Civil Society and the Management Challenges of NGOs or Not-For-profit Organizations

8/8/2019 Civil Society and the Management Challenges of NGOs or Not-For-profit Organizations

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AN OUTLIENE OF CIVILSOCEITY ANDMANGEMENT

CHALLENGES OF NGOs ORNOT-FOR-PROFITORGANIZATIONS

Amjad Nazeer4/2/2010



Amjad Nazeer Management Challenges of NGOs2

AN OUTLIENE OF CIVIL SOCEITY AND

MANGEMENT CHALLENGES OF NGOs OR NOT-FOR-PROFIT ORGANIZATIONS

Abstract:

While stepping into its middle ages the nonprofit-sector is struggling with and discovering itsown management system as do the experts and academicians. The questions are, can itlearn from public and private sector management models? If yes! How far? If not! What is

the way out then? What type of management is already in place, if any? Nevertheless,delving into the management debate is difficult without having an idea of civil society first, of which nonprofits are the strategic constituent. That is why the article will begin drawing anoutline of civil society. It will then proceed to the concept of, but mainly to the managementapproach and challenges of the non-profits. Management dilemma and complications thatcontemporary not-for-profit sector faces with, is the main theme of this article. Along with

political, economic and ethical inevitabilities, internal and external tensions of the sector aregiven a due consideration. Quandaries caused by the sources of revenue, autonomy and the

complex relation with state and market are also seen through. A co-relation between thegoverning board, accountability and performance-measurement is also explained.

Describing the inapplicability of the bureaucratic and the scientific management theory, thearticle proceeds to the management approaches of the not-for-profits, though heavily relyingupon H.K. Anheier’s understanding and analysis of the not-for-profit management. Although

it is difficult to speak about adequacy and inadequacy of a particular approach but certainideas and insights are shared for the guidance of policy makers and managers in the sector.

Precisely, it is intended to demonstrate that not-for-profits’ management is widely differentfrom both public and private sector. In reality, it is far more complicated and multifarious than

is usually perceived to be. It will demonstrate that a nonprofit-organization is actually aconglomerate of more than one organizations or a complex array of multiple components,

hence calling forth a complicated management system. The methodology used here isdescriptive and analytical rather than prescriptive.

Introduction:

It is weird to speak about management without knowing the kind of organizations subject toour consideration. Nonprofits are civil society organizations but not civil society in exclusion.Systematic study of civil society is no more than two-and-half decades old. Therefore,theories of its nature, rai-son-de-tre and impact on state and society are quite novice. Thephenomenon, however, is gradually taking shape and freeing itself from preordainedconventional economic and welfare approaches. The growth of a sustained and vibrant civilsociety cannot be attributed to a single political, cultural or economic factor or to a historicalera. It is the outcome of decades' long process even centuries (Anheier 2005, 35). Civilsociety, neither as public sphere nor as part of a society , rather as a kind of society (Edwards 2004, 10-40) is the framework of present analysis.

Understanding Civil Society:

While endeavouring for a better understanding, a lot has been said and written about civilsociety groups and organizations. One of the major difficulties is caused by the mindboggling variety of the organizations we find under the rubric of civil society. They are as




varied in terms of structure, scope, objectives, staff and source of funding as they are inidentity and nomenclature i.e. non-governmental, non-profits and philanthropicorganizations, voluntary, associational or independent sector, third sector, social economy,charities, self-help groups and possibly some other recognitions too, each having its ownconceptual and practical implications (Anheier 2005, 38). In this context, it is difficult to comewith a universally accepted definition. However, one can find a functional agreement on itsdefining features amongst experts and practitioners saying that ‘civil society is an arena of voluntary action, self-governance and non-profiteering, where people come together for theadvancement of common interests. Driven by higher ethical values, the sphere liessomewhere between family, state and the market which is usually populated with charities,non-government organizations, women’s and self-help groups, religious and ideologicalassociations, trade unions, advocacy alliances and social movements (CCS, 2010, Civicus2008, 3-4).

