PUBLIC, NONPROFIT & VOLUNTARY ORGS

U.S. economy comprised of three generic sectors, each with distinctive sources & types of revenues

and estimated percent of the U.S. labor force

SECTOR REVENUE SOURCE

TYPES of REVENUE

% LABOR FORCE

For-Profit Customers Purchases 70%

Public (Gov’t)

Taxpayers Taxes, Fees 20%

Nonprofit Clientele Donations, Grants, Fees

10%

Nonprofit Legal FormNPOs are a distinct legal form, special tax status:

• Internal Revenue Code 501(c)3 = tax-deductible contribs

• IRS 501(c)4 permits political activity (e.g., Sierra Club)

• Mutual-benefit ass’ns excluded (unions, coops, veterans)

NPOs are a highly heterogeneous population, spanning many “industries” – beyond just stereotypical charities

Member-Serving & Public-Serving as two broad classes

The primary constraint on NPOs, distinguishing from for-profit companies, is the nondistribution of revenue$ to owner/shareholders

Origins of the NP0 Sector

ECONOMICS EXPLANATION:

Both government agencies & NPOs arise from “market failure” when private sector unable to make profits (e.g., hospitals for the poor)

Alternative theories about the origin & spread of the NPO form

SOCIOLOGICAL EXPLANATIONS (DiMaggio & Anheier):

• Institutional theories require detailed historical & cross-national studies of variations in specific industries

Tocqueville: US’s unique individualist culture, religious freedom, tolerance of diversity, market-driven economy

• Org’l ecology theories explain typical S-shape growth pattern as interplay of legitimation & competition dynamics as new NPO forms are created by entrepeneurs and accepted by the public

Promoters of NPOs

1. Status and Class groups with self-interested agendas

Upper classes seek social domination of civil society

Racial, ethnic, religious groups seek cultural preservation:

EX Cultural arts, welfare-social service

“Giving is greatest where wealth is greatest, rather than where need is greatest. What is more, much of private giving … functions with a significant ‘amentiy’ value to the givers (e.g., education, culture).”

Lester M. Salamon. 2001. “The Current Crisis.” P. 423 in The Nature of the Nonprofit Sector, edited by J. Steven Ott. Boulder,

CO: Westview.) 2. Professionals with ideologies of work autonomy inside orgs

Are NPOs more conducive to prof’l empowerment?

Teachers in schools; scientists in labs

Doctors in hospitals; managed care & HMOs

NPO Promoters

Legacy of the Great Society’s War on Poverty efforts

Conservative suspicions of NPOs as “liberal social engineering”

3. The State

Expanded powers to tax & regulate shapes NPO growth

Charitable deductions shift NPO sector boundaries

Grants, subsidies for service delivery to deprived groups

4. U.S. civic culture’s norms generally support NPO activities

Taken-for-granted expectations about social institutions

• Government should “stay out of our private lives”

• Charitable giving vs. self-help reliance

Health care shouldn’t be wholly market-driven

Schools should be publicly funded (anti-vouchers)

Measuring NPO Performance

“The research literature is vast and inconclusive” about NPO performance criteria.

Paul DiMaggio and Helmut K. Anheier. 1990. “The Sociology of Nonprofit Organizations and Sectors.” Annual Review of Sociology 16:137-159.

EX Unclear whether teacher salaries are higher/lower in private vs public schools & colleges

NPO sector probably too heterogeneous to draw solid conclusions beyond specific narrow industries (hospitals, schools, art museums)

EX Coleman study of high schools showed that private (Catholic) schools raise the test scores of lower SES students, narrowing the wider class gap in public schools

QUEX: What implications if used to make policy, increasing access to private schools through vouchers?

LO SES HI

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PUBLIC

PRIVATE

Four NPO Crises

Lester Salamon discussed four crises facing NPOs that threaten their freedoms to pursue their distinctive missions. Great risks to the NPO heritage of innovation, trustworthiness, altruism on behalf of the sociopolitically dispossessed.

FISCAL CRISIS

• Declining government revenues beginning with Reagan-Gingrich federal grants cutbacks, tax system reforms

• Private charitable donations unlikely to fill the gap

ECONOMIC CRISIS

• Growing reliance on fee-for-services (e.g, health care)

• NPOs may avoid their traditional “unprofitable” activities

NPO Crises, cont.

