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University of North Florida

Master of Public Administration program

PAD 6164 Nonprofit Stakeholder Relations, Summer 2019

Government, public, media, and partners & allies Public manager of the week

Photo credit

Rick Scott

Nonprofit stakeholder

Lecture goals: discuss the role of government, the public and the media, and partners & allies as

nonprofit stakeholders.

Dumont and I discuss government as follows:

Government is a key, omnibus non-profit stakeholder for a number of the “for what”

dimensions of accountability discussed below (Van Til 1994: 52—55). Accountability to

government is made especially complex by the myriad governments to whom non-profits

need account, both within countries (Irvin 2005: 161—78) and across borders (Atack 1999;

Therien 1991). With devolution, government agencies are increasingly becoming a key non-

profit financial stakeholder, both as contracting authority (Howlett 2000; Kearns 1994;

Phillips and Levasseur 2004) and through the effect of tax policies on donations (Brooks

2000; Day and Devlin 1996). The judicial branch of government is also the key stakeholder

in terms of the legal accountability discussed below (see also Kearns 1994: 68—74; Romzek

and Dubnick 1987: 228—29). Even in the absence of contractual relationships, government

is a non-profit stakeholder as regulator (Boase 1982; Kearns 1994: 68—74), while Holland

notes that for the policy advocacy non-profit, legislatures are often a key stakeholder as the

target of much advocacy work (2002: 417). The Voluntary Sector Initiative reflects another

important dimension of the relationship between government and non-profit organizations,

because the VSI “was a unique undertaking between the government of Canada and the

voluntary sector to enhance their relationship and strengthen the sector’s capacity” (Canada,

Department of Human Resources and Social Development, Community Development and

Partnership Directorate, Voluntary Sector Initiative 2009).

The central idea behind the concept of government as nonprofit stakeholder should be pretty

obvious, at some level: think IRS and laws. Contracting has also, obviously, made government a

major stakeholder of many nonprofits. Not surprisingly, these two ‘stakes’ are the focus of two

of our readings this week. A way to look more broadly at the government/NP relationship might

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be to adapt the Dumont/Candler framework and apply it to different types of NPOs, as shown in

Figure 5 in the Appendix (p. 22). The idea here is to think about which types of NPO need to be

accountable to government “For What” and, we might, add: why? I’ve offered my suggestions.

Any comments?

More general notes on government! Especially in an MPA program (or a Graduate Certificate

in Nonprofit Management located in an MPA program), some broader discussion of the context

of government in the US seems appropriate.

Size of government. Government in the US is (hold on to your hats if you are of a libertarian

bent) relatively small, if you compare us to other, actually existing human societies, rather than

some sort of ideological ideal. This is reflected in Table 1, which adds other indicators from

those in Table 1 in our week 1.

Table 1

Government, markets and civil society compared

Economic

freedom

Size of

government

Regulation Gov’t1

% GDP

Civil

liberties

Civic

engagement

G7+

US 7.96 7.13 7.89 16 1 60

Australia 7.90 6.80 8.24 17 1 59

Canada 7.95 6.54 8.30 19 1 54

France 7.32 5.43 7.01 23 1 31

Germany 7.46 5.64 6.25 18 1 43

Italy 6.90 5.71 6.54 21 1 26

Japan 7.46 6.18 7.73 18 2 26

Sweden 7.24 3.61 7.24 26 1 39

UK 7.81 6.02 7.89 22 1 57

BRICs

Brazil 6.19 6.7 5.1 20 2 29

China 6.43 4.5 6.0 11 6 21

India 6.40 6.7 6.5 12 3 28

Russia 6.55 6.8 6.1 18 5 22

Global

median

6.85

6.39

6.87

17

3.4

32.1 Note: 1 -- Government final consumption, as % GDP.

Sources: The first three columns are from the Fraser Institute and Cato Institute’s 2011 Economic Freedom of the

World Report. The data is a 1-10 scale, with 10 equal to more economic freedom (less government ‘meddling’).