Civicus employed 74 indicators for measuring multiple aspects of civil society, further

grouped into 25 sub-dimensions and broadly classified into 4 dimensions i.e. environment,structure, values and impact; each broken down into several other factors such as society,economy, politics, culture, participation, democracy, rights and freedoms, gender,transparency, public policy, social interest, information etc to evaluate the state or strength of civil society (Civicus, CSI 2008, 6). Precisely, civil society is making substantial contributionsin the area of health (14%), education (23%), social services (19%), environment (2%),culture (19%), development (6%) and civic advocacy (4%) just in the 32 developed anddeveloping countries that were surveyed. The sector accounts for over $1 trillion economy,approximately employing 30 million (7%) of the workforce ranging from 12.5% to 0.4%population. Out of which volunteers make a 5% of the ratio. Overall contribution approaches

to 37.2% and 38.5% in the transitional and developing countries figuring up to 38% in all thecountries studied (Salmon & Wojciech et-al 2000, 23).

Corresponding to the richness and diversity of the specie, there are several sector-specificdefinitions too that reflect upon its legal, economic and structural aspects. In the simplestterms nonprofits are defined as, “....the institutions that are legal or social entities created for the purpose of producing goods and services whose status does not permit them to be asource of income, profit or other financial gains for the units that establish, control or financethem. In practice their productive activities are bound to generate either surpluses or deficitsbut any surpluses that they happen to make cannot be appropriated by other institutional units” (UN Hand-Book on Nonprofits 2003, 12) .

Social capital, which is unlikely to develop without an associational fabric, provides the basisfor democracy. Democracy is almost impossible to exist and sustain without a vibrant civilsociety. The void created by excessive individualism in a liberal democratic and capitalisticsociety is abridged by the social capital, be it the product of Kantian rational devils’ long-term self-interest. Civil society serves as a school of citizenship that underpins mutual cooperationand support in public life. On the other hand social capital is the outcome of religious ethicsin Hindu, Islamic and Buddhist societies. Though social capital is difficult to be created butnon-profits make substantial contribution under favourable circumstances (Fukuyama 2001,11, 16, Gellner 1994 & de-Tocqueville 1963 as cited in Fukuyama 2001).




The state (public agencies)

Formal Nonprofit

Informal for profit

Public

Private

The Community (Households, families) The Market (Private firms)

(Source. Evers & Laville 2004 )

Nonprofits have marked their significance by performing three main functions: provision of basic amenities that governments are unable either or unwilling to extend for catering theneeds of majoritarian constituency in a heterogeneous society. Minorities and sociallymarginalized communities are often unattended or under-served. Market would yield basiccommodities to those who can afford to pay at a competitive price. Nonprofits instead servethe purpose empathetically and innovatively imbued with ideological, cultural and humanvalues. Advocating and influencing government policies in favour of the poor and powerless;exposing corporate greed and exploitation and stewarding natural resources essential for thesustenance of life and livelihood is another strategic role that nonprofits fulfil. Pluralism,economy and redistribution are added values - indispensable for democracy and social

justice - that nonprofits engender. They constitute a kind of organizational infrastructure for social activism and basic services usually employed to achieve a larger common good.

Welfare state model emerging in the aftermath of great depression (1930s) and World War II(1940s) rolled-back in 1980s and 1990s. Extended states are unmanageable, inefficient andunnecessarily intrusive, were the arguments against. The trend continues to date. Recenterosion of the state carved out spaces for nonprofit action and governments are increasinglyassuming voluntary sector as partners in delivering services (Anheier 2005, 30-31). Diversityand development of civil society and nonprofits depend on socio-cultural, political andeconomic circumstances of a state and society. Several factors account for the accreditedimportance of nonprofits like shrinking role of the state, wider acceptability of democracy,freedom of expression and association, cross-border activism and specially the aboundinginfluence of communication technology (Anheier, 2005, 14, 28, 174-175).

