The strategic advantage of non profits and civil society groups

image: Storm Force by John Gaffen www.whitewindmillphotography.co.uk

"After decades of discourse about how nonprofits need to be more businesslike, I am driven to discuss the differences structurally and in more detail. The admonition to be more like a business is a preposterous proposition—ill informed and exhibiting a sloppy state of mind that tries to draw us all off track to a space of unaccountability. Don’t fall for it. For goodness’ sake—if you want to act like a business, be a business! The major distinguishing factor of a business is its ability to build the wealth of individual owners rather than build collective well-being and value. Decide which bottom line you are dedicated to, and make it your own"
Ruth McCambridge

Like Ruth McCambridge, I have long been a critic of those who claim that nonprofits should be more business-like and operate like business to remodel themselves along business and market lines. It is both an ill informed and dangerous claim.

The claim reflects a naive understanding of non profit organizations and is predicated on a false assumption that non profits need a dose of "business thinking" to be more effective and effective.

Others who express similar views to McCambridge and I, include Michael Edwards and Deborah Allcock Tyler.

In her article Use it or Lose it: Frittering Away Civil Society's Strategic Advantage in the excellent online and print journal Non Profit Quarterly, of which she is the Editor, McCambridge argues that non profits have a strategic advantage that they are often blind to because they don't recognize or use it. 

And she argues that blindness to this strategic advantage is leading the nonprofit and civil society sector to lose its opportunity to become more influential, particularly in terms of responding to debates and solutions about important social, economic and political issues.

McCambridge argues that this strategic advantage springs from a number of distinguishing characteristics of non profits that need to be valued much more and worked with in a more conscious and powerful way.  

Strategic advantage is not to be found in the lure of competition, business metrics, market orientation, growth for growth's sake and obsession with money and profitability.

Some of the strategic advantages highlighted in Ruth McCambridge's article include:

• the tradition of collective association and collective endeavor for the common good
• the tradition of being close to constituents and to communities and of providing opportunities to maximise and amplify their voice
• the importance of shared values and collective aspirations
• the importance of scale, particularly smallness and nimbleness 
• close engagement and shared fit between the interests and aspiration of those who run the organization and those who benefit from its activities
• the focus on mutual benefit and the common good
• the tradition of mobilizing people to work together for shared value and of working non competitively in networks
• the important of trust and credibility in the eyes of constituents and stakeholders, rather than public image and brand 
• acting as the vehicle through which constituents and citizens can take action for the common good and mutual benefit
• appealing to common cause and individual aspiration through activity aimed explicitly at common benefit as a way for engaging the energy of stakeholders.
• availing ourselves of our constituents/stakeholders’ unpaid/volunteer labor.

So are there too many non profits?

Like Deborah Allcock Tyler I am constantly annoyed when I hear business people, Ministers, senior people in Government agencies, and many people in the non profit sector complain that there are too many non profits, particularly too many small non profits.

The claims vary- overlapping or uncoordinated services, duplication of effort and resources, failure to'get their act together', lack of efficiency, wastage of resources and reduced effectiveness, too many different voices, too many agencies for Governments to deal with. I have heard them all.

And the suggestion that follows is usually that someone- Government, the sector, the bigger agencies, the smaller agencies- should rationalise and reduce the number of non profits, particularly smaller ones who, it is claimed, are often unviable and less effective.

Many Government agencies have operated on this assumption for years, and have used their contracting and procurement regimes as a defacto strategy to rationalise the sector.

On many occasions I have heard senior Government officers and leaders of nonprofit organisations admit that one benefit of the contracting and procurement regimes that Federal and State Governments have imposed on the non profit sector here in Australia is that it it leads to a rationalization of the non profit sector by squeezing out what they perceive as 'unviable and less effective' (they mean 'less businesslike') non profits, usually smaller agencies.

Obviously, non profits should look at ways they can work more effectively with others to reduce duplication and improve their effectiveness and impact. This includes exploring collaborative partnerships with other non profits, if it is a way to deliver better outcomes for the people and the communities they exist to serve.

