephen Bennett, President and CEO of United Cerebral Palsy pointed out the difficulties in funding disability related work and the need for leadership, and for imagining futures where creative ideas  contributing to the solutions  we look for.

The issue of mergers of non-profits  and also partnerships between for-profit and non-profits came up, with several participants asking questions related to the need for exploring such synergies.

Analyzing the harsh economic climate in which non-profits are forced to operate in now, Urquilla added :” If you didn’t start off strong to begin with, there is no way you can make through. The amount of strategic management and guidance that non-profits need is immense. It is an opportune time. Under constraints, we have found that is when innovation is formed. To imagine alternatives, to put everything into what is working. I am hopeful and certainly mindful that it is a very difficult time, to engage with what is important. It is work that all of us in this country rely on : whether it is providing some services to the poor, or contributing to the cultural experience  “.

The discussion following the panel revolved around both management issues as well as the need for strategic thinking, building capacity of the nonprofits and learning to be frugal.