What Kind of Third Sector, What Kind of Society?

 CitizenCitizen’s Forum’s Forum

Council of EuropeCouncil of Europe

Strasbourg,Strasbourg, October 2002 October 2002

ByBy

Helmut K. AnheierHelmut K. AnheierLSE & UCLALSE & UCLA

Facts

4-7% of total employment in EU4-7% of total employment in EU, 2-4% in CEE, 2-4% in CEE Significant growth in economic importance of Significant growth in economic importance of

third sectorthird sector, with 5% growth rates annually in , with 5% growth rates annually in some countries some countries

Increase in associational densityIncrease in associational density Increase in number of foundations, assetsIncrease in number of foundations, assets Greater policy recognitionGreater policy recognition Heightened expectationsHeightened expectations

What is more…

Greater economic pressureGreater economic pressure—German Free —German Free Welfare AssociationsWelfare Associations

Consultation fatigueConsultation fatigue—UK charities—UK charities Value dilemmas – secularizationValue dilemmas – secularization Future of welfare state, East and WestFuture of welfare state, East and West Grey zones more frequent (profit, non Grey zones more frequent (profit, non

profit, public benefit, private benefit)profit, public benefit, private benefit) CEE: local innovation, import of modelsCEE: local innovation, import of models

Two underlying trends

1. The rise of non-profit organisations as service-providers

-- part of public-private partnership under the rubric of new public management and the rise of markets and quasi-markets in areas that have hitherto been part of the welfare state.

Two trends…

2. The (re)discovery of civil society

--as part of the growing awareness among policymakers and scholars that the very social fabric of society is changing. The third sector serves as a panacea to counteract social isolation and the negative impact of individualism.

New Public Management

less government = less bureaucracy = more less government = less bureaucracy = more flexibility = greater efficiencyflexibility = greater efficiency

from third party government to mixed from third party government to mixed economy of care / welfareeconomy of care / welfare

from simple contracts to quasi markets or from simple contracts to quasi markets or ‘constructed and managed’ markets‘constructed and managed’ markets

from long-term relations to short-term from long-term relations to short-term considerations, greater uncertaintyconsiderations, greater uncertainty

NPM -- basic idea

Better technology and improved Better technology and improved monitoring invite market solutionsmonitoring invite market solutions

Competition across form possible, desirableCompetition across form possible, desirable Nonprofit one form among othersNonprofit one form among others CCompetitive competitive contracting as tool to ontracting as tool to

implement policy = modernized welfare implement policy = modernized welfare statestate

Nonprofits as service provider

Long history, now: neo-liberal roleLong history, now: neo-liberal role Germany’s Germany’s newnew subsidiarity subsidiarity New Labour’s New Labour’s CompactCompact in the UK in the UK Clinton’s welfare reforms and Bush’s faith-Clinton’s welfare reforms and Bush’s faith-

based communities in the USbased communities in the US France’s unemployment policies of France’s unemployment policies of

‘insertion’‘insertion’ Public sector reform in CEEPublic sector reform in CEE, privatisation, privatisation

Implications

CommercialisationCommercialisation: :

Nonprofit services become more ‘commercial’ in Nonprofit services become more ‘commercial’ in a broad number of fields such as social services, a broad number of fields such as social services, health care, education, culture [shifts in revenue health care, education, culture [shifts in revenue structure; rise of financial and revenue structure; rise of financial and revenue management; rise of nonprofit marketing and management; rise of nonprofit marketing and branding] branding]

cultural change within organisations!cultural change within organisations!

Implications…

ProfessionalizationProfessionalization

nonprofits are under pressure to become nonprofits are under pressure to become more ‘professional’; social workers, more ‘professional’; social workers, accountants, health care professionals, accountants, health care professionals, teachers – even volunteersteachers – even volunteers

‘‘corporatization’ of nonprofits, from corporatization’ of nonprofits, from association to firm, association to firm, von Anstalt zu Betriebvon Anstalt zu Betrieb

Implications …

Organisational form questions:Organisational form questions:

Is ‘charity’ still adequate, how far can we ‘push the Is ‘charity’ still adequate, how far can we ‘push the limits’ of the nonprofit form? Many countries are limits’ of the nonprofit form? Many countries are considering legal changes that would make it considering legal changes that would make it easier for nonprofits to function as economic easier for nonprofits to function as economic actors [UK: PUI/Treasury reviews; public benefit actors [UK: PUI/Treasury reviews; public benefit corporation; Social Investment White Paper; corporation; Social Investment White Paper; Ireland’s Green Paper; Germany: reform of public Ireland’s Green Paper; Germany: reform of public benefit and tax law; reforms in CEE from 1990 benefit and tax law; reforms in CEE from 1990 onward]onward]

Implications…

‘‘Ethos’ implicationsEthos’ implicationsIs the sector still the same? Operates in Is the sector still the same? Operates in

changed environment; complex changed environment; complex partnerships. What happens to traditional partnerships. What happens to traditional role of sector? What is the role of values in role of sector? What is the role of values in the context of new mangerialism.the context of new mangerialism.