However, I have never understood the claim that more non profits is a bad thing. In particular, it is fundamentally anti-democratic for someone else to decide which non profits should exist, or to decide that there should be an arbitrary limit on the number of non profits.

Efforts to reduce the number of non profits, ultimately has the effect of reducing the democratic rights of citizens to take action.

And compare this claim that there are too many non profits, with views about for profit businesses. You never hear the claim that there are too many for profit business, despite the evidence of a huge number of failing, poorly run businesses, engaged in criminal and highly questionable conduct. Rather, the view is that the more for profit businesses there are, the better.

Deborah Allcock Tyler is spot when she writes:

One principle of a free democracy is the ability of people to come together in service of something they care about, regardless of whether or not someone else is already doing it and thinks they're doing it better than anyone else (which they always do!) or, indeed, if others don't think their cause is important..................................

The belief that there are too many charities is pardonable from those outside our sector, who are less likely to see the bigger picture and more likely to see donors and volunteers as willing and obedient stooges and beneficiaries as voiceless, choiceless victims who should be grateful for whatever they get from whomever is allowed to give it.

But that belief is, for me, incomprehensible when held by those within the sector. To them I say this: all right, if you genuinely believe that there really are too many charities, close yours down and that will be one less.

The issue of whether there are too many non profits in the US context is discussed here and here. A Canadian perspective is here.

Neoliberalism, market fundamentalism and the colonization of Aboriginal policy

"Neo-liberalism is a hungry beast and this 21st Century strain of capitalism is shaping the agenda for control of Aboriginal lands...........Australian Government policy is heavily influenced by neo-liberalism through its extraordinary emphasis on managing access for mining companies to resources on Aboriginal lands. This involves controlling what is still perceived as ‘the Aboriginal problem’ and forcing a social transition from traditional values and cultural practice to ‘mainstream’ modernism of a particular brand. It also involves displacing many Aboriginal people from their traditional lands and concentrating them in ‘growth towns.......To make any sense of the aggression behind most current Indigenous policy in Australia you need to study the impact of neo-liberalism around the globe"  

Jeff McMullen

The Australian journalist, writer and social justice campaigner Jeff McMullen has written two cogent and articulate critiques of the colonization of Aboriginal policy making in this country by the cancer of neo-liberalism (or what others call market fundamentalism). 

One of Jeff McMullen's articles The New Land Grab is available on line here (in The New Internationalist blog). The second piece is a book chapter titled Dispossession- Neoliberalism and the Struggle for Aboriginal Land and Rights in the 21st Century which appears in a new book In Black and White: Australians at the Cross Roads (edited by Rhonda Craven, Anthony Dillon & Nigel Parbury). This article is available here on Jeff McMullen's own website

In drawing on the work of David Harvey and others, and incorporating the voices of Aboriginal people, McMullen makes the case that neoliberalism is a key driver of the agenda for the control of Aboriginal lands and assimilation of Aboriginal people in Australia.  

Neoliberalism, McMullen argues is the ideological underpinning of a uniquely Australian strain of state-corporate capitalism that aims to control Aboriginal communities to enable exploitation of the land and mineral wealth on Aboriginal lands. McMullan argues that the real goal here is the upward redistribution of land and mineral wealth.

McMullen demonstrates the way that successive Federal and State Governments have used the coercive powers of the state to impose an agenda of modernization, control of Aboriginal lands and assimilation and assault on Aboriginal rights and culture.

Drawing on David Harvey's book A Brief History of Neoliberalism, McMullen identifies 4 essential features of the neoliberal agenda and analyses the extent to which they are manifest in Aboriginal policy making in this country:

1. Privatization and commodification of public and community goods. This has occurred through the privatization of Aboriginal lands, via policies that open up Aboriginal land to resource exploitation and attempts to override community land ownership and impose private property ownership rights.
2. Financialization to treat good or bad events as opportunities for economic speculation.
3. Management and manipulation of crises to establish a neoliberal agenda. This includes using the  Northern Territory Intervention as justification for  exerting greater control over Aboriginal communities to enable market and corporate exploitation of the minerals and resources on Aboriginal lands and the use  of 'military style campaigns to exert control and challenge Aboriginal sovereignty
4. State redistribution of wealth, not to the poor but to the rich and powerful.

