PAD 6060 lecture 9

Page 1 of 13

University of North Florida

Master of Public Administration program

PAD 6060 Public administration in modern society

Fall 2017

Intersectoral administration

Intersectoral Administrator of the Week

Photo credit

Peter Benenson

*

Lecture goals: Discuss the intersectoral nature of the society in which public managers operate.

*

The power of civic groups. Intersectoral administration especially refers to cooperation --

between government, business and nonprofit organizations -- in governing human society. Peter

Benenson, though, represents an example of how non-governmental organizations have

occasional not so much been involved in, but have driven social governance; and not just at the

local, but global level. His 1961 article "The forgotten prisoners" in The Observer newspaper in

the UK spurred a worldwide campaign to work for fundamental human rights. Governments

were more often than not the problem. In Benenson’s day, many were egregious human rights

abusers, and a handful of the major powers (especially the US, which supported the pro-

American dictator Pinochet in Chile while opposing the pro-Soviet dictator Castro in Cuba; and

the USSR, which supported the pro-Soviet dictator Castro in Cuba while opposing the pro-

American dictator Pinochet in Chile) encouraged dictators around the world so long as they were

against the enemy of the major power (i.e.: the other major power). So again, it was not national

governments, least of all the two

superpowers, who led the human rights

campaign, it was non-governmental

organizations that drove global governance

on this issue.

If you want to check on progress on global

freedom, one indicator is the Freedom

House data we’ve looked at elsewhere (see

Table 1). Freedom House also does a

spiffy "Map of freedom" (pdf file, loads

slowly) that provides an overview.

Table 1

Global trends in freedom

Year free

countries

partly free

countries

not free

countries

1974 41 (27%) 48 (32%) 63 (41%)

1984 53 (32%) 59 (35%) 55 (33%)

1994 76 (40%) 61 (32%) 54 (28%)

2004 89 (46%) 54 (28%) 49 (26%)

2014 89 (46%) 55 (28%) 51 (26%)

Source: Freedom in the World

PAD 6060 lecture 9

Page 2 of 13

Welfare services and policies

Raadshelders and Vigoda-Gadot’s chapter 12 discussion of welfare services and policies also

provides a nice illustration of the diverse intersectoral relationships in the provision of these

services. Indeed, they open with a reference to health services being offered by nonprofit

organizations (the Catholic Church) “after the fall of the Roman Empire” (p. 349).

Health. They structure this discussion around Singapore, the Netherlands, Argentina and

Australia.

Singapore. This island city-state’s (not quite a ‘tiny island’, at 200+ square miles, though on

checking I see that this is 1/5th

the size of New York’s Long Island) system is structured

around three government run plans: Medisave (“a bold venture to interject market forces into

government-funded health care” -- p. 351), Medishield (“low-cost top-up catastrophic illness

insurance” – p. 352) and Medifund (“A means-tested public safety net of last resort for the

needy” – p. 352). All are financially linked to the country’s Central Provident Fund, “a

national superannuation scheme, which is a compulsory, tax exempt, and interest-yielding

savings account started in 1955 to provide financial protection for workers in their old age” –

p. 351).

Public provision – The country also has a mix of public and private health provision:

Public – eight public hospitals account for 80% of beds.

Private – private general practitioners account for 80% of primary care.

Netherlands. Competition, through mandatory private insurance (call it an individual

mandate).

Argentina. Community insurance: for me the interesting point in this otherwise chaotic case

is the Mutual Aid Societies, nonprofit provision of health insurance Again, with an

‘individual mandate’ to participate.

Australia. Seemed like a great system to me (my Oz

Medicare card, at right)! Public health insurance (paid

through taxes). There has been a lot of policy

experimentation, a lot apparently motivated by the

Singaporean example.

Education.

Wisconsin. Privatization on steroids. I’ll only add to this that I am especially conservative

when it comes to experimenting with the lives of others. After all this kerfuffle, there is no

evidence that the new non-public schools have significantly improved (or even improved, in

some studies) outcomes. Meanwhile there has been a lot of disruption.