Figure2, Civil Society Diamond, Source: CSI, Civicus Mati, M 2009, p.6

Third

Association

3 Structure

3

Values Environment

Impact

2

1




Forms and Complexities of Nonprofits:

Although similarities between public and private organizations and the nonprofits cannot bedenied but distinctions and dissimilarities are substantive enough to impart entirely aseparate character to nonprofits. Democratic governments are held accountable to their electorates by being voted in or out every four to five years. Public firms are subject tomarket forces and are answerable to the owners and shareholders. People’s participation ingovernment is natural for citizens cannot avoid it being voters, tax-payee and depending onfor public services and law and order. In private-sector people participate following their desire and affordability but in the field of nonprofits, it is purely voluntary. Public sector isfinanced by government’s taxing authority. In private sector owners and shareholders investto earn and multiply profit. Nonprofits rely on philanthropic donations, grants and gifts,voluntary and paid labour, dues and users-fees, and contracts and endowment-building.Revenue optimization without profit-maximization, labour-intensiveness, accountability to arange of stakeholders (members, users, volunteers, staff and state), uncertainty, goal-

orientation and locality between public and private push-and-pull factors makes non-profits’structure, governance and management multifaceted and complicated. Upshot, nonprofitsare essentially different and differently organized both from public and private firms (Anheier 2005, 181-195, 229).

Complicated relationship of the not-for-profits with the state further adds to its complexity. Allthree i.e. complementary, supplementary and adversarial relationships simultaneously existbetween state and nonprofits depending on the times, situation, country and the context. Inother words a kind of cooperative, complementary, co-optive and confrontational relationshipruns at a time depending on needs and priorities of the two. (Young 2000, Najam 2000 as

cited in Anheier 2005, 283-285). What David Billis (1993, 160-165) delineates as anambiguous arena between the unambiguous personal, associational and bureaucraticworlds characterised by formality and informality and hybridness of identity, is also adepiction of nonprofits’ complicated construction.

The peculiar quality of non-profiteering, non-distributiveness and absence of electorate,makes their performance assessment highly convoluted. No surprise that non-profits areexpected to measure and report their effectiveness and impact to their supporters, donors,board of governors, members and the communities they work for. They employ methods likegoal-based, outcome-based and process-based evaluation along with day-to-day monitoringto demonstrate their performance. Benchmarking, scorecard-balancing and dashboard-scaling are some of the performance measures, originally popular with private sector, butnow increasingly applied by the not-for-profits too. This is in response to the growingdemands of nonprofits’ accountability, competitiveness and building public-trust (Anheier 2005, 196-201). Ideals like social justice, honesty and human dignity are always difficult toevaluate. The value-dimension causes both organizational complication and evaluation-challenges to the nonprofits (Anheier 2005, 204).

Humanitarian organizations experience conflict between human-rights principles and local-cultural norms and preferences. Collaborating or not with undemocratic or authoritariangovernments, ethical abrasion with a source-of-funding and constant demands to addressstructural and institutional issues is another intricacy that nonprofits go through, each havingits implications for organizational mandate and management practices. Most of the INGOs




situated in the west, for instance, operate in the rest of the world, whose culture and valuesare largely different. In the face of civil war, tribal feuds and oppressive governments, peoplewant them to work on preventing the very evils than concentrating on relief, rehabilitationand resettlement of the affectees. Avoiding conflict with a government itself causes conflictwithin the organizational mind and community’s perceptions. Put succinctly, nonprofits fightwith teething troubles inwardly and outwardly (Bell & Cranes 2004, 301-329).

Classical Bureaucratic Management and Nonprofits:

Since the last decades of the 19 th century, down to the end of 20 th century there has been aconflict between two forms of management theory i.e. the mechanical-bureaucratic school that assumes organizations to be machines created for enhanced productivity and problem-solving; and the people-oriented biological school advocating for accommodation, trust,autonomy and openness (Morgan 1989, 41-43). Max Weber is one of the pioneers of theformer, i.e. the bureaucratic form of management. It is a form of management best suited tofor production-based profit-driven-organizations working in a reutilized task-environment. It is

where specialized workers, selected on the basis of technical competence, perform certaintasks without any powers to appropriate resources, save a fixed salary. Administrativelydecisions are taken under stipulated rules and policy guidelines; performance and bestpractices are measured against productivity and relationships are hierarchical, predisposedto authority with asymmetrical division of labour. Profit-motive and profit-maximization driveany such organization distributing its proceeds among the owners/shareholders. Obviously,the bureaucratic management is inappropriate for not-for-profit organizations andorganizations working for a mission (Anheier 2005, 142-143).

