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NONPROFIT SECTOR AND CIVIL SOCIETY: ARE THEY COMPETING PARADIGMS? MARK LYONS CACOM WORKING PAPER NO 35 NOVEMBER 1996 This paper was presented to the “Social Cohesion, Justice, Citizenship. The Role of the Voluntary Sector” Biennial Conference of Australian and New Zealand Third Sector Research Limited, Victoria University, Wellington, New Zealand, 3-5 July 1996 Mark Lyons is an Associate Professor in the School of Management at the University of Technology, Sydney and Director of the Centre for Australian Community Organisations and Management (CACOM) ISSN: 1036 823X ISBN: 1 86365 341 4 CENTRE FOR AUSTRALIAN COMMUNITY ORGANISATIONS AND MANAGEMENT (CACOM) Community organisations are the product of group or community initiatives. They are formed to provide services to their members or to a wider public. Community organisations are particularly active in providing community services, health, housing, culture and recreation, education and training, finance, religion and in the organised representation of interests. Community organisations are not run to make a profit for owners or shareholders and are not under the formal control of government. As a class they differ in important ways from both for-profit and government organisations. They differ in the ways they are governed, in the variety of their sources of income and in their frequent reliance on volunteers. It is the mission of the Centre for Australian Community Organisations and Management (CACOM) to strengthen the Australian community sector and its management through research, management training and publication. Among CACOM's objectives are: • to promote a better understanding of the Australian community sector by undertaking and publicising basic research on its size, its resources, its management practices, its history and its relations with government and other sectors of the economy; and, • to provide an information resource by collecting and disseminating research and other information vital to the community sector. To this end CACOM sponsors a Working Paper Series. Generally, CACOM Working Papers will publish research undertaken by CACOM members or encouraged by CACOM. The aim is to make the results of research widely available as quickly as possible to encourage discussion. In some cases, the research reported in a working paper will be further refined for refereed publication. Working papers are available to academics, researchers, community sector managers, public servants and others who are interested in better understanding the Australian community sector. If you wish to comment on this paper or seek further details of CACOM's activities and publications, write to: The Director Centre for Australian Community Organisations and Management (CACOM), University of Technology, Sydney, Kuring-gai Campus, P O Box 222, LINDFIELD NSW 2070, AUSTRALIA Phone: (02) 9514 5311 Fax: (02) 9514 5583 TABLE OF CONTENTS Abstract i Introduction 1 Nonprofit Sector 3 Civil Society 6 Comparing Civil Society and Nonprofit Research 11 Conclusion 14 References 14 ABSTRACT The growth of research into and writing about the third sector over the last decade has been remarkable. It began in the United States but quickly spread to other countries. There is, however, a bifurcation in this research. Some identifies itself as being interested in nonprofit organisation, other research describes its interest as civil society. Nonprofit research is strongly influenced by economics, whilst political science and sociology are the formative disciplines for civil society research. This paper explores these two traditions and asks whether they are fundamentally incompatible. i Introduction The growth of research into and writing about what I shall call the third sector over the past 20 years has been remarkable. It began in the United States but has spread to many countries as the membership directory of the International Society of Third Sector Research (ISTR) can testify. In part this growing interest would appear to be a response to the growth of the third sector world wide. In an important paper in the influential journal Foreign Affairs, Lester Salamon, has argued that this growth is the product of several factors: a loss of confidence in the welfare state in developed countries; a crisis in government led models of development in most of the third world in response to the oil price shocks of the 1970s; the collapse of communist regimes in Eastern Europe and their replacement by political systems that allow the articulation of various interests; the huge growth in the size of the educated middle class in many Asian and other countries; the growth of social movements such as the women’s movement, the environment movement, and the human rights movements, which manifest themselves in thousands of third sector organisations (Salamon, 1994). Interest in the third sector has been provoked not only by its international growth, but also by the collapse of Marxism as an intellectual movement. This in turn has led to the partial dissolving of the old left/right distinctions and has generated a quest for new social theory and a critical reassessment of the role of the state. But while this fruitful intellectual climate and the apparent growth of the third sector world wide may have helped fuel the growth of research into it, they are not a sufficient condition. It is perfectly possible for the third sector, its growth or decline, to go unnoticed,as the record in Australia shows. In part, this is because the third sector is fragmented into various fields of activity: education, health, sport, community services, recreation, interest groups and the like, so that the common features of organisations that constitute the sector are not easily recognised (Lyons, 1993). To paraphrase Peter Dobkin Hall’s provocative but accurate observation, in a country such as Australia the third sector (for Hall, the nonprofit sector) needs to be “invented” (Hall, 1992). 