The final column is from the World Bank’s World Development Report 2011, pages 350-1. Civil freedom:

Freedom House, Freedom in the World Report 2012. The score is a 1-7 scale, with 1 = free, 7 not free. Civic

engagement: Gallup. The score is a 0-100 index, with higher numbers indicating greater civic engagement.

The table shows that on the eve of the ‘Great Recession’, total government spending in the US

was relatively low, the overall size of government relatively small, regulation relatively light,

and so economic freedom in the U S of A among the highest in the world. Good comparative

data on the relationship of government and civil society is a bit harder to come by, but the last

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two columns in Table 1 provide some idea. The US is widely regarded as having a comparably

robust ‘third’ (non-market and non-government) sector, and this data supports that. That we

have the best possible civil liberties score is unremarkable, as we share this with about fifty

countries in the world today. The civic engagement indicator will be elaborated on later in this

class, but note that this high score is due in large part to our providing many social and human

services in the nonprofit sector, rather than directly by government.

Government as stakeholder

Key arenas. Grønbjerg and Salamon especially identify four key “arenas in which government

and nonprofit organizations interact” (p. 551).

1. Government funding of NPOs

2. Government tax policy relating to NPOs

3. Government regulation of NPOs, and

a. Including advocacy, with positive (preventing conflict of interest) and negative

(quieting dissent) implications.

4. Government policy in specific NPO interest areas.

Complexity. Not surprisingly in a country with about 89,000 government units, and perhaps

2,000,000 NPOs, government-nonprofit relations are complex.

Government generally has the upper hand: it has money, makes and enforces the law, is

more stable (has a generally steady revenue stream), and in all localities in the US, there is a

coherent government actor.

By this I mean that while there are 2,000,000 NPOs in the US, there is one federal

government. While there are surely 10,000s of NPOs in Florida, there is one state

government; and while there are hundreds of NPOs in Jacksonville, there is one city

government. Government can organize and act coherently more easily than can ‘the

nonprofit sector’.

A nice illustration of this occurred early in 2015 (22 Jan -- click link):

Government = COJ, and then Mayor Alvin Brown.

Who speaks for NPOs? = Rena Coughlin of the Nonprofit Center, Sherry Magill of

the Jesse Ball Dupont Fund, and Ju’Coby Pittman of Clara White Mission.

NPOs incoherent. So from the previous points: while ‘government’ can sit down across a

table from the nonprofit sector, the nonprofit sector can’t provide an equally coherent voice.

Forward Together (into oblivion?). Another nice illustration of this was ironically

provided by Grønbjerg and Salamon, with their reference to ‘Forward Together’, and its

2009 declaration. “Ultimately endorsed by close to 500 nonprofit leaders representing at

least 100,000 nonprofit organizations across the country…” (p. 579). A link was

provided in the endnote (#79). The link is now dead, though I did eventually manage to

find it (though for such a grandiose declaration, it took some searching). There are ten

pages of signatories, including such nonprofit leaders as

Tessa Young, Database Administrator, Japan Society;

Danya Pastuszek, MBA Candidate, May 2009, New York University;

Barbara L. Hug, President, Iowa Genealogical Society;

Peter Edelman, Professor of Law, Georgetown Law Center; and

Elaine Butler, Site Manager, Philip Foster Farm National Historic Site.

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Of what might be considered local leaders of the Jacksonville nonprofit community, Rena

Coughlin is listed. The other plausible ‘leaders representing’ the Jacksonville nonprofit

community of the era – Connie Hodges, Nina Waters, Ju’Coby Pittman -- are not listed.

Challenges.

“…retrenchment and marketization of government funding,

Key here: shifting some funding from direct grants to the NPO, to consumer subsidies

to clients, in an attempt to use markets to maximize NPO accountability to clients.

Performance measurement (p. 562-3).

“expansion of the types of organizations eligible to compete for this funding,”

With ‘faith-based’ agencies, first in the GW Bush administration’s Office of Faith-

Based and Community Initiatives, continued under President Obama’s Office of

Faith-Based and Neighborhood Partnerships. A bit over a year into office President

Trump announced a continuation, but other than the authorizing Executive Order, I

can’t find it on the White House website.