Many nonprofits rooted in values, often Many nonprofits rooted in values, often religious and politicalreligious and political

The (Re)discovery of Civil Society

In contrast to the neo-liberal role (NPM), In contrast to the neo-liberal role (NPM), the neo-Tocquevillian approach emphasises the neo-Tocquevillian approach emphasises the sector’s social integrative function and the sector’s social integrative function and indirect contributions. indirect contributions.

Notion of social capital, self-organizationNotion of social capital, self-organization Social capital as the glue of modern, highly Social capital as the glue of modern, highly

diverse societiesdiverse societies

Norms, networks, civil society

““strong and vibrant civil society strong and vibrant civil society characterised by a social infrastructure of characterised by a social infrastructure of dense networks of face-to-face relationships dense networks of face-to-face relationships that cross-cut existing social cleavages such that cross-cut existing social cleavages such as race, ethnicity, class, sexual orientation, as race, ethnicity, class, sexual orientation, and gender that will underpin strong and and gender that will underpin strong and responsive democratic government” responsive democratic government” (Edwards, Foley and Diani, 2001:17).(Edwards, Foley and Diani, 2001:17).

The essence of US debate

civil society creates social capital, which is civil society creates social capital, which is good for society and the economy. For Neo-good for society and the economy. For Neo-Tocquevillians, civil society is not only a Tocquevillians, civil society is not only a bulwark against a state that could become bulwark against a state that could become too powerful, or a mechanism that creates too powerful, or a mechanism that creates social cohesion, it is much more than that: a social cohesion, it is much more than that: a general principle of societal constitution. general principle of societal constitution.

Persistent myth or solution?

The genius of Putnam was to link de Tocqueville’s 19The genius of Putnam was to link de Tocqueville’s 19thth century diagnosis (or age-old mythologies, as some century diagnosis (or age-old mythologies, as some would say?) to modern issue of American society. would say?) to modern issue of American society. This made his work so attractive to policymakers in This made his work so attractive to policymakers in US and elsewhere: It identified a problem (isolation, US and elsewhere: It identified a problem (isolation, exclusion) to a solution (voluntary associations, exclusion) to a solution (voluntary associations, community) and offered a solution from the past, community) and offered a solution from the past, suggesting tradition and continuity to an unsettled suggesting tradition and continuity to an unsettled presence. This connection ‘clicked’ not only in the presence. This connection ‘clicked’ not only in the US, but also in Britain (see Third Way) and countries US, but also in Britain (see Third Way) and countries like Germany (long history of associationalism).like Germany (long history of associationalism).

The essence of the European debateThe strong and positive link between social The strong and positive link between social

capital and civil society that is typical of the capital and civil society that is typical of the US debate, is seen as more problematic in US debate, is seen as more problematic in Europe, and requires the State to make it Europe, and requires the State to make it work.work.

Economic redistribution, social redistributionEconomic redistribution, social redistribution of capital, life chancesof capital, life chances

Where Europe is different

the French tradition (Pierre Bourdieu) sees the French tradition (Pierre Bourdieu) sees social capital primarily as a form of social capital primarily as a form of inequality and less as a force of cohesion; inequality and less as a force of cohesion; this contradicts the US (Putnam) theme that this contradicts the US (Putnam) theme that sees social capital as social ‘super glue.’ Of sees social capital as social ‘super glue.’ Of course, distinctions between bridging, course, distinctions between bridging, linking and bonding capital help, but the linking and bonding capital help, but the French approach is more critical than US French approach is more critical than US one. one.

Where Europe is different …

Civil society and ‘social capital’ require Civil society and ‘social capital’ require ‘good governance’ to function for the ‘good governance’ to function for the greater public good.greater public good.

Government needed to create and Government needed to create and implement such policies of social inclusion implement such policies of social inclusion and integration.and integration.

European state remains active state (even in European state remains active state (even in UK), in contrast to US (minimalist state). UK), in contrast to US (minimalist state).