1 I have used the term third sector in an attempt to find as neutral and as generic a term as possible for all those organised efforts that are neither part of government nor designed to return a profit for owners, plus volunteering and philanthropy. The growing interest in the third sector by researchers, intellectuals and activists that was referred to above does not share a common terminology. Rather, it has emerged in different parts of the world, among researchers from different disciplines with different concerns and different forms of discourse for expressing them. Within these many different strands, it is possible to identify two forms of discourse, two intellectual movements. These are best captured by the terms ‘nonprofit sector’ and ‘civil society’. The first began in the United States in the 1970s but has a world wide salience; the second was revivified in Eastern Europe at about the same time, but acquired a strong articulation in the 1980s, not only there but in Asia and Latin America and finally attracted usage in the United States where it has drawn on and become entangled with some older intellectual projects of political scientists and sociologists which are focused on what has been called variously civic culture (Almond and Verba, 1963) communitarism (Etzioni, 1987); civic voluntarism, (Verba, 1996) and social capital (Coleman, 1990; Putnam, 1993, 1995). Generally speaking, as scholars in these two traditions become aware of the other tradition, they welcome it, though tentatively. Thus Amati Etzioni, the founding father of the new ‘communitarian’ movement gave the keynote address to first ISTR conference in Budapest in 1994, and Robert Putnam has become an active participant in ARNOVA, the Association of Research on Nonprofit Organisations and Voluntary Action. Yet there has been to this point little cross fertilisation in ideas. That raises the question that this paper seeks to explore. Are the two traditions of discourse, of scholarship and research simply illuminating different parts of the third sector, so that their insights can simply be added to give a fuller picture of the third sector, or are they at heart, different and thus competing paradigms that lead to quite different conclusions about how to evaluate and theorise about the third sector and individual third sector organisations. The paper will sketch salient aspects of the two traditions, that of the nonprofit sector and civil society, and will draw out some of their similarities and differences especially how they go about evaluating the object of their study. 2 Nonprofit sector Despite the oft quoted remarks of the French commentator de Tocqueville in the 1830s about the American passion for forming associations, the growth of extensive scholarly interest in the nonprofit sector began in the United States in the late 1960s. The events that triggered it were a series of poplar attacks on foundations. These attacks came from both left and right and led to Congressional enquiries which culminated in the 1969 Tax Reform Act. These criticisms and official enquiries spurred a response by sections of the nonprofit sector which culminated in the early- to mid-1970s with the Filer Commission, established by a few foundation leaders, congressional leaders and the United States Treasury (Hall, 1994: 72-80). It was the extensive research agenda developed and pursued by the Filer Commission that marked the first extensive acknowledgment by the research community of the nonprofit sector. Given its origins, much of the research which the Filer Commission sponsored focused on the impact of taxation on private giving, on foundations and on the large public-serving nonprofits, such as hospitals, universities, art museums and social service organisations. Responding to the same events that led to the Filer Commission after a long gestation, Yale University began its Program on Non Profit Organisations (PONPO), with one of its fundamental tasks being that of defining what might be meant by ‘nonprofit sector’ (Hall, 1994: 249). In the end, the definition that was adopted and is now generally used refers to organisations given tax exempt status by the US Tax Code, or alternatively, organisations that are prevented by their constitution from distributing any surplus funds, which is, basically, what the Internal Revenue Service requires to award tax exemption. For some, this definition and associated terminology was too broad in scope and too negative in connotation. In 1979, a loose grouping of peak bodies representing various groups of charitable nonprofits (or the 501C3s), in the terminology of the US Tax Code) formed the Independent Sector which has since then played a crucial role through its annual research forums, its own research, especially on the dimensions of the nonprofit sector, giving and volunteering and through its various publications. The concept of an independent sector has been criticised as being both false and bad 3 politics: false, because few of these organisations are truly independent (most of them receive large amounts of government funding in particular); bad politics, because