“further devolution of government decision-making to the fifty states,

“narrowing of the tax advantages nonprofits have available,”

In part this is due to for-profit firms complaining that tax exempt status gives NP

providers an ‘unfair advantage’.

...because, you know, nonprofits care about clients rather than shareholders, and the

whole point of providing client-based social services is to maximize profit for

shareholders? Yes, sarcasm.

“expanded local efforts to capture revenues from nonprofits,”

This is partly due to the vast landholdings of many urban NPOs (think universities,

hospitals, churches), and the impact of tax exempt status on communities that rely on

property tax for public revenues (an example), especially when it is difficult to

discern the public benefit of the NPO.

“tightening of government regulation, and

“risks to core mission objectives as a result of pressures to lower the unit cost of

services” (p. 549).

Though it is hard for me to see how the mission can be put at risk as a result of

achievement of that mission at lower cost. All else equal, if you can achieve the

mission at lower cost, you can achieve more mission!

Legal accountability.

Hopkins and Gross (2010

– the Jossey-Bass book)

discuss the legal

accountability framework

of the nonprofit sector, to

its government

stakeholders.

The concept of the

nonprofit organization:

I’m sure this has been/will be discussed at length in PAD6142, but for- and non-profit

differences are presented in Table 2, above right.

Table 2

Business/ nonprofit differences

For profit firm Nonprofit firm

Stockholders hold equity Equity held in trust by

directors/executives

Operated for economic benefit

of owners

Operated in pursuit of a

mission

Profits are passed through to

owners

Not permitted to distribute

surplus revenue to directors

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Sources of nonprofit law. Federal (Tax law, Antitrust law, Consumer protection, Health, labor,

postal, securities, and other), along with State corporation and fundraising law.

Tax exempt status. All NPOs are not tax exempt! This is a matter of law, and tax-exempt status

needs to be recognized by the IRS. Tax exempt status is restricted to organizations doing some

plausible public good, and (wait for it) political organizations are not eligible (click here).

Tax exempt organizations: legal basics

Primary purpose, and organizational tests – “the primary purpose of an organization

determines (in part) whether it can qualify as a tax-exempt organization” (Hopkins and

Gross, p. 47). Duh?

Operational test, ‘private inurement’ and private benefit doctrine – walk the walk:

“…fundamental requirements are advancement of one or more exempt purposes, and

avoidance of private inurement, private benefit, substantial legislative activity, and political

campaign activity” (p. 48, my emphasis). As well, financial transactions between the

organization and staff/board must “be tested against a standard of reasonableness’ (click for

a current discussion), and the organization does, indeed, have to serve a public, and not itself.

Commensurate test – more walk the walk: “whether a charitable organization is maintaining

program activities that are commensurate in scope with its financial resources” (p. 51).

Free Wesleyan Church of Tonga, Sydney, Australia: bad financial plan.

The Phoenix Foundation: no business plan.

Governance!!!

Now we’re getting to the interesting stuff. For starters:

“The body of law applicable to the governance of a tax-exempt organization is state, not

federal, law. The nature of the governance of a nonprofit, exempt organization depends

mainly on the form of the entity. The state act governing the creation and operation of a

nonprofit entity” will address NPO governance (Hopkins and Gross, p. 56).

Basics of board governance. Boards govern: fantabulous! Sounds good: these are the guardians

of the key stakeholders identified in the mission! But...

...while these boards no doubt, often as not, take this role seriously, the reality

occasionally diverges from this.

Independence is critical: what is needed is someone “with no financial or family

connections with the organization, other than serving as a board member” (p. 57). That

the bar is set so low tells us something.

What seems to be missing here is the inverse: some board members (to paraphrase the

previous quote) ‘with financial or family connections with the key stakeholders, as

identified in the mission’. In other words: why would a human service organization that

helps the homeless have a board made up of rich people, many of whom were born into

affluence, and with no one who has experienced homelessness? The financial benefits of

the status quo model are obviously good, but the programmatic results not necessarily so.