Analyzing Aboriginal policy through the lens of neoliberalism as McMullen does, helps us to understand what drives social policies such as the Northern Territory Intervention and the social engineering to control Aboriginal people still living on traditional lands, as well as the aggressive land grab by mining and resource companies, aided and abetted by Federal and State Governments, which divides Aboriginal communities, and even Aboriginal families.  He writes:

'Neoliberalism connects the agendas of modernising Aboriginal culture and allowing mining companies to vigorously exploit and minimal cost the mineral treasures on Aboriginal lands'.

McMullen points to the divide and conquer tactics of mining companies and governments in the Kimberley and Pilbara in Western Australia, across the Northern Territory, on Cape York and in parts of NSW and South Australia, as manifestation of these neoliberal agendas.

McMullen is scathing about the role played by influential Aboriginal leaders, such as Noel Pearson, Marcia Langton and Warren Mundine who have become influential advocates and brokers for neoliberal policies and have gathered adherents and supporters in both political parties and corporate Australia.

Why the application of market models is misguided and dangerous?

Debra Allcock Tyler and Catherine Walker from the UK Based Directory of Social Change write here on why market based models and market based thinking is counter to the values and raison d'etre of the not for profit sector.

Allcock Tyler and Walker directly challenge the prevailing market based views that are dominant among influential policy makers and decision makers in areas of social policy and human and community services. They write

.....it does seem to be the prevailing view in government circles that charities are simply another source to supply the market. This view completely fails to recognise the fact that charitable endeavour is at its core about altruism. It is not a transactional activity, but a transformational one. And the work of charities is far more than simply the cause. The existence of charities acts as a ‘call to the heart’ of our citizens. Charitable endeavour calls forth in others the desire and willingness to serve others, our communities and our society. The current model of the market applied to our sector is not appropriate. Indeed, it assumes that the market model in and of itself has inherent attributes that work across sectors. There are some core myths about the market model:
(1) market models are the most effective way to deliver the work of charities;
(2) the beneficiary is the same as any consumer, with rational informed desires about where to seek help;
(3) those interacting with charities desire to do so on a transactional basis, for example, givers and volunteers will do so only if an end reward is on offer; and
(4) charities are inefficient and social investment is the way forward.

Allcock and Tyler go on to demolish these myths and argue that the application of market models to the not for profit sector is misguided  and dangerous. They conclude:

Charities are fundamentally an embodiment of the best part of human nature, the best evolutionary bit, the bit that makes us a social being with the common good at heart. Value comes in living a good life. Value is about selflessness not about a price tag imposed in an intrinsically greedy marketplace. This is not piety or sentimentality, nor is it about good and evil, but it is about what kind of charity sector is best for a good, big or better society.

Why demands for greater accountability and stronger governance should be challenged

Very good advice from Helmut Anheier who calls on not-for-profits to resist and lobby against demands  by legislators, politicians, academic think tanks and corporate leaders for greater not- for- profit accountability.

This is a critical issue here in Australia where Governments of all political persuasions and corporate and business leaders demand greater not- for- profit accountability and exhort the sector to "rise to the accountability challenge".

Of course their demand for greater not- for- profit accountability is wholly incompatible with their commitment to reduce accountability and regulation of politicians and political parties, and corporations and business.

Anheier argues (here) that the continual focus on accountability and governance produces undermines the reasons why not- for- profits exist.

Charity leaders must lobby against ever greater accountability requirements, delegates were told at Acevo’s annual conference today.

Speaking at the event in London today, Helmut Anheier, professor of sociology and dean at the Hertie School of Governance in Berlin, said he was concerned about the growing expectation for the voluntary sector to become more accountable.

"Why I’m concerned is that continual emphasis on good governance and accountability will ultimately put non-profits on the defensive, making it very difficult for them to meet these expectations, unless we take a proactive solution and steps in that direction," he said.

Anheier, who was Centennial Professor at the London School of Economics between 2001 and 2009, said the debate about the need for charities to be more accountable stretched back almost 20 years, but was now getting louder.