such an assertion of independence encourages government to reduce its support. Nonetheless, the Independent Sector has done much to advance research into and to create a wider public awareness of the concept of a nonprofit sector. But probably it was PONPO at Yale which, building on the Filer Commissions research, did most to establish a clear and strong research tradition for the nonprofit sector. Many of the prominent names in US nonprofit studies have had an association with Yale: Simon, Hansmann, James, Rose Ackerman, Young, Steinberg, Ben Ner, DiMaggio, Powell, Hall, Milofsky, Anheier. There are certainly important exceptions: Horton Smith, Van Til, Salamon, Weisbrod, Clotfelter, Dale, O’Neill, Lohmann, Gronbjerg - to name but a few. And, over the past decade, other centres have grown. Nonetheless, nonprofit scholarship was given its formative shape by the work of the Filer Commission’s research and PONPO. The definition of the sector and the priority in deciding matters requiring research have been determined primarily by lawyers and economists, such as the first seven of the Yale group named above and three of the other group. The strength of this legal/economic paradigm can be seen in the history of ARNOVA, the scholarly association that now draws 400 scholars to its annual conference. At the time as the Filer Commission researchers were beginning work, but emerging from a different tradition and set of interests, academic sociologists, David Horton-Smith and John Van Til, began the Association of Voluntary Action Scholars focusing research attention on voluntary action and (primarily) voluntary associations, phenomena of little interest to those in the Filer group. During the 1970s and 1980s it was the nonprofit research group around PONPO and the Independent Sector which grew in scope and prominence. They gradually became entangled with AVAS and in the early 1990s, AVAS underwent a name change to the Association for Research on Nonprofit Organisations and Voluntary Action, or ARNOVA, a marriage of the two traditions, one emerging largely (but not exclusively) from economics and law, and the other from sociology (and, to a lesser extent, political science). But it is the former tradition which has dominated. Some work on voluntary associations, small neighbourhood-based self help membership bodies has been done by Smith (eg Smith, 1991, 4 1992, 1993, 1995), but by and large the major emphasis within ARNOVA over the past 6 years has been on public serving, employment generating nonprofit organisations. What then is the scope of the nonprofit research project and the theory that underpins it. Essentially, nonprofit theory is interwoven with economic theory. At the heart of any theory is an explanation of why the phenomenon that is the object of study exists. The explanation for the existence of nonprofit organisations is framed in terms familiar to economists who assume that the profit maximising firm operating in a free market is the natural form of economic organisation and who seek to explain deviations from this, such as governments and private nonprofit organisations, in terms of market failure. The two most commonly cited explanations for nonprofit organisations are those of Hansmann (1986), which argues that nonprofit organisations exist because of market failure caused by information a-symmetry, and Weisbrod (1986), who argues that the existence of public benefit providing nonprofits needs to be explained not directly by reference to market failure, but by reference to government failure. To elaborate, Hansmann, and many who follow him, propose that because people sometimes need to access services where they cannot judge the quality of the service, then they will choose a nonprofit organisation because it is less likely to try and cheat them than is a for-profit firm. Weisbrod notes that nonprofit organisations often provide public goods which are more generally provided by governments (because of a different type of market failure). He proposes that this is because governments, which rely on taxation revenue to fund the provision of public goods, will provide only that type and level of goods which just over half of the electorate (or the median voter) prefers and is prepared to pay for. Any further provision, or any specialised provision catering to minority groups will be provided by nonprofit organisations. Using this theory, James (1987) predicted that nonprofit organisations would be more likely to be found in heterogenous society than homogenous ones. Her study of schooling in several countries seemed to demonstrate this. The proportion of schools that were private schools correlated in particular with the degree of religious heterogeneity of the society. Since then a great deal more theoretical work has been done without overturning these theories. This is despite Lester Salamon’s theory of voluntary failure, which noted that historically, voluntary 5 organisations preceded governments as the providers of many services and were replaced by government provision in many cases for reasons to do with the insufficiency, the particularism, the paternalism and the amateurism of voluntary or nonprofit endeavour (Salamon: 1987: 111-113). Nonprofit scholarship has subsequently broadened its coverage, probing the interrelationship between giving and levels of taxation and giving and government expenditure, describing the prerequisites of effective management and governance and explaining relations between nonprofit organisations and government. But in almost all these cases, it