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Developments in nonprofit accountability to government

Sarbanes-Oxley type reforms – lurking out there, menacingly, for NGO scofflaws.

Corporate policies – by this is meant formal, internal NGO policies governing important

issues, especially those on which clarification could be helpful.

Reporting rules

Annual information returns – IRS Form 990 and its derivations.

State annual reports.

Charitable solicitation act reports – again to states.

Disclosure rules – by law information (IRS Form 990, etc.) must be made available in the

organization’s business office. Best practice: send it to the IRS, then post it on the internet.

IRS. The Grand Inquisitor (only joking, I’m with Oliver Wendell Holmes!).

In addition to the various rules, and annual filing requirements, an audit is always a

possibility, albeit a slim one.

In all honesty, audits protect both average citizens, and the honest majority of the NP

sector. See the IRS on Charity and nonprofit audits.

Government as funding source

Smith (Salamon chapter 4 reading) discusses government/nonprofit contracting relationships.

‘Rising sharply’ -- Contracting has increased dramatically, driven by...

...pressure to reduce the costs of public service...

...with market-friendly ideology favouring a contract-based approach.

Broad interests in voluntarism

Social innovation

Citizen and community engagement

Dynamics

Loss of control. NPOs inevitably lose some autonomy in government contracting, as ‘we the

people’ demand accountability from these private organizations when they use public money.

Somehow, this is seen as controversial among many in the nonprofit sector. Hmmm…

Employees pay for savings. Seems obvious to me that much of the cost savings are simply a

result of taking money from social service providers, by which I mean the workers in this

field. Their compensation packages (salary, benefits, job security) suffer (on average!).

Mixed security implications for NPOs

Security -- That money is nice through the term of the contract, especially not having to

work a donor base continuously, but...

Insecurity – …Smith reports higher costs associated with government contracts, and so

greater vulnerability if the money dries up.

Insanity? – Smith reports, and buzz on the street confirms, that contracts often fail to

cover costs.

Overhead. Lots of NPOs report that the contracts don’t cover overhead, requiring

secondary income sources, or creative accounting.

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Take it out of employees. Smith also refers to “the current economic crisis” (p. 561) as

a reason for tight budgets.

Probably not. Consider Jacksonville:

Economic growth. Post recession, the economy had been growing for some

years, so one would expect public revenue to grow annually, as well.

Public revenue decline. Not necessarily. The City of Jacksonville continued to

experience budget contractions well after the recession ended. This was

because revenue is tied to a stock (housing) rather than a flow (income).

Tax cuts for some. In effect, all home owning citizens were getting a tax cut,

as even though their incomes grew a bit, their property taxes dropped.

Sacrifice for government, and nonprofit workers. So rather than ‘shared

sacrifice’, we saw public and nonprofit (especially human service) workers

taking pay cuts to pay for the tax breaks going to home owners.

Cultural shift. At bottom, a lot of this might just be symptoms, rather than the

disease. We may be seeing a coarsening of America, as our already stingy social

safety net (see Table 1) is further weakened. The ‘promotion of the general welfare,

through doing unto the least among us’ is becoming less and less an American value.

Granted, it may well be that government is bloated in America, but I haven’t seen

the evidence for this (as opposed to opinion), certainly not in comparative terms.

And so: Government! It’s cool, and wants to be your friend.

PS: in the link, ‘promote the general welfare’ gets dissed (it goes from ‘a common

defense’ graphic to voting)! See also the second paragraph to the Declaration of

Independence:

“We hold these truths to be self-evident, that all men are created equal, that they are

endowed by their Creator with certain unalienable rights, that among these are Life,

Liberty and the pursuit of Happiness. – That to secure these rights, Governments are

instituted among men…” The point: government is All-American.

*

Public and media

Dumont and I justify the inclusion of the public and media in our framework as follows:

General public. Beyond accountability to the general public through its elected government,

nonprofits often owe obligations of accountability directly to the public, or to what Brody

(2002) terms ‘the public trust’. Jeavons notes that the tax exempt status enjoyed by

nonprofits is based on an assumption that “they are serving the public good” (Jeavons 1994:

197), while Kearns (1994) emphasizes the importance of public trust and of public scrutiny.