Bureaucratic order of the organizations was, and by and large still is, accepted as the mostefficient system for industrial production. Borrowing the model from Max Weber (1910s) andHenri Fayol (1916), F.W. Taylor (1967) perfected it to the ideals of scientific-management and workplace-optimization for maximum possible output with minimum input in a giventimeframe. Bigger the salary - greater the productivity, irrespective of mechanical task-fragmentation, authoritative behaviour and tense human relations that workers do not careabout, was the key assumption behind his conception of scientific management In thissector, authority is centralized and is distributed according to one’s position or expertise.Tasks and responsibilities are demarcated and specialized. Rules and procedures govern allthe functions and relationships. System and supervisors exercise direct control. Socialrelations are impersonal and instrumental. Recruitment is determined by papers,qualifications and experience. Incentives are extrinsic such as salary, increments andcareer-advancement. Efficiency and success is rewarded by high pay differentials and

upward movement in the hierarchical ladder (as cited in Anheier 2005, 144).

In the latter ones authority emanates from the centre but is adequately shared by all themembers. Rules and procedures govern to a limited degree. Supervision is exercisedthrough interpersonal dynamics in a relatively homogenous environment. Relationships arepersonal, comprehensive and valuable in themselves. Recruitment is based on sharedideals, interests and personalities. Incentives are intrinsic say seeking ideals and enjoyingwork. Rewards take the form of limited pay differentials but increased respect. Tasks andresponsibilities are generalized, rotated and shared (Zimmeck, M. 2000, 16-17). ‘Rational’,‘strategic’ and ‘optimized’ management lead by Max Weber, Henry Fayol, W.B Taylor andseveral of their followers dominated organizational theory for over a century but failed indealing with the organizations not vying for profit. The bureaucratic management model falls




in conflict with value-driven social-service-organizations that are largely collectivist anddemocratic in character

Management Complications and Challenges of Nonprofits: Role of Structure,Leadership and Values:

Coupled with civil society theorization, nonprofits’ management theories are also evolving.Like structure, origin and functions, its’ management typology is also on its way to beanalysed and understand properly. For being voluntary, philanthropic, and value-driven,management in this sector remained an abhorring idea for long, in favour of informality andflatness. But its’ ever growing size, increased social obligations and declining governmentalsupport compelled it to assume one or another form of management. Beyond concerns of cost-minimization and financial controls, nonprofits are adopting innovative and enablingmanagement style (Anheier 2000, 2-6, 12). It might hold a few similarities with public andprivate sector but nonprofits’ management is far more complex and multidimensional,

henceforth looking for a different approach and managerial practices.

Broadly Pearce and Robinson (1998) describe management as, ‘the process of optimizing human, material and financial contributions for the achievement of organizational goals’. Post 1980s management was heavily influenced by the ideas of equity and marketefficiency. Nonprofits were not immune from the trend. But that change could only serve if nonprofits are assumed to be an extension of the public-sector or for-profits in disguise. For being unique, they need a management model of their own what they are gradually gettingat. There are number of structural distinctions and entirely a different vision and values thatshape them separately and set them apart. Normatively all management approaches are

context and environment specific, so do the nonprofits. Given their componential structuring,federative alignments, multiplicity of constituency and mission-determination acomprehensive and multifaceted management approach suits the sector (Anheier 2005,240-244 ).