has been the charitable nonprofits: the art museums, hospitals, social services and mental health providers which have been the objects for study. The relative narrowness of this focus has been remarked by several commentators. It has been criticised for omitting mutual aid organisations, such as co-operatives and self-help groups (O’Neill, 1994). It has been criticised for paying scant attention to purely voluntary, member benefit associations that vastly outnumber employing nonprofits (Smith, 1992, 1993). The French term “economie sociale” or social economy, tries to encompass all of these. But the original definition of nonprofit sector remains strong. For example, even though Lester Salamon has proposed an alternative version to relations between nonprofits and government and has been critical of the use of the term “independent sector”, his interest focuses on the public serving nonprofits (Salamon, 1992). The Johns Hopkins comparative nonprofit sector project which he and Helmut Anheier co-ordinate only recently agreed to accommodate the views of researchers from a number of other countries to include unions, mutuals and political parties within its scope (though with certain conditions). Its primary measures for evaluating the nonprofit sector is employment size and turnover or expenditure (Salamon and Anheier, 1994). Civil Society While the tradition of nonprofit scholarship may be criticised for its omissions, it is nonetheless an impressive cross-disciplinary and cross-national endeavour; one that possesses an important degree of coherence. 6 That cannot be said of the set of organised activities, research interests and intellectual traditions that provide a very different focus and might eventually emerge as an alternative paradigm. The term civil society will be used to identify these loosely coalesced traditions but other terms such as social capital, civic voluntarism, civic community are often used. The term civil society has a far older usage than nonprofit sector. This is both a strength but also a weakness. Along with related terms such as civitas and commonwealth, it made a frequent appearance in the writings of 18th and 19th century philosophers such as Hobbes, Locke, Smith, Ferguson, Kant, Hegel and Marx It received continuing attention in the works of many Marxist writers, particularly Gramsci, but also Poulentzas, Urry and others. The civil society was seen as a sphere of action that was in some way distinct from family, state and economy or market, but for the most part, the philosophers proceeded to conflate it with one or the other of its more readily grasped partners of state or market. For some, it was a sphere which was separate from the state where economic relationships of the market could flourish; for others it was the synonymous with the state (Frankel, 1983, 25-33). Because civil society was used, ambiguously, by Marx, it was a Marxist writings that the term entered the 20th century. Gramsci, for example, saw civil society as constituting the institutions of hegemony, the institutions whereby intellectuals who carried the interests of capital, articulated and maintained over the rest of society a set of dominant ideas and assumptions. It was, nonetheless, separate from the coercive institutions of the state (Gramsci, 1971). More recently, other Western European writers have found a role for ‘civil society’, without agreeing on its meaning. Urry (1981), for example, affirmed a separate role for civil society and reconceptualised it as playing an intermediary role between state and economy. More recently, Held (1995:88) has affirmed an important role for “civil associations” but describes these as only part of civil society, which also include private firms. These theories all operate at a highly abstract level. Civil society is a category in an all encompassing theory, rather than an object of study in its own right. As a consequence, in these theories it is not at all clear just what organisational form civil society might encompass. By contrast with the West, in Eastern Europe in the 1970s and 1980s, the term “civil society” was refurbished by Marxist theorists who were also active opponents to the communist regimes. 7 Harking back to Kant, writers and activists such as Arato (1981) and Markus (1982) argued that civil society creates a public sphere quite independent of the state, but also of the rudimentary economy. Gellner (1994) developed this analysis further in an analysis of the emergence of civil society and what he describes as its three rivals, the segmenting community of the traditional village, Marxism and Islam. The current widespread interest in civil society clearly emphasises the distinction between civil society and the state on the one hand, and civil society and the market economy on the other. It has, been appropriated, defined and championed by middle class intellectuals in three areas of the world. It has been used to define features of a world they were struggling to create. It became an important organising principle in people’s movements over the part two decades: in Eastern Europe, where the dominant state was the enemy, and in many countries within Asia and Latin America where authoritative military regimes with close links with national and international firms were the focus of opposition. From the wider ranging victories of these movements has emerged an activist concept of civil society as a sphere of freedom where people can co-operate and organise to pursue their interests as citizens, independently of state and market. The best