This is echoed by Lawry (1995), for whom public scrutiny is the key to accountability. From

a legal perspective, Chisholm (1995: 151-2) notes efforts to expand ‘standing’ to give the

public access to legal accountability tools against nonprofits, while Miller (2002: 439-40)

emphasizes the importance of accountability to “the community”.

Media. The media can usefully be distinguished from the public to which it communicates.

Kearns, for instance, draws this distinction with reference to “subjective standards of

appropriate behavior applied by the general public and the news media to executives and

board members” (1994: 115); while Brown and Moore note that the acquisition of legitimacy

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for value-based advocacy groups “puts a premium on access to the media and to wider

publics whose views can validate and support pressure on key actors” (2001: 583).

Gibelman and Gelman (2001) especially note the role of the media as watchdogs of nonprofit

impropriety.

It is also worth noting that the media often focuses on communicating negative news about

NPOs to the public, though with numerous qualifications. Just from a more or less random day’s

(6 Feb 13) Times-Union, I found five positive stories about NPOs. Finally, the Boris and

Maronick chapter on civic participation and advocacy is included in this week’s readings. We’ll

address this more directly later, but for now note that use of the media to reach the public is

central to this communication process.

Accountability to the public, and to the media as stakeholder, is probably a bit simpler than for

some of the other stakeholders. In this case, I’d reckon those groups with an explicitly public

service mission should especially be expected to ‘account’ to this public. A way to look more

broadly at the government/NP relationship might, again, be to adapt the Dumont/Candler

framework and apply it to different types of NPOs in Figure 6, in the Appendix. The focus will

be mostly on the public, with the media seen as a sort of de facto communication mechanism.

Keep in mind, though, the logic of Dumont and my treating these two separately.

‘da readings

Lee looks at the accountability of NPOs to the public, while the Sisco, Collins and Zoch article

addresses crisis response (and, implicitly, accountability to the media). Boris and Maronik

discuss how the public gets involved in policy advocacy.

Lee and the public

The public matters. Foreshadowing the Sisco, Collins and Zoch article, Lee points to a number

of crises in NP accountability. Beyond Lee’s take on it, from our application of the framework

above, we can see that accountability to the public is certainly important when:

...the public, or society, or the community directly, are identified as a stakeholder in the

mission of the NPO. As an example, consider the St. Johns Riverkeeper. Their mission:

“The St. Johns Riverkeeper mission is to be an independent voice that defends, advocates,

and activates others to protect and restore the St. Johns River. We are a privately-funded,

independent and trusted voice for the St. Johns River and the public to whom it belongs.”

...the public, or society, or the community are indirectly, but inextricably linked to other

stakeholders. For instance:

Members. Simple enough: the organization should account to members. Yet new

members come from the general public, and public relations will be closely linked to the

supply of new members.

Donors. Simple enough: the organization should account to those who donate their

money to the organization. Yet new donations (large and small) come from the general

public, and public relations will be closely linked to the development of new donors.

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Volunteers. Again, simple enough: the organization should account to those who donate

their time to the organization’s work. Yet new volunteers come from the general public,

and public relations will be closely linked to the supply of new volunteers.

Reputation and legitimacy. I’ll combine the two, as they are closely linked, especially for

the purposes of this weeks’ discussion. New members, donors and volunteers will be

closely related to reputation and legitimacy: an organization that claims to work on behalf

of the river will see few volunteers, donors and members if the organization’s reputation

as advocate for the river, and so legitimacy as advocate for the river, are questioned as a

result of extraneous interests or activities inconsistent with this mission.

Civic capital. Lee especially cites the contribution of good public relations to an

organization’s ‘civic capital’. This is not the same as social capital, as Dumont and I use

it: NPOs contribute, selflessly, to the stock of social capital within society. Lee is using

‘civic capital’ more as we use reputation: a stock that can be drawn on (see also p. 173).