"It is the ‘audit society’, general institutionalisation, the suggestion that more and more mechanisms are needed to reassure us that things are okay," he said. "This is merged with ideas of good governance, which are now the prime directives for voluntary organisations."

He said that putting emphasis on accountability undermined the reasons non-profit organisations exist.

Innovation in accountability should be encouraged in the charity sector, he said. He advocated demonstrating the academic Jonathan Koppell’s "five dimensions of accountability": transparency, legitimacy, controllability, responsibility and responsiveness.

"It should be acknowledged that full accountability is beyond what non-profits can and should do," said Anheier. "New forms of self-regulation and smart reporting should be encouraged.

"Lobby against new directives for ever great accountability requirements – let’s not overdo it."

UK not for profit leader warns against adopting private sector models

Deborah Allcock Tyler who is the CEO of the UK based Directory of Social Change is a regular vsitor to Australia and always has important and insightful things to say about the Not-for profit sector

Last time she was in Australia she slammed the idea that Not for profits should be more business like arguing that it is offensive how much is written about how NFPs need to be run better and behave more like the business world.

Debra Allcock Tyler addresses the 2010 Think Innovation Summi

Allcock Tyler argues that the constant comparison between practices in the business and Not for Profit sectors is ironic, as it was the failure of corporate governance and banks that plunged the world into a recession.

Allcock Tyler has recently visited Australia again as a guest of the Victorian Department of Communities to speak about the experience of the big society and its impact in the UK, social finance and the role of the voluntary sector in social change.

One of her messages (one that I and many others have been arguing for years) needs to be stated over and over-  private-sector models are not the solution to deeply entrenched, long-term social problems and complex human and community needs.

Allcock Tyler is a strong critic of competitive tendering and contractual approaches arguing that the move to competitive tendering for government contracts creates a view of NFPs as just another delivery vehicle for social services. It creates a system where NFPs are forced to behave more ruthlessly like businesses, in a competitive manner.

 Allcock Tyler argues that competitive tendering creates a psychological shift about who the client is – with a contract the client is whoever is paying, instead of the grant system, where a NFP determines a solution to a problem and takes it to government for funding. It also this means the big organisations get bigger, and the medium and small organisations are left behind.

Allcock Tyler has warned the Australian not- for- profit sector of the dangers of adopting untested and in many cases failed market- based policies, including social finance, social enterprise and payment by results, which are increasingly popular here in Australia among Governments and which are fiercely promoted by academic think tanks like the Centre for Social Impact and the growing number of corporate funded  and business oriented NFP advocacy groups.

Allcock Tyler writes here:

It was a great trip, even though I came away worried that the Australians are following the UK's lead in government engagement with the voluntary sector - which, let's face it, is not going well. I did point out that they really shouldn't follow our example because we're buggering it up badly (they're Aussies - they like a spade to be called a spade, and an expletive to emphasise the point always goes down well).

You won't be surprised to hear that I was particularly scathing about social impact bonds and payment by results. One rather important sort of chap then asked me how I explained the success of the "Peterborough experiment". I was flummoxed. I'd never heard of it and said that if it was that successful people would have been shouting about it loudly.

Amazingly, on my first day back in the UK I was listening to Today when said 'experiment' was referred to by Chris Grayling, the Secretary of State for Justice. The absolute shocker was his statement that the payment-by-results model used in the social impact bond being pioneered at Peterborough prison was hugely successful - although he hadn't yet had the report with the evidence to back up that assertion. It seems the government is so confident this market-based, capital-intensive model is right that it doesn't need the evidence to prove it.

What really riled me was the bare-faced hypocrisy of this. We in the sector are constantly exhorted to provide evidence of need and success in order to get funding - but the government is allowed to get away with rolling out a controversial, highly contested model of funding the sector without providing evidence. How hypocritical is that? Well, it won't work. Private-sector models are not the solution to deeply entrenched, long-term social problems.

When progressive ideas are used to conceal market agendas

This piece from the UK Social Work and Action Network describes vividly how supposedly progressive reforms and ideas like social inclusion, social innovation and user centred services are deployed to conceal market based agendas and how, as a result, they end up destroying effective human and community services.