manifestation of this meaning is in CITIZENS, the defining publication of the new international organisation CIVICUS, which calls itself World Alliance for Citizen Participation (de Olivera and Tandon, 1995). The focus of CITIZENS and the regional studies that it is built upon is organisations or movements of people formed to protest against tyranny, against environmental degradation, the exploitation of women and children and economic policies which appear to cause further immiseration for large parts of the worlds population. It also encompasses the various grassroots organisations, such as church base communities championed by Catholic proponents of liberation theology and credit unions and other co-operative arrangements for the management of common pool resources, all designed to build a strong set of self reliant communities which can interact on a more equal footing with for-profit organisations in a wider economy. There is little attention here to the public-benefit nonprofits that are at the centre of the nonprofit tradition. In the United States, a range of factors such as increasing crime, a huge growth in pre-nuptial births amongst young Afro-American women, the economic collapse of many regions, the seemingly 8 irreversible retreat of the state and the dominance of neo-classical economics has helped fuel the search for new intellectual traditions that might hold on to some old American values. This search has been manifested in movements such as communitarianism, which subtitles its main publication “Rights and Responsibilities”. Communitarianism is, in turn, tied to SASE, the Society for the Advancement of Social Economics, which brings together many social scientists dissatisfied with the dominant paradigm of neoclassical economics. These efforts are from the “moderate” left. From the right, a similar set of concerns generated talk of “tough love” and projects entitled “Active Compassion” (Marchetti, 1996). Other intellectual strands interweave with these concerns. One strand comprises work done by political scientists and anthropologists on the way society has handled the problem of the commons: that is, the problem posed for managing in a sustainable way nonexcludable or common pool resources, such as fish or forests. The problem is that unchecked, individual users would appear to have an incentive to exploit those resources leading to their eventual and probably rapid decline. To economists, the solution is to allocate property rights such as by giving individuals part of a forest or a pasture; to lawyers it is to use a strong state to regulate usage such as limits on the size of herds or of catches of fish. However, as Elinor Ostrom (1990) has so convincingly shown, a third solution, which requires neither state nor market and which is widely practiced, is for users to form and police their own co-operative agreement. This shows that “economic man” is capable of co-operative collective action and that state regulation is not necessary to enforce rationing. There is a long tradition in North American political science that is interested in the conditions that make and sustain an effective democratic polity or political system. As early as 1963, in Civic Culture, Gabriel Almond and Sidney Verba identified active membership in voluntary associations as being an important determinant of political confidence and a participative political culture (Almond and Verba, 1964). More recently, Verba, in a monumental study of participation in political activity in the United States, Voice and Equality, pointed to the central importance of involvement in voluntary associations, especially churches, as a determinant of who participates in politics and thus whose values and interests are registered in the political system. 9 Perhaps the most powerful boost to this “civil society” tradition in the United States has been given by the Harvard political scientist, Robert Putnam. Putnam has had two separate impacts. His study of regional government in Italy, Making Democracy Work, was first published in 1993. It provided a closely argued analysis of why regional governments, introduced into Italy in 1970, seemed to have succeeded in the northern parts of central Italy but to have languished in the south. He noted that this division closely corresponded to the division between areas of economic prosperity and areas of economic stagnation, but argued that underlying both these conditions was the presence or absence of a strong tradition of civic community going back to the middle ages. That is, those areas where regional government and the economy both prospered were those which had had a strong condition of voluntary associations: guilds, cultural societies, sports clubs and the like, for at least 600 years. These had drawn on and sustained a capacity for collective action independent of government which nonetheless strengthened both the polity and the market economy when drawn on by actors in each of these spheres. In developing this thinking, Putnam drew on a concept of social capital which had been giving a theoretical definition by James S. Coleman (one of Almond and Verba’s collaborators in the 1960s and 70s). For Coleman (1990), and Putnam, social capital was a resource that people drew on for collective public action and which in being drawn on also renewed itself. More recently, Putnam has achieved greater prominence in the United States for his claim that social capital is declining in that country. His measures of social capital include the declining preparedness of Americans to trust