Ethics. Implicit in ‘reputation and legitimacy’ is a concern for ethics, to the extent that an

organization puts mission before ethics, and so gambles with those reputational stocks.

And so: while you’d like to think ‘doing good’ would be enough to protect reputation and

legitimacy, and so ensuring public support and a steady supply of loyal new volunteers,

donors and members; occasionally conscious efforts are required to reduce the likelihood

that the organization’s work and actions are unappreciated or, worse, misunderstood.

Accountability explained. While this class has treated accountability fairly simply (definition:

‘to give an account’?!?!?!), Lee points out that it is not this simple (or else academics have

managed to make it less so). Various dimensions of accountability include:

outcome assessment, performance measurement, and program evaluation

internal management

ethics

organizational assessment

37 subtopics in a 2002 book by Lester Salamon.

23 subtopics in our course text (edited by Salamon)

But generally speaking, two specific meanings:

“to give an account to an external stakeholder or constituency” (Lee, p. 170), such as

‘da Board

Rank-and-file donors

Clients and customers

Government funders

Foundations

“the method of legally required information submitted to government regulatory agencies,”

or accounting. Yet “in contemporary literature for practitioners and academics, accountability

to the public at large tends to get little attention beyond a mere assertion of it” (ibid).

Two approaches to accounting to the public:

Indirect, through the news media (see also Sisco, Collins and Zoch, below)

Direct to the public.

Annual financial report

Annual organizational report (see ‘myriad reporting ideas, below).

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Newfangled ‘social media’ popular among young hipstahs.

Stakeholder explained. In addition to giving us a chance to rethink the concept of accountability,

Lee also provides this opportunity for a re-assessment of the concept of stakeholder.

...“any person, group, or organization that can place a claim on an organization’s attention,

resources, or output or is affected by that output” (p. 171, quoting Bryson).

Tax exempt status = public accountability!

Lee’s case for NP public accountability

rests largely on the benefits of tax exempt

status. His Table 1 presents the value of

these tax benefits, at an eye-popping

figure of between 2-3% of GDP, which

would have just about wiped out the US

federal deficit for much of the past 30

years. I’ve reproduced it (with edits) in

Table 3, at right.

As well, beyond lost revenue, “government must also shoulder the costs of a judicial and law

enforcement infrastructure to protect the rights accorded to

the nonprofit sector” (p. 172).

Myriad direct public reporting ideas (drawn partly from

government)!

Herzlinger’s ‘four-step approach’ (Lee, p. 179), seems

a good way to think about it:

Disclosure

Analysis

Dissemination

Sanctions (?)

Insert cartoons (example at right).

Make a film (presumably in addition to the annual

report), pod cast, or whatever latest technology is furrowing Dr. Dumont’s brow as she

rassles with it on her computer; and which I will dutifully adopt five years hence.

The broader point is to make the information understandable. Perhaps don’t ‘dumb down’

to the level of education of the average citizen (i.e. much can be lost through this, and

there is something to be said for not patronizing), but at least drop to a level that the

responsible citizen (the ‘informed lay person’) can understand, with relatively little effort.

Use numbers as appropriate.

Present “upcoming policies that would need to be decided” (p. 175), by stakeholders, to

encourage input: e.g. Komen and abortion.

Use annual reports to inform citizens about problems in the organization.

Recruit Scouts to hand them out: informing citizens and earning the Scouts a valuable

citizenship badge!

Table 3

Annual cost to the public of the nonprofit sector Lost Government Revenues Amount

Tax deduction for charitable contributions $23.3b

Exemption from corporate income tax 13.9b

Property tax exemptions 6.0b

Tax-exempt bonds 23.0b

Indirect value of other tax preferences 99.6b

Total $165.8b Note: The table is based on 1990s data, and copied (with some

edits) from Lee (2004, p. 172).

Original source: Brody and Cordes (1999, pp. 144-50).

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Traditional media: “Mailings, pamphlets, posters, public service advertisements, lectures,

community meetings, exhibitions, and special programming events” (p. 176), and toll-free

numbers.

