Monday, May 24, 2010

Michael Edwards: the danger of business approaches in the not-for-profit and civil society sector

"No lasting change has been successful without large numbers of people acting consciously and collectively around human values of solidarity and social justice, not market values. Markets are great ways to do some things, but not to fashion communities of caring and compassion"
Michael Edwards Small Change: Why Business Won't Save the World.

It has become tiresome to hear the cliche that not-for-profit and civil society organisations should become "more businesslike", that they should operate more like business and be remodeled along business and market lines. Frankly, it is a ludicrous and dangerous claim.

Most times it reflects a naive understanding of not-for-profit and civil society organizations and is predicated on the false assumption that such organizations are run by well intentioned amateurs who need a dose of "business thinking" to be more effective and effective. My view has always been that the reverse is in fact true. Business and corporations would in fact benefit more from the values, principles and practices of many not-for profit and civil society organizations.

In his new book Small Change: Why Business Won't Save the World Michael Edwards questions the wisdom of applying business and corporate thinking in the world of NGOs and civil society. Michael Edwards's book should be required reading for any one working in the not-for-profit and civil society sector(s). Edwards, who has spent over three decades in the not-for-profit and civil society sectors in the USA, UK, Europe and internationally, has published widely on the sector. His book Civil Society is acknowledged as one of the seminal works on the role of civil society and citizen action in democracy and public life.

Small Change is a wise and radical book that challenges many of the taken for granted assumptions that dominate thinking and practice in the world of not-for-profits and civil society. Edwards argues that business and market thinking has too much influence over not-for-profit organisations and civil society groups.

Edwards rejects the role of markets, business and business thinking as solutions for the social ills of society and the challenges facing the not-for-profit and civil society sector. He contends that civil society and NGO groups must turn away from the lures of the market and business and reassert the importance of independent citizen action. He is deeply skeptical about importing business approaches into the nonprofit sector.

Edwards argues that while market approaches can improve access to goods and services, confronting inequality and injustice head-on requires advocacy and system change.

In this book and an earlier monograph and articles Edwards critiques what he called philanthrocapitalism- the belief that markets and business can create lasting social change and that philanthropy from wealthy individuals and corporate sources that is guided by the values and metrics of the corporate world is a force for positive and just social transformation.

In Australia we see a growing body of powerful and influential philanthrocapitalists who claim to be putting their money to work to achieve socially transformative goals. As Edwards points out what is missing from their work is any genuine systemic change that addresses social injustices and inequities in fundamentally significant ways.

Here are just some of the lessons to take from Edwards masterly work
  • Philanthrocapitalism concentrates power in the hands of a few major players, mirroring the very inequities not-for-profits and civil society organizations should be trying to ameliorate. With a vested interest in the status quo it shies away from fundamental change. At most all it can promise is valuable but limited advances: small change.
  • Markets and business cannot be fundamentally reformed to serve social purposes in the way that their proponents claim
  • What seems inefficient using market and business criteria is essential for the social and political impact of not-for-profits and civil society
  • Most business metrics and business practices are at odds with the social goals and social transformation that not-for-profits and civil society organizations aspire to.
  • Achieving social transformation and change requires cooperation not competition, collective action rather than just individual effort and support for long term systemic solutions rather than immediate results. Business and business models promise only limited advances in addressing society's inequities and injustices.
  • Business and business values are ill equipped and unable to address the core issues of concern to many not-for-profits and civil society groups.
  • The adoption and use of business models and market thinking can and does corrupt the core mission, purpose and values of NGOs and civil society.

Sunday, May 16, 2010

Strategies to ensure the viability of small NGO's

Recently I participated in a conference panel on the sustainability and viability of small community based not-for-profit organizations in Western Australia. We discussed strategies that small agencies could use to ensure agency viability and sustainability, whilst maintaining their small scale, local grassroots efforts.

Small NGO's are under pressure on many fronts- from governments, from the private and corporate sector, and from larger NGO's who are moving in to the territory previously occupied by small agencies. For many viability it is a month by month struggle.

A number of us on the panel stressed the importance of "political strategies", particularly the need for small NGO's to have a unified voice in the form of a representative peak body to advocate for their interests. Most existing peak bodies are driven by representatives of big NGO's and so tend to advocate and promote strategies that benefit big NGO's first, but not necessarily small NGO's. For a number of reasons , many small agencies don't feel that their interests are represented by most peak bodies.

We also discussed "collaborative" strategies, whereby small agencies collaborate with other small agencies as shared entities, while retaining their individual identity and mission, and capacity to address local needs. This included using consortia to tender for larger projects and developing partnerships to deliver projects, programs and services.

We also emphasized the benefit of what I call "Shared Services Alliances", in which small agencies create 'back office' alliances involving partial integration or sharing of business and administrative functions. Sharing services assists small NGO's to leverage their size and resources to spread the costs of services across a number or agencies, making them more affordable. Agencies can maintain their grassroots local identity but develop more sophisticated models and services.

Shared services alliances are not new in the NGO sector (eg. co-location, shared service delivery, partnerships) however they have been underdeveloped by small NGO's in certain areas.

In addition to shared serviced delivery (probably the most common example) some shared service options include:
  • shared office space (as per the Lotteries House model or other forms of co-location of services)
  • shared purchasing, where agencies use their joint purchasing power to purchase goods and services
  • shared staff roles where agencies share particular staff roles
  • shared funding such as grants
  • shared services and functions, where agencies share administrative and business functions such as payroll, IT, accounting and bookkeeping, IT, insurance, facilities management, research, consultancy etc.
Useful articles on shared services in the Non-Profit sector can be found here, here and here.

Compulsory Income Management: Evidence based" social policy that ignores the evidence

The Rudd Government and the responsible Minister Jenny Macklin continue to claim that compulsory income management delivers substantial benefits for all Aboriginal people subject to it, despite mounting evidence to the contrary.

A number of recent reports, cited in this piece by Eva Cox, show there is little hard evidence for the benefits claimed by the Minister and in fact, signs of potential long term harms for many people. Eva Cox cites a study published today in the Medical Journal of Australia that challenges a central tenet of compulsory income management- that people's spending habits will be modified in a positive way with mandatory restrictions on expenditure alone. The study led by researchers from the Menzies School of Health Research found that income management is not associated with healthier food and drink purchases and may be having no effect on tobacco sales The researchers write:

"However, in contrast to the government report, we found that spending on food and drinks and fruit and vegetables did not change with income management. Soft drinks sales increased.

The one time during income management that spending went up for all store commodities was when people actually had more money: at the time of the government stimulus payment.

Telling people of low income how they can use 50% of their income may make no difference to their spending, but giving a lump of cash does".

The researchers view is that Government's claims of improved food choices, specifically more fresh and more healthy food being purchased, are linked to the new licensing of stores in these communities -- not income management.

The negative effects of compulsory management income for Aboriginal people are documented in a report by the Jumbunna Indigenous House of Learning. The reports summarises the types of problems being experienced on the ground, including lack of pathways out of compulsory income management, no evidence that compulsory income management has resulted in better nutrition, no improved financial capacity and reduced investment in social services. The report also describes human rights violations, lack of quantitative data, failure to meaningfully engage Aboriginal communities, problems with implementation and associated costs.