EFFECTIVENESS CRISIS

• Perceptions that over-professionalized NPOs may actually worsen social ills (e.g., poverty, welfare dependence)

• Unaccountability + uncertain technology = ineptness

LEGITIMACY CRISIS

• State, local governments “deprivatizing” many services

• Disillusioned public support of NP sector, fueled by high-profile financial scandals & relentless conservative attacks on “liberal” advocacy NPOs (e.g, Planned Parenthood, environmental groups)

Associations & U.S. Democracy

“Americans of all ages, all stations in life, and all types of disposition are forever forming associations. There are not only commercial and industrial associations in which all take part, but others of a thousand different types--religious, moral, serious, futile, very general and very limited, immensely large and very minute. . . . Nothing, in my view, deserves more attention than the intellectual and moral associations in America.”

de Tocqueville, Democracy in America (1835)

19th century liberalism’s conundrum was how to minimize democratic government’s intrusion into domestic affairs of the populace (during transition from Gemeinschaft Gesellschaft)

Which social structures could best preserve individual freedoms and group liberties by limiting the concentration of state & market powers?

Alexis de Tocqueville’s classic study Democracy in America

Tyranny of the Majority

SOLUTION: Create many voluntary or civic associations able to resist domination of citizenry by totalitarian democratic state

Especially in pluralistic, heterogeneous societies, VAs are indispensable for mediating state-civil society relations

By exercising grassroots democracy, VAs become training schools for citizenship values, norms, and practices for larger society

PROBLEM: In mass democracy, public opinion always threatens a tyranny of the majority (“totalitarian democracy”):

Democratic rule suppresses minority group interests

Pressures on officials for state action to enforce equality

Mediocrity of democratic mass culture produces conformity & stifling uniformity of social life – a leveling-down of standards & tastes

Dual Functions of VAs

FOSTERING PERSONAL AUTONOMY:

• Express interests, needs, problems of diverse population

• Instill local community’s moral standards

• Reduce frustration, powerlessness, anomie (normlessness); Durkheim’s “corporative orgs” based on occs & professions

• Develop sense of participation, involvement, satisfy personal needs without necessity of state intervention

PROMOTING CIVIC ENGAGEMENT:

• Educative role in civic affairs and democratic practices

• Create power centers autonomous from state, avoiding oppression

• Channels for two-way communication between citizens & political elites

Voluntary Associations

Voluntary association (VA) evolved into a special type of NPO

• Tax-exempt legal status, nondistribution of “profits”

• Reliance on voluntary labor to achieve collective goals

• May or may not have a paid staff

David Horton Smith (2000) distinguished two basic types of voluntary groups

(1) Paid-staff voluntary groups

(2) Grassroots Assns: local, voluntary, autonomous, “voluntary altruism based”

David Horton Smith. 2000. Grassroots Associations. Thousand Oaks, CA: Sage Publications.

VA DEMOGRAPHY

90% of orgs are missed by IRS records

Grassroots assn population = 7.5 million

Paid-staff vol group population = 2.0 million

Average volunteer gives 2.6 hours/week

Total volunteering of 27.6 billion hours = 16.2 million full-time workers [~13% of U.S. labor force]

Churches received 39% of volunteer efforts

Still a Nation of Joiners?

1998 GSS asked adults about 16 types of membership groups:

TYPE %

CHURCH GROUP 33

SPORTS 22

PROFESSIONAL 19

SCHOOL SERVING 16

UNION 12

YOUTH 10

LITERARY, ART 10

SERVICE 10

FRATERNAL 10

HOBBY 9

VETERANS 8

SCHOOL FRAT. 6

POLITICAL 5

NATIONALITY 4

FARM 4

OTHERS 11

31% belonged to no assns

26% belonged to only one group

12% belonged to 4 or more

Mean = 1.61, std. Dev. = 1.60

U.S. rate is highest among 15 industrial nations; but if churches & unions removed, then Canada, Great Britain, N. Ireland have equally high levels

Curtis, Grabb & Baer. 1992 “Voluntary Association Membership in Fifteen Countries: A Comparative Analysis.” American Sociological Review 57:139-152.

Bowling Alone?

Robert Putnam (Bowling Alone 1995, 2000) popularized a “decline of community” thesis: from 1960-1990, individual bowling was up 10%, but league bowling was down 40%

Much evidence of eroding social capital relations (networks, trust, norms) that previously enabled citizen pursuit of shared objectives. Indicates widespread social, psychological disengagement from politics and government.

Two primary causes: (1) Generational replacement; (2) Boob tube

Robert Wuthnow’s (1998) community transformed thesis: Many new forms of civic engagement recently emerged to supplant older forms

• Therapeutic self-help, special-purpose, professionalized nonprofit organizations

• Tight, life-long social bonds to civic organizations replaced by more flexible & transient welfare, service & advocacy groups trying to cope with entrenched social problems

Robert Putnam. 2000. Bowling Alone: The Collapse and Revival of American Community. NY: Simon & Shuster.

Robert Wuthnow. 1998. Loose Connections: Joining Together in America’s Fragmented Communities. Cambridge, MA: Harvard University Press.