(Wait for it): use an Internet Web Site to inform stakeholders!

New media. Other new media (beyond the ‘Internet Web Site’, which might be

considered old media these days, as even I have a web site, and I’m old!): Cable

public access shows, Blogs, FaceBook, Twitter, whatever else Dr. Dumont studies

that I haven’t heard of yet.

Report more often (monthly, quarterly), and in longer format less often (i.e. a 5 year plan?).

A ‘sustainability report’: “a comprehensive accounting for the environmental and social

impacts of the organization’s operations and programs” (p. 180).

Accountability officer. Assign one person to coordinate accountability. Try to find someone

who knows something about assessment and accountability.

Sisco, Collins and Zoch on crisis response and the media

Lee on the media. Lee offers a number of ideas for using the media, especially thinking beyond

the major networks and flagship city newspaper (i.e. the Times-Union). These include:

Weeklies, Ethnic-oriented publications, Shopping and other local magazines, Neighborhood

newsletters, National publications targeted at specific audiences (p. 178).

Crises! Sisco, Collins & Zoch provide a number of high profile recent examples in which the

American Red Cross (the focus of their study) got in trouble, fairly or unfairly:

Blood shortages (with all the vampires around these days, couldn’t they partner up?)

Blood safety – they won’t take blood from diseased individuals (like me, apparently, what

with a past history of leishmaniasis, and regular travel to Brazil).

Discriminatory blood donation policies

Management scandals:

Embezzlement.

Outrageous salaries – (Note: sarcasm alert I) NP managers were reported to be receiving

salaries of $500,000. That’s $500,000: outrageous for someone who does stuff as trivial

as feed the hungry, house the homeless, and comfort the vulnerable. When hedge fund

managers who destroy the global banking system make barely $1,000,000,000, only 2000

times what a top NP manager makes, it is hard to see us continuing to attract the top

talent into global finance that we will need to produce future financial meltdowns.

9/11 donation misuse

Inept response to Hurricane Katrina – (Note: sarcasm alert II) In some communities

WalMart was the first or only source of emergency supplies, not the National Guard, FEMA,

or the American Red Cross. Wal-Mart was able to do this despite having in constant

operation thousands of trucks, huge distribution centers, stores throughout the region, a profit

motive, and piffling annual revenues of $400b. Yet the Red Cross, with a whopping budget

of over $4b, about 1/100th the size of WalMart, was unable to provide immediate relief to all

of the 1,000,000+ folks in need throughout the approximately 20,000 square mile affected

area. Vive le capitalisme!

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Crisis management: their point. Many NPOs are unknown, or largely forgotten by the public.

When a crisis arises, this changes!

Situational crisis communication theory.

Three major crisis clusters:

Victim – claim to have been (or legitimately were) a victim.

Accident – claim the crisis was (or the crisis was indeed) an accident.

Preventable – admit the crisis could have been prevented.

Major crisis response strategies

‘deny’ – shape attributions of the crisis.

‘diminish’ – change perceptions of the organization.

‘rebuild’ – reduce the negative effect.

Red Cross empirical study. In their empirical study of the Red Cross’s reactions to crises over a

decade, they found the following:

Of 1585 articles about the Red Cross, 207 reported one of the above alleged crises.

83% included a Red Cross response, with 81% of these responses from the national,

rather than local level.

More data is presented in Table 4, below:

Table 4

Crisis situation and SCCT response strategy

Victim Accident Preventable Total

Deny 16 (32.7%) 4 (9.1%) 11 (15.1%) 31 (18.7%)

Diminish 26 (53.1%) 28 (63.6%) 39 (53.4%) 93 (56.0%)

Rebuild 7 (14.3%) 12 (27.3%) 23 (31.5%) 42 (25.3%)

Total 49 (29.5%) 44 (26.5%) 73 (44.0%) 166 (100%)

Source: Sisco, Collins and Zoch, p. 24.

More broadly, I’d argue the paper does present three approaches to crisis management. I suspect

most folks would argue that

openness is (almost?) always the better policy (i.e. admit mistakes), and...

