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.