France. “USSR-like central planning” (p. 369) up until fairly recently, when

decentralization was brought in. This appears, though, to have maintained the USSR-like

planning, it just moved this to the sub-national level.

‘Peoples’1 Republic of China. Through the 1970s the country’s education system appears to

have had little education beyond training Communist Party cadres. As the move to a

1 In parenthesis because there have been no free and fair elections in this country in my lifetime, and so that this

government serves ‘the people’ is debatable.

PAD 6060 lecture 9

Page 3 of 13

‘socialist market economy’2 was being planned in the 1980s, the system was decentralized

(intergovernmental) and opened to non-governmental actors (intersectoral).

‘Britain.’3 Ironically: public and classist.

Social Security.4 They open with a bit of historical context: the issue of providing some income

security to the elderly especially became a problem as average lifespans increased dramatically

(over 30 years during the 20th

century – source), as adult children became more mobile, and as

birth rates dropped families had fewer children.

Chile. The Chilean case has been a famous one: the early model was similar to many

wealthy, progressive southern cone of South American societies, though having written that I

see that this probably only includes Chile, Argentina and Uruguay. In a nutshell: people are

required (an individual mandate) to open a retirement account, and 10% of their salary is put

into this. More or less random points:

Investment funding. Many countries like these ideas because they provide sources of

capital for investment. So (hopefully) reputable firms (and no doubt governments) can

borrow the savings in those plans, invest in Chile, and create jobs.

Unrealistic expectations. Expectations of retirement incomes of 70% of one’s final wage

were never realistic.5 For another perspective, click.

The gender inequity problem is serious, as well.

As in many of the other plans, there was still a public backstop for the poorest of the

poor.

Japan. Japan has had one of the most severe demographic problems in the world, with the

highest percent of its population over 65 years of any country (source). Despite the world’s

largest pension fund, at $1.3t (source), it isn’t enough. A good portion of this fund’s assets,

by the way, are invested in US Treasury Securities.6

Poland and Sweden. In both cases you have countries with pension systems (Poland) and

‘active labor market’ programs (Sweden), that went from strong government involvement to

less of this.

And so? Again, the point is to illustrate the diversity in the mix of public, private (for profit), and

private nonprofit provision of three functions central to governance.

2 This isn’t as crazy as it sounds. As AC Pigou put it (1937, p. 6): “under the influence of the Russian experiment,

the definition of general socialism has been modified. Twenty years ago there was talk of central planning.

Socialism entails, it was the held, (1) the extrusion of private profit-making, in the sense of one man or group hiring

other men and selling their output for profit to a third party; and (2) the public or collective ownership of the means

of production (other than human beings). Neither of these requirements singly make necessary any form of central

planning; nor do the two together. Thus the extrusion of profit-making by itself could be accomplished through the

organization of all industries in independent consumers’ co-operative societies, municipal enterprises and public

boards; the choice between these forms being made to suit the special conditions of the several industries.” 3 …and there are no references to Northern Ireland in this section, so ‘Britain’ looks accurate.

4 They offer a useful clarification that ‘social security’ is really only about the provision of economic security (really

removing some economic insecurity). However surely this makes society less insecure. 5 Do the math: assume 50 years of work, saving 10% of one’s salary annually. At the end you have 500% of your

average lifetime salary. At even a generous 10% annual payout, you’d only have 50% of your average salary, not

70% of your final one. Yes, I know this doesn’t factor in compound interest on those earlier investments, but then

there were commissions for the fund managers. Still, even at 20% of one’s final salary, this is higher than 0%. 6 Yeesh: this source indicates that ‘Japan’ owns $1t in US assets. I’m guessing this is a variety of Japanese entities,

not just the national pension fund.