Key questions

Do these trends (NPM, civil society) share Do these trends (NPM, civil society) share common sources, what do they have in common? common sources, what do they have in common? Or are they parallel developments? Do we find Or are they parallel developments? Do we find the same diagnosis across countries, and are there the same diagnosis across countries, and are there commonalities? What are some of the major commonalities? What are some of the major implications for research and policy-making? implications for research and policy-making? What can we say about the future of the nonprofit What can we say about the future of the nonprofit sector in developed countries? sector in developed countries?

Or, in different words…

How can nonprofit organisations be efficient How can nonprofit organisations be efficient providers and neo-Tocquevillian associations -- providers and neo-Tocquevillian associations -- ‘be all’ -- at one and the same time; how can they ‘be all’ -- at one and the same time; how can they serve such dual functions beyond a certain serve such dual functions beyond a certain threshold? Does emphasis on one, e.g., service threshold? Does emphasis on one, e.g., service provision under new public management, come at provision under new public management, come at the expense of the other, e.g., creating a sense of the expense of the other, e.g., creating a sense of belonging and social trust, or can both be belonging and social trust, or can both be combined, and if so, how?combined, and if so, how?

The Nonprofit Form

Nonprofits exist under certain suply and demand conditions

1. Supply- entrepreneurship (ideological, social)- organisational skills, human resources, finance

2. Demand- heterogeneity, public fund shortage- ‘voice‘ problems for diverse segments, groups- information asymmetries, trust problems

Much of expansion demand driven!

Fundamental Revenue Problem

Preferred good: quasi-public good, difficult to price, to raise funds for, charge fee (freerider problem etc).

Nonpreferred good: related or unrelated to purpose, meant as ‘cash cow,‘ necessary evil

Cross subsidisation: (use revenue from nonpreferred good to support preferred good) or

Direct subsidy: (grants, donations, tax concessions)e

Stakeholders and Revenue•Related and unrelated buisness income have differentstakeholder attached to them

•Leads to innovation but also tension

•Goal displacements, taming, growding out

•Conversion, merger, form changes

•Grants have ‘strings’, can reduce autonomy

Basic Issues

Like all organizations, NGOs have to Like all organizations, NGOs have to address issues ofaddress issues ofPower / principal agent problem / Power / principal agent problem / professional control (Michels, Olson)professional control (Michels, Olson)Economic pressures (revenue, Economic pressures (revenue, competition, fitness)competition, fitness)Environmental uncertainty Environmental uncertainty (political, economics)(political, economics)

So…

Can nonprofits be both?Can nonprofits be both?

Service provider …Service provider …

and and

source of social capital?source of social capital?

Initial answers…

Nonprofit can be both if they are value-based, Nonprofit can be both if they are value-based, small and locally bound, or focused on well small and locally bound, or focused on well defined issues, groups.defined issues, groups.

They can be both if they are supported by key They can be both if they are supported by key stakeholder that provides financial securitystakeholder that provides financial security

In most other cases, nonprofits are transient form In most other cases, nonprofits are transient form if pushed—but vitally important.if pushed—but vitally important.

Nonprofit require supportive, enabling legal Nonprofit require supportive, enabling legal environment to develop, ‘deliver’ and to either environment to develop, ‘deliver’ and to either sustain or transform themselves. sustain or transform themselves.

On to more basic questions

The numerous government policy initiatives The numerous government policy initiatives currently under way and being considered currently under way and being considered suggest a more fundamental policy shift suggest a more fundamental policy shift whose ultimate objective is however not whose ultimate objective is however not clear: what kind of ‘society’ and what kind clear: what kind of ‘society’ and what kind of ‘community’ does Europe, the current of ‘community’ does Europe, the current US administration, New Labour etc want? US administration, New Labour etc want?

National - International

These nation-state developments contrast with These nation-state developments contrast with what seems to be happening at the global, what seems to be happening at the global, transnational level transnational level

Rise of NGOs in humanitarian assistance, Rise of NGOs in humanitarian assistance, development etc and the crisis of multilateralismdevelopment etc and the crisis of multilateralism—is this pointing to a shift in international —is this pointing to a shift in international relations away from nation states as actors and relations away from nation states as actors and constituting element of multilateralism? Are we constituting element of multilateralism? Are we witnessing the emergence of a new international witnessing the emergence of a new international welfare system based on private actors?welfare system based on private actors?

Growth of International NGO

Figure 8.1: Growth in international organisations: 1900-2000(all active organisations)

0

5,000

10,000

15,000

20,000

25,000

30,000

Source: Union of International Associations

Num

ber

of o

rgan

isat

ions

1975

More specifically…

What does the significant expansion of NGOs at international level signify, mean?