Gomez and Zimmerman (as cited in Anheier 2005, 245) present a good beginning tocomprehend nonprofits’ management. The key to nonprofit management, they believe, is tounderstand the role of multiple bottom-lines, normative-orientation and informational-adequacy of the nonprofits conjoined with operative necessities of personnel, accountingand service delivery. To control, communicate and integrate multiple components, managersusually have a series of choices to make or not to make. Both centralized and decentralisedstructures and functions converge in the nonprofits for variant wants and purposes. Saypolicy-demands and positions need to be centralized while local needs are better servedbeing decentralized. Multiple management models, therefore, are concurrently active andeffective in nonprofits each suitable to the component and bottom-line it serves (Anheier 2005, 244-246).

Leadership and the exercise of power are most problematic features of public and privateorganizations but far more challenging in not-for-profit sector where the exercise of power ismore than getting a job done. It is not productivity, efficiency or a public office but loyalty toideology and commitment that imparts them a profound sense of success (Anheier 2005,160). Values are deeply embedded in the nonprofits’ culture, manifested acrossorganizational objectives, activities and person to person relationship. Unlike the owners-




board-management triangle, mainly concerned with profit in the business firms, governanceand management in the nonprofits is predominantly concerned with organizations mission.Decision making, financial control and accountability are distributed among several groupsand interestingly board has a share of it rather than having all authority (Billis 1993, 157).Performance measurement is easier in public agencies and private firms against very clear bottom-lines i.e. profit and political power. Difficult it becomes in the non-profits as they havetoo many bottom-lines contrary to the conventional view of having none. It is the mission andstakeholders’ expectations what a nonprofit board considers for performance assessment(Anheier 2005, 226-7).

The most effective management framework takes the sector’s multidimensionality intoaccount i.e. structure-hierarchy dimension, identity-orientation dimension, formality-taskdimension and longevity-performance dimension. The organizational life (seasoned or beginner), size (large or small sometimes analogy made with tent or palace), culture(technocratic or social), and form (coalition, network or professionally organized), direction

(outward or inward) and lastly interconnectivity of its multiple components. In other wordsmultiplicity is the signature of non-profits. Therefore a management model corresponding toits various components, culture, mission, values, operating-procedures, activities and theoutcomes is most effective for nonprofits. And this is the multiple management model thatfunctions effectively in this sector without causing inertia, rigidity and inefficiency (Anheier 2005, 244-246).

People vs. Task orient Permanent vs. Temporary

Internal vs. External Monolithic vs. Polycentric

Source: Anheier 2005, p.252

(Source: Gomez & Zimmerman as cited in Anheier 2005, p.252)

Complications Arising from Modern Management:

Role of volunteers is the cornerstone of voluntary sector. If, all of the volunteers stop workingall at once, the working of the whole sector will come to a halt. However managingvolunteers, of all abilities and orientation, complicates nonprofits’ management further.Volunteerism is becoming more and more problematic in the sector. Formalization,professionalization, equal-opportunity-employment-principle, accountability, freeing itself form risk and ensure funding are few of the reasons. On the other hand, volunteerism, theroot-canal of nonprofit functioning, is becoming increasingly frustrated. Inability to employtheir knowledge and skills, friction with professional staff, lower status, distrust andregulatory burden are discouraging volunteerism. Interestingly such complaints are

emanating from modern management practices that nonprofits are gradually adopting(Zimmeck 2001, 7-12).

I d e n t i t y v s c o n t e x t

I d e n t i t y v s c o n t e x t

F l a t v s

. s t e e p

e f f i c i e n c y v s e

f f e c t i v e n e

Net

work

Techno

Culture

HierarchicalExternal

Organizat.

Palace

Soci

Cult

Int.

org

Tent




‘Formalization’ and ‘professionalization’ perhaps resolve some of the problems but generateseveral others. For example most of the national campaigning organizations are losing touchwith their local groups that once generated ideas and issues for national organizationssustainability. Traditional bond between the national and local organizations is gettingthinner and weaker. Both social services and campaigning is progressively becomingprofessionalized and specialized in functions. Like volunteerism, local-support-base is alsowaning away. Increased funding, professionalism and trained-staff are shifting powerstowards the centre. Traditionally, local campaigns were driven by people’s emotional reaction for righting a perceived wrong . Balance is now shifting towards more professionaland resourceful national organizations supposed to be planned, analytical, strategic, rationaland articulate. But overall organizational success is not possible without a stronger andstrategic linkage between grassroot and the national campaigning organizations. Thegrowing split in turn will dilute their public mandate. Bridging the gap between emotion and strategy also calls for an adequate managerial response (Ritchie, D. 2007, 5, 11, 27-33).