PAD 6060 lecture 9

Page 4 of 13

The ‘new public service’. As discussed earlier, this is much of what Robert and Janet

Denhardt are getting at with their ‘new public service’. They are not fans of The New Public

Management, or what I call:

Market-mediated network governance. The general idea in this approach is to use market

mechanisms where possible to coordinate interaction between government and other social

organizations.

Criticisms. Among the criticisms of the ‘new public management’ that inspired the

Denhardts' ‘new public service’ is that the public and private spheres differ. The citizen is

not the same as the consumer, and the market is not the same as democracy.

Merits. Still, surely there is still much of value in the 'new public management':

First, in terms of being willing to think outside of the public agency box to get public

goods and public services provided. If nothing else, the choice of government needs to be

revisited periodically.

This reference to markets puts a lot of trendy lefty noses out of joint. Yet save for a few

eccentrics who still argue for a democratic version (hopefully!) of Soviet-style planning

(and Jeremy Corbyn appears to stop well short of this), competition can be a good way to

keep agencies accountable, and market consumer choice can empower clients!

The Denhardts are also not fans of what they call:

Traditional public administration -- The key feature of traditional public administration for

the Denhardts is perhaps best expressed by Woodrow Wilson:

“The problem is to make public opinion efficient without suffering it to be meddlesome.

Directly exercised, in the oversight of the daily details and in the choice of the daily

means of government, public criticism is of course a clumsy nuisance, a rustic handling

of delicate machinery. But, as superintending the greater forces of formative policy alike

in politics and administration, public criticism is altogether safe and beneficent,

altogether indispensable. Let administrative study find the best means for giving public

criticism this control and for shutting it out from all other interference” (1887, p. 215).

In other words: in implementing government policies, there should be a wall between

administrators, who are experts; and the public (who Wilson famously characterized as

"unphilosophical"). Or at the very least, we should recognize this difference.

The Denhardts were unsupportive of this, preferred administrators engaging citizens.

It is worth keeping in mind that (despite the Denhardts' criticisms) 'traditional', bureaucratic

public administration was a huge improvement on what came before: government by the

incompetent (no professional training) few for the wealthy (yet still greedy) few. Max

Weber summed up this (for its time) radical new approach to administration, in which

administrators were professional and chosen on merit, and their position was:

“in the nature of a duty… Entrance into an office, including one in the private economy,

is considered an acceptance of a specific obligation of faithful management in return for a

secure existence” (1948).

And of course a science of (public) administration also saw the development of its

systematic study, and so development of better techniques. This would include things

like planning, organizing, staffing, directing, coordinating, reporting and budgeting

(POSDCORB).

PAD 6060 lecture 9

Page 5 of 13

Rather than markets or public bureaucracy, the Denhardts offer their ‘New public service’ – or

what I refer to as:

Dialogue-mediated governance. The heart of the Denhardts’ message is that the public are

citizens first. Citizens have rights, especially of democratic control over government. As a

result, public administration should serve and empower citizens:

“The New Public Service demands that the process of establishing a ‘vision’ for society

is not something merely to be left to elected political leaders or appointed public

adminstrators. Instead, the activity of establishing a vision or direction, of defining

shared values. Is something in which widespread public dialogue and deliberation are

central” (2007, p. 65).

Criticisms (from Candler & Dumont 2010):

Conflict. ‘Shared values’ may be hard to ‘define’ from outside, as many participants in

the policy process seek neither dialogue nor to share values.

Inequality. Some actors have more influence than others, so ‘dialogue’ in a participatory

process is almost inevitably unequal, and so benefits the powerful.

Non-participation. It is counter-intuitive to offer participation as solution, when lack of

participation has long been part of the problem.

Information gap. Many citizens are uninformed. Worse, substantial numbers of others

are misinformed.

Public interest. The central focus of this model is to serve the public interest. The authors

conceptualize the public interest as the result of dialogue regarding shared values, with the

administrator having a large responsibility in facilitating and creating these shared values

(Denhardt and Denhardt 2003, 65-81).

