Transcript The Theory of the Third Sector
Overall Program Objectives
Prof. Stephen Block
Overall Program Objectives
This series of four courses will focus on management principles and practices as applied to: Consumer Behavior Corporate Governance Economic Systems and Transformation Essential competencies required to effectively manage and govern Nonprofit Organizations [that can lead to collaborative partnerships with private and public sector organizations]
Course Objectives
For Monday 26 September 2005
Learning Objectives
1) Culture as a management issue 2) The relevance of studying Nonprofit Management 3) The Scope of America’s Nonprofit Sector 4) A contextual framework provided by history and tradition
A Challenge of Terms
What do we mean by the word “Culture?”
cultural competency cultural attaché culture-shock cultured-person cultural revolution cultural exchange counter-culture arts & culture cultural hero cultured pearl cultural center
among others
Culture & Management
In the context of discussing and learning about the practice of management, the term Culture takes on two different complex forms and applications.
Cultural Impact
Values, Beliefs, Assumptions, Artifacts, Language, Mores, Styles of Learning
Culture & Management
Two Forms: 1.
2.
Culture from an external or comparative Social/Societal Perspective Culture from an internal, micro- perspective of an organizational entity.
Societal Differences
As Managers, we need to be aware that there are, in fact, differences of style, customs, ways of working and thinking as reflected in how a person has been “acculturated” in his/her upbringing.
Cross-Cultural Differences
Differences based on: Nationality: Country of origin Regional differences Local Community
Questions
Or comments
Context & Scope of the American Nonprofit Sector
Scope of the Nonprofit Sector
There are approx. 1.6 million identifiable organizations in the nonprofit sector Nonprofits represent about 6% of all types of organizations among the three sectors of government, nonprofit,and for-profit.
Scope of the Nonprofit Sector
Revenues of $670 billion, equivalent to 9% of the US gross domestic product (GDP) Exceeds the GDP of Australia, Canada, India, Netherlands, Spain and most of the countries in the world
Scope of the Nonprofit Sector
Nonprofits control cash, investments and property that exceed $1 trillion.
Scope of the Nonprofit Sector
Approximately 134 million people work in full and part-time positions in all types of nonprofits. (11 million people work as employees of 501 C 3 & 4 nonprofit organizations.
Scope of the Nonprofit Sector
In addition to paid employees, nonprofits employed the equivalent of 9.4 million fulltime volunteers who contributed 12.7 billion hours of volunteer time, estimated at $250 billion of free labor.
56% of the adult population volunteer an average of 3.5 hours per week.
Scope of the Nonprofit Sector
11% of all employees in the US economy (combining paid employees and volunteers) work for nonprofit organizations.
The Context of the Sector
Five cogent explanations for the origin of the nonprofit sector: Historical Market Failure Government Failure Pluralism Solidarity
Historical Context
Society preceded the establishment of the state.
In the absence of government organizations, individuals had to deal with common concerns and problems on their own.
It was advantageous to join with other people in associations, organizations, and voluntary groups.
Historical Context
A provision of a range of services (charity, housing, health, adoption, legal, vocational, etc) were developed without government support or regulations.
Market Failure
Economists point to the marketplace for the production of goods and services that are consumed individually.
For goods and services that are consumed collectively by groups of people, problems can arise in the marketplace. Individuals have incentives to be “free riders”
Market Failure
Since all economically rationale individuals will make the same calculation, the result will be inadequate production of collective goods, such as : security/community safety clean streets parks and nature preserves Etc.
Market Failure
There are two solutions to market failure: Government - through the levy of taxes compels all citizens to assume the cost of providing collective goods.
Market Failure
Nonprofits - groups of individuals can pool their resources to produce goods and services they mutually want but cannot convince a majority of citizens to support.
Groups linked by common social, economical, and/or cultural goals can provide the collective goods desired in the absence of majority endorsement or government involvement.