The piece also demonstrates that the use of market based approaches damages the most vulnerable and the most disadvantaged and undermines the capacity of human and communty services, thereby creating  the conditions for even more marketisation and privatization.

Sadly this situation also applies here in Western Australia.

I work for the NHS within Community Mental Health Services as part of a team whose remit was to enable service users to access educational and employment opportunities. We ran what I considered a unique and progressive service. We worked in a building not far from the city centre. We had an ICT suite where service users could gain qualifications and with our support create or update their CVs.
 

Within the centre we had a café where service users could gain work experience to gain relevant qualifications with currency in the catering industry. It was also a place where service users could come along for a hot meal, a coffee and a chat.

Our reception was also staffed by service users gaining work experience and relevant qualifications. We delivered in house courses in Building Confidence and Self Esteem. The team alongside ex service users also developed and delivered workshops to service users based on the Recovery Model.
 

We worked closely with local education providers delivering courses such as: Rights and Responsibilities at Work, Working in Retail, Working in an Office, Working in Customer Services and Working in the Public Sector. We also worked closely with Welfare Rights who regularly delivered workshops and advice sessions on benefits, debt and housing issues. We also had thriving Art and Drama projects which rebuilt the confidence of people who had endured a variety of mental health difficulties.

The whole project was person-centred, the idea being that it was a sort of stepping stone which gave them renewed self confidence and skills to move on with our advice, guidance and support into mainstream opportunities to enhance their life chances.

The whole project was person-centred, the idea being that it was a sort of stepping stone which gave them renewed self confidence and skills to move on with our advice, guidance and support into mainstream opportunities to enhance their life chances.

Then came the reorganization. The reorganization was pushed through using ideas and progressive language originally developed through the previous New Labour government’s Social Inclusion Unit. Day Centres we were told were bad, they simply institutionalized people with mental health difficulties. The whole new focus was to create services without buildings.

During my time working in Mental Health Services I have seen some pretty awful places. Day Centres which offered patronizing services that oozed with boredom with no real progression for service users. Our project was not like this.

The NHS Trust I work for was at the time of our reorganization looking at squeezed budgets and the cost incurred in leasing buildings. They do have a building programme for new inpatients units, but as yet not one brick has been laid and in some instances planning permission is not yet approved, yet they closed the only inpatient ward in the City.

Our project has changed beyond recognition. Some staff will be taking pay cuts in the reorganization which has had a massive impact on morale. We are now expected to record all service user contacts and outcomes from each appointment on 3 separate and different I.T. systems. But more importantly we can no longer deliver the range of opportunities to service users. Everything has to be accessed in the wider community. The café and service user reception has gone. We cannot make appointments to see service users in the building when we are offering advice, guidance and support. We now have to go out in twos to the service users home to ascertain from the service user what we can do for them to promote their social inclusion. The outcomes of the first contact with the service user are discussed at a team meeting and then a member of the team (an education worker, employment worker, volunteer coordinator, arts worker, sports worker) is allocated to the service user, depending on what kind of ambitions they have.

This is followed by a telephone call to the service user and arrangements are made to meet them somewhere in the community. The advice from the trainers from the Social Inclusion Unit was that a café may be a suitable venue for the first appointment. Yes a public place when the service user may be disclosing personal and often quite distressing information.

As a team we are now finding that many opportunities in the community for our service users: colleges, arts projects, leisure centres, etc are few and far between because of the current round of cuts .The local council has made cuts to the passport to leisure scheme which helped people on benefits access leisure centres etc. The local colleges have changed the criteria for fee wavering for people on benefits meaning that many of our service users are unable to access educational opportunities. As the cuts start to bite deeper there will be fewer and fewer opportunities for our services users in the wider community.

To make staff morale worse our building may be given to different teams within the Trust. We have recently heard that we may be supplied with laptops and work from our cars, dropping into Trust buildings to use docking stations to send data to the I.T. systems. We will probably end up as lone workers apart from one afternoon per week when we attend a caseload allocation meeting. It seems to me that our service has now been slimmed down to such an extent it is ripe and ready for privatization.

Welcome to modern, progressive mental health day services in 21st Century Britain.