Sectors of society. By 'intersectoral' administration we refer to the governance of human

society through non-governmental mechanisms, or organizations in 'sectors' of society beyond

the public sector. For instance, different sectors of society would include:

State (also called public, government) -- society creates formal, 'public' organizations to

regulate social interactions. These regulations would include anti-trust legislation, product

quality requirements, resource conservation, criminal behavior ('thou shalt not kill'). The

state also often provides goods and services directly (health care, education, transport --

Conrail, airlines), steel (France, Brazil).

Market (also called private, business, for-profit) -- people organized in privately owned firms

produce goods for exchange, in the hopes of making a profit.

Nonprofit (also called independent, third, non-governmental) -- individuals cooperate to get

things done through formal, 'third sector' (non state or market) organizations: little league,

church groups, charities, Greenpeace, professional associations.

Communal -- much like nonprofits, save that this involves informal interaction, carried out in

the absence of a formal (i.e. typically registered) organizational structure. If you look after

your neighbour's child, for instance, your activity comes under this sector.

Self-provision/subsistence -- grow your own veggies, make your own clothes, wash your own

car, cook your own food.

PAD 6060 lecture 9

Page 6 of 13

Relative size. We have

discussed the relative size of

these sectors a bit in the

course already. 'The state', or

government in America is

one of the smallest among

the rich countries, relative to

the size of the US economy.

Another take on it is in Table

2. The table presents the

share of private

Consumption, Government

consumption, and Investment

(C+I+G in Table 1, of lecture

5). We can see that

government, again, is

relatively small in the US.

Instead, the market sector is

especially prominent. Good

comparative data on the

nonprofit sector is a lot

harder to come by (though

we’ll look at Table 3 in a

bit), but this is 'intersectoral administration’: cooperation between different types of

organizations in modern society: government, business and nonprofit organizations.

Nonprofit services undervalued. The impact of the nonprofit sector is typically undervalued,

relative to business and government. The non-governmental, non-profit, 'third' sector of the

economy provides around 10% of formal jobs in North America. The equivalent of somewhere

in the neighbourhood of another 10% of the labour force is provided through voluntary labour

provided to these organizations. Add up those two tens, and you get the equivalent of maybe

20% of the labour force involved in the formal nonprofit sector. Yet data for the percentage of

GDP provided by the sector are typically in the single digits (8% comes to mind). This is due in

part to systems of national accounts not valuing (at all) voluntary labour. It is also due in part to

the way that national accounting (and economic analysis) values the provision of goods and

services at market prices. So the psychiatrist in private practice may charge $100 per hour for

her/his services, yet when that same psychiatrist provides the same counseling services pro bono

for a nonprofit... well probably it isn't valued at $100 per hour. Similarly, if you go to a bar (a

for-profit organization) you pay maybe $3 for a beer. If you go to the (nonprofit) Veterans Club

you pay maybe $1.50, for the same beer.

Worse, some stuff isn't valued at all. The Veteran's club is a social club, and that conviviality is

worth a great deal to its members. Similarly, people often join nonprofits, and/or volunteer, for

these social aspects. Nonprofits also contribute to a sense of community, again something that

isn't incorporated into GDP figures.

Table 2

Market v. government and share of demand (% GDP)

Household final

consumption

Government final

consumption

Gross capital

formation

G7+

US 70 16 20

Australia 55 18 29

Canada 56 19 23

France 57 23 22

Germany 57 18 18

Italy 59 20 21

Japan 57 18 24

Sweden 47 26 20

UK 63 22 19

BRICs

Brazil 61 20 19

China 37 14 43

India 56 11 39

Russia 45 19 25 Sources: World Development Report 2010

PAD 6060 lecture 9

Page 7 of 13

Numbers! Beyond the macro-economic data in Table 2, measuring sectors or dimensions of

society isn’t easy, but there are a couple of indicators available, presented in Table 3, and

presented in terms of my ‘paradigms.