one another (as measured in the national opinion polls) but also in a decline in associational membership. To use the title of his famous paper: More Americans than ever are bowling, but more of them are “bowling alone”. In an important footnote, Putnam notes Salamon’s thesis that nonprofit associations are growing and disagrees. Putnam argues that Salamon’s evidence, for the United States at least, relies on a large number of new tax exempt organisations being formed and that this overlooks the number that have died. Putnam finds stronger evidence of associational decline “from the point of view of social connectiveness” (Putnam, 1995: n40). That is the crucial distinction. Salamon’s evidence hinges on IRS data which is better at recording organisational births rather than deaths and is not at all helpful for capturing anything about the vast 10 number of small purely volunteer associations, such as bowling clubs that are far more central than the larger nonprofits to reproducing social capital. Comparing civil society and nonprofit research So, what can we say about these various research traditions that have been lumped together here under the heading of civil society? How do they compare to the nonprofit research tradition? Civil society researchers are certainly concerned with what we have loosely called in this paper the third sector, but they focus their attention on a different set of organisations than does the nonprofit tradition. Civil society is interested in organisations that provide people opportunity to organise, to discover shared views and to advance those views, to provide facilities or services to be used by themselves or by others. It is focussed on organisations that would be classed as providing membership benefit rather than public benefit. So, to one of the central questions of this paper. Will civil society research add to and further enrich the tradition of nonprofit research? Will it cover the gaps and lead to the development of a more powerful theory of the third sector? Or are the two approaches really two separate paradigms, offering fundamentally incompatible accounts of the third sector? My answer is that it is too early to say, but there are reasons to believe that the latter possibility may be the case. I say this for several reasons. Most of the theory of nonprofit organisations has been developed by economists. Economics or the dominant neo-classical paradigm of economics is a relatively closed discipline. It is unlikely to accept insights from other disciplines or either to recognise their preoccupations as important. Civil society theory has developed from sociology and political science. These disciplines are more open and can incorporate parts of economic theory. So if any comprehensive theory is to develop, it will be by extending the currently far less well developed civil society theory than vice versa. How to the two traditions compare on several important points? 11 Both traditions evaluate third sector organisations differently. The nonprofit tradition sees third sector organisations as a special kind of firm. It evaluates the appropriateness and the effectiveness of nonprofit firms in particular industries by their responsiveness to environmental conditions and by their capacity to satisfy customers or clients. The contribution of the sector to the overall economy is measured by its employment size, by its level of expenditure and its contribution to GDP. By contrast, the civil society tradition evaluates third sector organisations by their capacity to encourage active participation, by their ability to build social capital. Measures for this are not yet well developed, but they are clearly different than the economic measures which are central to the nonprofit tradition. Both the nonprofit and the civil society traditions recognise and are interested in philanthropy and volunteering. For the nonprofit tradition, these are forms of behaviour that provide important resources for many nonprofit organisations. In its more mythical versions, it is these resources which make the nonprofit sector “independent”. Within the nonprofit tradition, there is a debate about the motivation for volunteering and giving: is it self interest or altruism? But nonprofit theory and most fundraising practice is built upon understanding volunteering and giving as self interested. This is understandable. Economic theory requires symmetry to any exchange. Within the civil society tradition there is little interest in philanthropy but a good deal in volunteering, or more importantly, membership. It is largely through active membership of associations (as opposed to simply belonging by paying a fee) that social capital is created. Membership overlaps but is not the same thing as volunteering. A good deal of membership activity would not count as volunteering under conventional descriptions of the latter term. For example: coaching a junior basketball team, being on the board of a social club, or fundraising for a resident action group would all count as volunteering and as membership activities, but playing a game of social cricket or competition bridge, showing a dog or a rose or singing in a church choir would not be classed as volunteering, although they are all important membership activities. And certain other volunteer activities, such as fundraising for a hospital or delivering meals-on-wheels would 12 generally not be considered a membership activity (although they would all appear to add to social capital). Organisational governance is evaluated differently in the