Conclusion:Civil society cum nonprofits is a complex phenomenon. It is loosely defined as a spatialentity between state, family and the market. Academicians and experts are increasinglygetting interested to understand the nature and role of civil society and nonprofits. Nonprofitorganizations are far more diversified, complicated and challenging than they are usuallyperceived to be. Nonprofits are a strategic and significant component of civil society. Theyare in-fact more than one organizations or a complex integration of multiple componentseach with a different bottom-line. Nonprofits are playing several vital roles both in thedeveloped and developing societies. Their inevitability is now globally acknowledged both interms of service delivery and expressive functions especially in the wake of state withdrawaland expanding market. Their management structure and adequate approaches are ascomplicated as the organizations themselves. Classical bureaucratic management theoriesand models fail non-profits in practice. Dynamic, multidimensional and proactiveorganizations as nonprofits are, need proactive and multidimensional management.Therefore a multidimensional model of management is the best model that is most suitablefor non-profits and is mostly in practice with or without the knowledge of its practitioners.William Wallace, the former professor of a business school once said that “public and privatemanagement are alike in all unimportant aspects (Allison, 1980, 27-38) ” . Likewise we cansay that not-for-profit, for-profit and public managements are similar except in all importantmatters. Their peculiarity composition is established. Therefore there management is

peculiarly complicated.

******




References:

1. Books and Articles :

Anheier, Hemult K. January 2000. Managing non-profit organizations: Towards a newapproach, Civil Society Working Paper, London School of Economics, Centre for CivilSociety.

Anheier, Hemult K. 2005. Nonprofit organizations: Theory, Management, Policy, Routledgepress, Canada and USA.

Bell, Danial A. and Cranes, Joseph H. 2004. The ethical dilemma of international humanrights and humanitarian NGOs: Reflections on a dialogue between practitioners andtheorists, Human Rights Quarterly, 26, 300-329 John Hopkins University Press.

Fukuyama, Francis. 2001. Social capital, civil society and development, Third WorldQuarterly, Vol 22, No 1, pp7-20.

Ritchie, Donald. October 2007. Bridging the gap between emotion and strategy: a study of change between national campaigning organizations and their networks or local groups,Voluntary sector working paper No. 5, Centre for Civil Society, London School of Economics.

Salmon, L.M. Wojciech, S. & Anheier, H.K. December 2000. Social origins of Civil Society:An overview, John Hopkins Centre for Civil Society Studies, Working Papers of the JohnHopkins comparative Nonprofit Sector Project, Baltimore, USA.

Zimmeck, Meta. September 2001.The right stuff: New ways of thinking about managing

volunteers, Institute for Volunteering Research, London.Morgan, G. 1989. Creative organization theory: A resource book, Sage publications, Sage.

2. Web Sources:

Centre for Civil Society, London School of Economics, March 1, 2010. What is civil society,http://www.lse.ac.uk/collections/CCS/what_is_civil_society.htm , hit on March 23, 2010,17.56hrs.

Edwards, Michael. 2004. Civil society, Cambridge: Polity, also cited in

http://www.infed.org/association/civil_society.htm#public_sphere , Site hit on March 23,2010, 16/43 hrs

Fayol, Henri. 14 Principles of Management,http://www.12manage.com/methods_fayol_14_principles_of_management.html , Site hit on March 25, 2010, 16.28hrs.

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http://www.lse.ac.uk/collections/CCS/what_is_civil_society.htm


http://www.infed.org/association/civil_society.htm#public_sphere

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Civil Society and the Management Challenges of NGOs or Not-For-profit Organizations

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