Table 3 ‘Paradigm’ indicators

Bureaucracy Dialogue networks

Normative approaches Markets

Public

services1

Corruption

perceptions3

Democracy5

Civil

freedom4

Civic

engagement7

Economic

freedom6

G7+

US 7.3 7.1

8.18 1 60 7.96

Australia 8.2 8.7 9.22 1 59 7.90

Canada 8.1 8.9 9.08 1 54 7.95

France 8.1 6.8 7.77 1 31 7.32

Germany 8.0 7.9 8.38 1 43 7.46

Italy 7.2 3.9 7.83 1.5 26 6.90

Japan 8.3 7.8 8.08 1.5 26 7.46

Sweden 8.5 9.2 9.50 1 39 7.28

UK 7.8 7.6 8.16 1 57 7.81

BRICs

Brazil 4.2 3.7 7.12 2 29 6.18

China 3.4 3.5 3.14 6.5 21 6.65

India 2.8 3.3 7.28 2.5 28 6.51

Russia 4.7 2.1 4.26 5.5 22 6.62

Sources:

1 – Failed State Index Public Services Quality subscore. The index is reported with higher scores meaning more

likely to contribute to a failed state, so I have turned these around (subtracted from 10) to make higher = better

public services.

3 – Transparency International’s 2010 Corruption Perceptions Index. Higher scores indicate less perception of

corruption.

4 – Freedom House’s 2011 Freedom in the World Report. Freedom House rates countries in terms of civil and

political freedom, on a 1 (free) to 7 (unfree) scale. The number presented here is the average of these two scores.

5 -- Economist Intelligence Unit’s 2010 Democracy Index 2010. The data is on a 1010 scale, with higher scores

more democratic.

6 – Fraser Institute and Cato Institute’s 2010 Economic Freedom of the World Report. The data is on a 1-10 scale,

with 10 equal to more economic freedom (i.e. less government ‘meddling’). The data are for 2008.

7 – Gallup’s Civic Engagement Index. This is a 0-100 scale.

Tools of government. Lester Salamon provides another recent multisectoral approach to the

nonprofit sector in his The Tools of Government, illustrated in Table 4, on the next page.

Salamon argues for a new paradigm of governance that focuses not on the traditional public v.

private (both for and not for profit) sectoral divide, but on ‘tools’ of governance. From this the

focus shifts from government v. business v. nonprofit provision of goods and services, to the use

of grants v. fees v. regulation and other tools, with a number of these tools involving multi-

sectoral cooperation (2002: 14-21). Note that many of these tools can involve interaction

between various of the public, market and nonprofit sectors.

PAD 6060 lecture 9

Page 8 of 13

Economic sectors. Yet another sectoral approach that can shed light on the intersectoral make-

up of society uses the type of product as the unit of analysis. Barry Jones, an Australian,

provides one such example. For Jones, society could be divided into the following sectors:

1. primary (farming, fishing, mining,

forestry)

2. Industry (manufacturing)

3. Personal Services

4. Information processing (including

entertainment, the arts, etc.) services

5. Household services – “The provision of

domestic services (generally unpaid),

professional services analogous to

domestic work, charity work and

hobby-based occupations… Voluntary

work to assist community-based

welfare organizations…”

Table 5 shows relative shares of the first

three sectors, prior to insights like those of

Jones, and so the 3rd

through 5th

sectors

combined in to one ‘services’ sector.

In Jones’ terms, the role of the formal

nonprofit sector lies largely in the third

through fifth sectors. 200 years ago the US economy was 80% engaged in primary production,

maybe 10% in each of manufacturing and 'services', as most people lived on more or less self-

sufficient farms. During the industrial revolution this changed dramatically, and manufacturing

probably peaked at 40% of the economy of the early industrializers (UK, Germany, Japan, US,

etc.) by 1950 or so.