Service delivery, social enterprise and the transformation of the not- for- profit sector

In this piece from the UK online publication Third Sector Lucy Sweetman asks some important questions about the future of third sector not -for- profit organisations.

Writing about the UK experience, Sweetman suggests that the increasing focus on service delivery and winning contracts to deliver services on behalf of Government, coupled with the uncritical adoption of the rhetoric of social enterprise and business has fundamentally transformed the sector's ethos and purpose.

And Sweetman argues that it is the most disadvantaged and vulnerable, the very people  the sector exists to serve, who are worse off because of these transformations.

The situation she describes in the UK is unfolding here in Western Australia.

Sweetman writes:

I’ve been worried for a long time that the sector’s charities have been drifting too far from their campaigning and fundraising roots and into service delivery. What started out in the sector as an interesting stroll down a path towards the creation of diverse public service partners has opened up into a gigantic free-for-all.

Predictably, the sector is now populated with social enterprises, social businesses, community interest companies and others, all willing to be in receipt of the state’s dollar to deliver our public services. And they are all competing with the charities that paved the way through the Compact.Public service delivery is now a vast and open market.

Ask Serco.

But when the large children and young people’s charities prefer to call themselves ‘social businesses’ in order to compete in this overcrowded marketplace, we move inexorably into territory where charitable purpose becomes meaningless and even undesirable.

For vulnerable and disadvantaged young people this is not good news. As we have seen with the Work Programme, the need to meet targets in order to justify or even receive funding for a service, leads to the people with the most complex needs being ignored. They are those who cannot be ‘resolved’ or moved on quickly and inexpensively.

So if charities stop thinking like charities entirely, who will be there for the most  disadvantaged,  those most in need of the long-term, expensive solutions? And who will take the time to set up and fund the types of projects that have less tangible outcomes, like those devoted to raising young people’s self-esteem or engaging them in the arts?

Managerialism as a prevailing ideology in the not- for- profit sector

image courtesy of Steve Blizzard

This important piece by Vern Hughes, Director of the Centre for Civil Society first appeared in the Sydney Morning Herald on February 4 2011.

Australia's voluntary, charitable and community organisations have changed over the past three decades, almost beyond recognition. Such transformation of the non-profit sector has attracted little public debate.

 Many organisations that began life as voluntary associations have become corporatised instruments of government service delivery and no longer need, or even want, volunteers. Those that still have a place for volunteers are often trapped in a web of regulations and risk-management protocols that reduce volunteering to narrow, mechanistic and unsatisfying tasks.

Most found it easier to seek and obtain public contracts for their operations and to tailor their mission to the delivery of these contracts, than to rely on private fund-raising or commercial income generation.

In the process, their programs and operations came to reflect the silo structure of government, and their internal cultures mirrored the government's risk-averse culture. They became accountable, not to their clients or founders, but to their funding departments.

A generation of non-profit managers rose to ride this service-delivery train, replacing their organisations' once colourful and idiosyncratic cultures with a bland managerialism.

The result is a third sector in deep confusion, torn between its voluntary heritage and its managerialism. Most organisations with a history of more than three decades are unrecognisable from the groups that formed in church halls and around kitchen tables in a previous era.

Disability service organisations are a case in point. Most of the disability agencies now headed by chief executive officers, complete with a raft of risk-management, regulatory-compliance and brand-protection policies, were formed by parents of people with disabilities. These parents knew they needed to create, from scratch, the supports and services required by their sons and daughters.
They usually began around a kitchen table. Everyone was a volunteer. Consultants were unheard of. The only resources on tap were goodwill and a willingness to work together for no reward apart from securing something in the future for their loved ones.

Today many such parents find themselves referred to, in the annual reports of the bodies they created, as ''stakeholders'' in the welfare of their sons and daughters. They appear alongside key stakeholders such local governments, suppliers and corporate partners. Many shake their heads in disbelief at the entity they unknowingly created. ''We gave birth to a monster,'' some say.

Managerialism - in public, private and community sectors - is the prevailing ideology of our time. It has trumped entrepreneurship in the private sector, and perverted notions of service in the public sector. But in the non-profit sector it has swept all before it.