Government Failure
Democratic governments encounter difficulties in providing collective goods: mobilizing for a majority of citizen support necessary for public action is a long and arduous process.
When government has won a majority of citizen support, citizens often find fault with the size, cost, and unresponsive nature of government systems.
Government Failure
Regardless of the validity of the complaints, citizens may prefer that a non-governmental organization deliver the services.
These preferences have fueled “privatization,” a complex pattern of cooperation and interdependence between the public and nonprofit sectors.
Pluralism
Expressive aspects leading to the existence of nonprofits.
Gives a voice to the great diversity of viewpoints held by citizens.
The most significant social reforms known in this nation are attributed to a voluntary sector
Solidarity
Preserves a capacity for joint action among citizens.
Coming together to pursue common purposes through associations, voluntary groups, and organizations.
Alex de Tocqueville observed that in democratic societies, equality of conditions can render individuals relatively powerless
.
Blurring Boundaries
Nonprofit organizations do many things that are also done by for-profit businesses and government entities. While the boundaries are not clear-cut, there are some distinctive activities (such as religious worship).
The Theory of the Third Sector
A Context for Understanding Today’s Nonprofit Sector & Civil Society Activities
Unlike the study of political science which can more easily be traced to Plato and Aristotle, or the field of medicine capable of being traced to Hippocrates of Cos, the lineage of nonprofit management is not clear-cut and precise.
-- Stephen R. Block “A History of the Discipline”
1.
The Origins of the Sector
The Roots of Charity and Philanthropy 2.
The Development of the Volunteer Role 3.
The Evolution of Tax Exemption 4.
The Adaptation of Management Techniques for Nonprofit Organizations
The Roots of Charity and Philanthropy
Sir Arthur Keith suggests biological aspects to altruism.
Evolving from the role of welfare and preservation among primitive societies.
Developing more complex societies using rules and structure, such as the Babylonians Code of Hammurabi.
Religious doctrines, ideology and influences on giving.
The Egyptians notion of blessed giving, 2300 years before the Christian Era
The Greek philosophy of charitable giving to fortify the community.
The Old Testament The Book of Deuteronomy and the commandment of tithing.
Maimonides and the Jewish concept of community giving.
The Scriptures of Matthew
Helping the poor and needy
The Reformation and the breakup of England’s feudal system.
The Poor Laws of 1601 codified: Public responsibility - Local responsibility - Relatives’ responsibility
Settlement House Movement Charitable Organization Movement Federated Fundraising
The Development of the Volunteer Role
The evolution of Volunteerism parallels the evolution of charity and philanthropy
The Observations of Alexis de Tocqueville
What is Volunteerism?
Individualism versus Social Constructivism
The Influences of Participation - Protestant Patrician Tradition - Urban Ethnic Influence - Organizational Tradition - Impact of Philanthropy
The Evolution & Impact of Tax-Exempt Status
The relationship between tax and charity is a symbiotic one.
Tax deductibility is an inducement for charitable behavior.
In the United States: Tax exemption follows from an historical, unwritten rationale for tax exemption to various statutes as Revenue Acts.
In the United States: Internal Revenue Code 501 (c) (3) is the benchmark for tax-exemption policy.
From Management Practice to the Emergence of Nonprofit Management The advancement of management practices can be traced from the Dark Ages to the development of commerce in the Mediterranean.
Management Concepts from Adam Smith’s Wealth of Nations.
Division of Labor
Management Thought The influences of: Henry R. Towne Joseph Wharton Frederick Taylor Henry Gantt Harrington Emerson Henry Fayol Horace B. Drury
The Human Relations Movement The Contingency Approach & The Systems Approach Management in the Modern Organization
Management tools are being widely used in the nonprofit sector and applications of those tools are being modified to achieve goals that are not addressed in the for-profit or government sectors. Or, in some cases, nonprofits address goals as equal partners with government and the for profit sector
.