Table 4

Common tools of public action: defining features

Tool Product/activity Vehicle Delivery system

Direct government good or service direct provision public agency

Social regulation prohibition rule public regulation

Economic regulation fair prices entry and rate controls regulatory commission

Contracting good or service contract and cash payment business, nonprofit

Grant good or service grant aware/ cash payment government, nonprofit

Direct loan cash loan public agency

Loan guarantee cash loan commercial bank

Insurance protection insurance policy public agency

Tax expenditure cash, incentives tax tax system

Fees, charges Financial penalty tax tax system

Liability law social protections tort law court system

Government corps. good or service direct provision/ loan quasi-public agency

Vouchers good or service consumer subsidy government/ consumer Source: Salamon 2002, p. 21

Table 5 – Economic sectors (% GDP)

Primary Industry

(manufacturing)

Services

G7+

US 1 22 77

Australia --- --- ---

Canada --- --- ---

France 2 21 77

Germany 1 30 69

Italy 2 27 71

Japan 1 30 68

Sweden 2 29 70

UK 1 23 76

BRICs

Brazil 7 28 65

China 11 49 40

India 18 29 53

Russia 5 38 57

Sources: World Development Report 2010.

PAD 6060 lecture 9

Page 9 of 13

This is reflected in the

graphic at right (from

Jones, p. 58). Primary

production went into free

fall, as its share of the

economy and labour force

has declined to maybe 5%

now. This is not because

agriculture has died, it is

because there is only so

much you can eat. With

improved farming

technology, we can grow

that food for ourselves

with less and less labour,

freeing up that labour for

other stuff, initially

manufacturing.

Technology has also

increasingly been applied to manufacturing, so that in the US, this sector’s share of the economy,

and of the labour force, has also been in steady decline, and is lower than it has been since

maybe 1930. This, again, is not because manufacturing has declined, we continue to produce

more manufactured goods than ever before. We just do it with more capital (technology) and

less labour. That freed up labour has shifted into services.

Services. 'Services' has become such a huge sector that it is analytically meaningless, especially

because of its diversity: I provide education services, a brain surgeon provides health services,

Bill Gates provided information services, a janitor provides cleaning services, and a 7-11 cashier

provides retail services. Efforts have been made to break this sector up into more manageable

chunks, which is where we get sectors 3-5 above. It is also worth noting (while on this sectoral

analysis stuff), that other sectors exist. These might include:

6. The black or grey market sectors. Here we would include goods and services produced for

market exchange, but intentionally without government knowledge or supervision.

7. Education. You all are producing knowledge, adding to capital stocks in the US.

8. Retirement. As with #7, countries with a larger percentage of aged people will appear to

perform less well than those with younger populations.

9. Infancy. Here we would have children who are too young for formal schooling. Different

sizes of this cohort will, as with 6 and 7, distort comparative socio-economic analysis; and as

in #6 we can think of this sector as adding to social capital. These children are developing

and so acquiring many of the tools to be productive (or otherwise) members of society. With

this last sector we might have the conceptual tools to do meaningful social analysis

(especially across countries).

PAD 6060 lecture 9

Page 10 of 13

For our purposes, the point of all this is to recognize the wild complexity of human

society. These sectors, critically, are not coherent entities able to act, but rather categories of

types of organizations that share certain characteristics.

Non-governmental organizations (the 'independent' sector)

The ‘hollowing’ of government. For our purposes, the ‘hollowing’ of government is reflected in

the (short) Posner and Bott readings. Posner looks at the use of third parties (business or

nonprofits) to do a lot of the work once done by government agencies; Bott looks at the same

phenomenon, though largely through the regulatory function that government still carries out.

Denhardt and Grubbs (2003 -- a text I've used before, and will rely on a bit here) note that the

federal government has been doing much more with much less (in terms of employees), as

"parties other than the federal government are actually conducting the programs and delivering

the services" (p. 107). While in 1970 the federal payroll was $27b and total federal spending

$196b: thirty years later the former had risen only $103b (or about 500%) while the latter had

risen $1600b (or 800%).

What is the nonprofit sector?