two traditions. Nonprofit literature drawing on a certain amount of research would appear to argue that third sector organisations should adopt a corporate model of governance. A board should be relatively small and focussed on ensuring that the organisation pursues its mission with economy, innovation and effect. The organisation should be responsive to its consumers and should use the best TQM technologies, or some other byproduct of the quality movement to ensure that it is. It should acknowledge the interests of other stakeholders and seek ways to obtain their views, but it should involve none of these in the actual governance of the organisation. By contrast, the civil society tradition would seem to require that the governance of an organisation is democratic: it should be structured so as to advance the generation of social capital. This would appear to require that the board is large and representative of the organisation’s various stakeholders. As far as possible, services should aim to assist consumers to manage their own needs, to become active citizens rather than passive, albeit satisfied, consumers. In this perspective, much more importance is placed on process rather than outcome. Finally, the two traditions would appear to evaluate certain government policy prescriptions differently. To take one rather salient example, that of compulsory competitive tendering. This is the arrangement whereby governments, claiming to be purchasing certain health or community services on behalf of consumers, invite organisations to bid for contracts to provide these services. It seems to me that while there may be grounds to object to the methods many governments use (particularly their abuse of their monopsony position by the use of fixed price tenders), from the point of nonprofit theory, there is no reason to object to this practice. By contrast, from the perspective of civil society such a policy could be coherently condemned as diminishing a capacity to co-operate between organisations and between organisations and government (the partnership that many in the third sector speak of). It could also be seen to favour organisational governance of the corporate model rather than the “messy” democratic approach of civil society. Finally, and relatedly, it could be argued that such an approach focuses on service 13 outcomes at the cost of reducing social capital. The argument here would be that many activities rightly supported by government (and indeed many activities pursued directly by government itself) have a mixture of service provision and social capital building outcomes. To exclusively favour one is to diminish the other. One of the challenges for managers and governors of third sector organisations is to obtain the optimum mix of these two outcomes. Conclusion It can be seen that there are many differences between the nonprofit way and the civil society way of looking at the third sector. The nonprofit tradition is far better developed and far more coherent than is the civil society tradition. Yet the relative coherence of the nonprofit tradition is at the expense of excluding and marginalising some parts of the third sector. It may be that that is the consequence of its origins in the problems confronted by American foundations, and of the centrality of economics to its body of theory. In the end, it may be that the far messier and far less well developed civil society tradition will be better able to assimilate large parts of nonprofit theory and create a relatively comprehensive third sector theory. 14 References Almond, G. and Verba, S. (1963) The Civic Culture: Political Attitudes and Democracy in Five Nations. Princeton, Princeton University Press. Arato, A. (1978) “Civil Society Against the State: Poland 1980-81.” Telos No 47, 523-47. Coleman, J.S. (1988) “Social Capital in the Creation of Human Capital.” Sociology, 94 Supplement, S94-S120. American Journal of de Oliviera, M.P. and Tandon, R. (eds) (1994) Citizens. Strengthening Global Civil Society. 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Civic Voluntarism in Americal Politics. Cambridge, Ma. Harvard University Press. Weisbrod, B. (1986) “Toward a Theory of the Voluntary Nonprofit Sector in a Three Sector Economy.” S. Rose-Ackeman (ed), The Economy of Nonprofit Institutions. Studies in Structure and Policy. New York, Oxford University Press. 16
Readings: Lyons (pdf or handout), Smith (course pack). Recommended: Edwards (link) or Schmid (link). Some questions for the journal: 1. Does it make sense to talk about 'grassroots' organizations as a distinct subset of nonprofit organizations? How is it useful? What are some of the challenges? 2. How useful is the distinction between Civil Society and Nonprofit Sector (or voluntary sector, or 'third' sector)? 3. How have nonprofit / civil society organizations been changing to be either more or less similar to profit oriented private organizations or government? 4. Edwards argues that if we look at civil society as a 'part' of society (nonprofit organizations), then we lose the original and still useful meaning of the concept -- civil society as a 'kind' of society identified wtih the ideals of political equality and peaceful co-existence. How important is it to think of civil society as 'the good society' or 'the public sphere' - a space in which we can deliberate about things important to all of society? Edwards link: http://infed.org/mobi/civil-society/ Schmid link: http://www.tandfonline.com/doi/abs/10.1300/J147v28n03_01

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