1. ‘Filling a void’ or ‘pushing open space’2. Greater numbers = greater complexity?3. Quantitative expansion and qualitative change?4. Beginning of more fundamental shift in

organizational form? Something new?5. Emergence of new power relations, policy

regimes at global level? Something different?

The Answers (in staccato)So, what does it mean, then…?

1. ‘Filling a void’ or ‘pushing open space’ Both, but increasingly more filling than pushing around transnational goods, problems.

2. Greater numbers implies greater complexity – quantitative expansion, qualitative change? Both, but the latter is really what’s important now.

3. Beginning of more fundamental shift in organizational form? Yes, much innovation.

4. Emergence of new power relations, policy regimes at global level? Complicated…but rather likely, and full of uncertainty…

WHAT KIND OF NGO FOR WHAT KIND OF EUROPEAN

SOCIETY?WELFARE REGIME?POLITICAL SYSTEM?GOVERNMENT?

FOUR SCENARIOUS

Here: European UnionHere: European Union But similar diagnosis at country level But similar diagnosis at country level

‘‘Caricatures’—but indicativeCaricatures’—but indicative Not either or, but clear tendenciesNot either or, but clear tendencies

NPM-Scenario

NGOs as a set of well-organised, corporate entities NGOs as a set of well-organised, corporate entities to take on tasks and functions previously part of to take on tasks and functions previously part of national state administrations and/or EU, but now national state administrations and/or EU, but now delivered through competitive bidding processes delivered through competitive bidding processes and contractual arrangements that try to maximise and contractual arrangements that try to maximise the competitive advantages of non-profit providers the competitive advantages of non-profit providers in complex, Europe-wide social markets under in complex, Europe-wide social markets under some form of State/EU tutelage. (‘some form of State/EU tutelage. (‘The NPM The NPM guru’s global delight’guru’s global delight’).).

Social Capital Scenario

NGOs as the self-organising, Europeanised ‘quasi-NGOs as the self-organising, Europeanised ‘quasi-state’ apparatus of the 21state’ apparatus of the 21stst century, as part of a century, as part of a benign global civil society, with high levels of benign global civil society, with high levels of individualism, participation and ‘connectivity’, individualism, participation and ‘connectivity’, that prevents social ills, detects and corrects them that prevents social ills, detects and corrects them before they become ‘social problems,’ well-co-before they become ‘social problems,’ well-co-ordinated, at arm’s length, with and by a ordinated, at arm’s length, with and by a technocratic EU regime of minimalist national technocratic EU regime of minimalist national states and other IGOs? (‘states and other IGOs? (‘The Dahrendorf The Dahrendorf warning as global nightmare’warning as global nightmare’))

Liberal Scenario

NGOs as a source of dissent, challenge and NGOs as a source of dissent, challenge and innovation, as a counter-veiling force to some innovation, as a counter-veiling force to some form of European government (‘super state’) and form of European government (‘super state’) and the power of TNCs—a sector that serves as a the power of TNCs—a sector that serves as a social, cultural and political watchdog keeping social, cultural and political watchdog keeping both global market and state powers in check, a both global market and state powers in check, a sector that creates and reflects the diversity and sector that creates and reflects the diversity and pluralism and dynamism of modern, European, pluralism and dynamism of modern, European, even global society. (‘even global society. (‘Gellner’s promise gone Gellner’s promise gone global’global’))

The Corporate Scenario

The ‘corporatisation’ of NGOs and the expansion The ‘corporatisation’ of NGOs and the expansion of business into European civil society; of business into European civil society; corporation use extended social responsibility corporation use extended social responsibility programmes to provide, jointly with NGOs, programmes to provide, jointly with NGOs, services previously in the realm of government services previously in the realm of government such as health care, child care, pensions, such as health care, child care, pensions, community services). Entitlements linked to community services). Entitlements linked to corporate/NGO membership, less to citizenship corporate/NGO membership, less to citizenship (‘(‘Perrow’s suspicion gone global’Perrow’s suspicion gone global’) )

Which scenario shall it be? Key issues: divergent answers

US: corporate, social capitalUS: corporate, social capital‘‘Old’ EU: NPM, liberal (neo SociOld’ EU: NPM, liberal (neo Social al DemDemocratsocrats))CEE: NPM, ??? CEE: NPM, ???

Here: Tension between need for Here: Tension between need for sustainable local innovations and EU sustainable local innovations and EU requirements, US influence, donor requirements, US influence, donor withdrawalwithdrawal

Thank you for listening …