“The nonprofit sector is one of the most important components of American life, but is also

one of the least understood. Few people are even aware of this sector’s existence, though

most have some contact with it at some point in their lives. Included within this sector are

most of the nation’s premier hospitals and universities; almost all of its orchestras and opera

companies; a significant share of its theater companies; all of its religious congregations;

huge numbers of its family service, children’s service, neighborhood development,

antipoverty, and community health agencies; not to mention its professional associations,

labor unions and social clubs. Also included are the numerous support organizations, such as

foundations and community chests, which help to generate financial assistance for these

organizations and to encourage the traditions of giving, volunteering, and service that

undergird them.” (Salamon p. 6)

Nonprofit distributing. Nonprofits can earn profit (in the sense of more revenue than

expenses in a given period), they are just not allowed to distribute these to stakeholders.

Two broad types: member serving and public serving. This, however, is only one way of

subdividing what is a famously

heterogeneous group of organizations.

What is meant by ‘sector’? By nonprofit

‘sector’ we just mean a group of

organizations that share certain

characteristics. As such, the term is more

descriptive, like ‘mammals.’ It does not

refer to a coherent body able to act more or

less in concert, like ‘the Germans’.

Size. In the US, as Table 3 suggests,

probably has the world’s most active

PAD 6060 lecture 9

Page 11 of 13

nonprofit sector, even relative to the size of US society, the nonprofit sector is large. Perhaps

2,000,000, with 1.6m ‘public serving’. Salamon’s (p. 9) Figure 1.3 shows the type and revenue

breakdown.

Diversity. Besides myriad diversity in terms of types, there is enormous size diversity. To

provide an illustrative example with old data and back-of-the-envelope math:

Numerical dominance of small organizations (about 2/3 of the 670,000 organizations known

to the Internal Revenue Service some years ago had budgets of less than $25,000),

and financial dominance of the large (among the 1/3 with budgets of greater than $25,000,

the richest 4% account for 70% of financial resources).

This means that this richest 4% included around 9000 organizations, with an average income

of $100,000,000.

Again:

440,000 or so NPOs had budgets of less than $25,000.

o Unfortunately, because the small groups are so hard to study, nonprofit studies tend to

focus on the large organizations. I say unfortunately because I have no doubt that the

small groups punch well above their weight, and have far greater impact on society

than do the large (Salamon 2002, p. 6-8).

while ~9000 have budgets averaging $100,000,000.

Revenue sources.

Salamon’s Figure 1-4

isn’t too helpful, as the

sector features such

heterogeneity that the

numbers are meaningless.

Instead, Table 15.1 (p.

554) provides a better

summary of revenue

sources. Note the

heterogeneity: revenue

sources vary greatly

depending on the type of

NPO.

Functions.

Service: “hospital care, higher education, social services, cultural entertainment, employment

and training, low-income housing, community development. And emergency aid” (p. 11).

Advocacy: “giving voice to a wide assortment of social, political, environmental, ethnic, and

community interests and concerns” (p. 12).

Expressive: “artistic, religious, ethnic, social, recreational…” (p. 12).

Community-building: social capital!

‘Value guardian’: this can be even gnarlier than most of these functions, though. Consider

recent high profile examples of value guardianship, from the Westboro Baptist Church (link),

to Duck Dynasty star Phil Robertson (link).

PAD 6060 lecture 9

Page 12 of 13

A number of key management issues arise in these groups:

Operational leadership. Often a difficult issue, as NPOs often have squishy legitimacy

problems. They aren't owned by shareholders in the traditional for-profit sense, instead have

mission statements and boards of directors which provide, too often, weak oversight to the

'leadership' emphasized by most writing on the topic.

Resource development.

I.e. money. One of the 'leadership' problems that many NPOs face is that they are in a

constant struggle to find money to keep themselves in business (and their employees

employed). If the NPO loses the contract, the NPO employees lose their jobs.

This search for money can occasionally get in the way of carrying out the mission.

There is enormous diversity in the sector, with this mapped out especially in resources.

Funding sources can include fees for services, government grants or appropriations,

philanthropy, membership dues and donations, of money and time: volunteers.

Financial management. Having gotten the 'resources' above, these funds have to be

managed. Simple financial cost accounting is a relatively simple matter, and is required by the

IRS for all '501(c)(3)' organizations with budgets larger than $25,000.

Performance accounting. More difficult is performance accounting: showing that the NPO has

achieved something worth the contract that it received. Performance standards are often

specified in the contract, but it can be difficult to identify such requirements comprehensively

and clearly. NPOs can perform to the letter of the contract, rather than the spirit.

Further, 'clientitis', whereby the government contract managers become too close to the

NPO 'clients' that they are managing, can make it personally difficult for contract

managers to ask tough questions about dubious figures provided by the NPO.

Advocacy. I’m especially interested (and have been in my research) in thinking about issues

surrounding nonprofit accountability and legitimacy.

Perhaps in simplest terms, the logic of advocacy lies in improving the democratic process.

A simple, if somewhat naive perspective of democracy is that what government bureaucrats

do is inherently democratic because government officials are appointed by legislators, or

hired through processes approved by legislators, to carry out policies determined by

legislators, whoa themselves were elected by the people. People vote to elect legislators who

appoint officials and tell them what to do. What's not democratic about that? 'Government

derives its just powers from the consent of the governed' (as the US Declaration of

Independence puts it).

It clearly isn't this simple (even under the best of circumstances):

o Voters have to aggregate their preferences.

And of course are imperfect.

o Legislators have to (gasp) compromise with other legislators elected with different

mandates.

And of course sort out conflicting demands, like spending more money while raising

fewer taxes while also paying down the national debt.

PAD 6060 lecture 9

Page 13 of 13

o Bureaucrats (street level government workers) have to exercise discretion (Behn’s

obligation to lead!) at times.

Each of these qualifications to the naive democratic model makes citizen involvement in the

policy process -- advocacy -- important to help legislators and bureaucrats figure out how to

resolve these various conundrums.

Nonprofits strengthen democracy. The involvement of nonprofits in public policy therefore

doesn't reflect a breakdown of democracy, but rather just a fuller expression of democracy. This

country, for instance, was founded on the belief in 'the right of the people peaceably to assemble,

and to petition the government for a redress of grievances' (see Lipsky, p. 221-2). This is the

policy advocacy role of nonprofits.

The logic of participation leading to good government is fairly straightforward, though. As I put

it: "A robust, free civil society can improve development outcomes by providing additional,

informed voices in the policy process. These serve both as independent voices to vet policy

proposals, and as sources of new policy initiatives themselves" (1999, p. 440). Government

needs popular participation to work well.

Social capital -- Schiavo-Campo and McFerson raise the importance of social capital, "the stock

of trust created through networks of reciprocal support based on common interests" (p. 358).

advantages: the trust inherent in social capital reduces transaction costs!

o It can also contribute to individual well-being.

disadvantages: 'bad' social capital.

o Here the distinction between 'bonding' and 'bridging' social capital comes in to play. The

KKK, for instance, has enormous bonding social capital, in that they share strongly held

views. There isn't a lot of 'bridging' going on, though, to other groups outside the white

buttignorantist (otherwise known as white supremacist) community.

*

References

Candler, GG and Georgette Dumont (2010). “The price of citizenship: Civic responsibility as

the missing dimension of public administration theory.” Public Administration Quarterly

34(2). EBSCO link.

Denhardt, Robert and Joseph Grubbs (2003). Public Administration: an Action Orientation.

Belmont, CA: Wadsworth.

Pigou, AC (1937). Socialism versus Capitalism. London: Macmillan & Co. Ltd. 1964.

Salamon, Lester (2012). The State of Nonprofit America. Washington: Brookings Institution

Press.

Weber, Max (1948). Bureaucracy.

Wilson, Woodrow (1889). "The study of administration." Political Science Quarterly, 2(2):

197-222.