...good management (to minimize crises!): the best long term form of crisis management.

* * * * *

Partners & allies With apologies for unnecessarily referring to

blaspheming mass murderers: al-Qaeda reflects

the power of linking with partners and allies in

networks (photo credit). Indeed, by most

accounts, al-Qaeda was never much of an

organization. Instead, it was more or less a

network based on a principle (of, well, mass

murder driven by religious bigotry).

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Al-Qaeda also allows us a short diversion into the broader place of nonprofits in modern society.

The NP sector itself is part of a broader structure of organizational types. Keep in mind that we

refer to the ‘nonprofit’ or ‘third’ sector implicitly by comparing it to the other two sectors: the

for-profit business sector, and government. But that ‘third’ sector is a lot broader than just

formal, nonprofit organizations. The graphic below (Candler 2000, p. 44) illustrates this.

In the paper in question, I was making the point that the international nonprofit literature focused

overmuch on grass roots development organizations, one of at least six types of NGOs,

themselves one of at least five types of civil society groups, themselves one of four types of

social actors (for lack of a better word, and al-Qaeda is an anti-social, informal NGO). All of the

civil society groups that Landim and Clark refer to are formal, legally registered organizations.

We all know that NPOs are non-profit and non-governmental. The sector is often seen as a

residual, none-of-the-above category.

Not quite! Beyond terrorist groups, organized crime organizations are for-profit; but are not

formal, legally registered corporations. The same ‘grey’-ness applies to folks (plumbers, say)

who work off the books: they are rarely addressed by the business management literature.

Similarly, violent hate groups are not for-profit, and are not government agencies, but most

certainly are not legally registered, ‘civil’ society groups. So certainly in terms of having a

broader understanding of modern society, recognizing the existence of forms of social

organization outside of the business/government/formal NPO triad is important.

Dumont and I discuss partners & allies as follows:

Partners and allies have become more important to non-profits as a result of networked,

governance approaches to social organization (Chevallier 2003). Brown and Moore identify

as key stakeholders partners and allies with whom non-profits work, to the extent that “the

capacity needed to deliver results lies outside their organizational boundaries” (2001: 577).

Ospina and her colleagues refer to these as “sideways pulls” (2002: 26). Holland’s “related

organizations” (2002: 417), Atack’s (1999: 860) and Therien’s (1991: 42—43) partners, and

Kearns’ networks represent other acknowledgements of the importance of these stakeholders

(1994: 103).

The central idea behind partners and allies in nonprofit management is that few nonprofits,

indeed few human organizations, are ‘islands entire of themselves’. Business firms have

PAD 6164 week 3

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suppliers and customers. Government agencies regulate other organizations, purchase inputs

from others, and contract with yet more. Similarly, nonprofits (among other things):

purchase inputs from other organizations,

receive funding from foundations, government, and businesses,

do contract work for government (and occasionally foundations and corporations), and

work with other organizations with the same mission.

The latter point is the especially interesting one here. A partnership or alliance is freely entered

in to by one NPO with another NPO (or with a government agency, or often even for-profits), as

the NPO sees benefit from doing so. This union also implies mutual obligations, and so the

nonprofit needs to ‘account’ for these obligations to this new stakeholder. Whatever benefits the

nonprofit receives from the partnership/alliance will be lost if these obligations are not met.

Examples (starting with infrastructure organizations):

Nonprofit Center of Northeast Florida, with beaucoup partners, including the MPA program

at UNF.

They also identify a range of other ‘Area Coalitions’ with an advocacy focus.

United Way of Northeast Florida, provides some of the functions of an infrastructure

organization, with a number of ‘Impact Partners’.

United Way of Saint Johns County, again with Partners.

Changing Homelessness “formed in 1978 by a group of concerned and engaged social

services agencies and downtown religious leaders...”

International Campaign to Ban Landmines, “The ICBL was launched in October 1992 by a

group of six non-governmental organizations: Handicap International, Human Rights Watch,

medico international, Mines Advisory Group, Physicians for Human Rights and Vietnam

Veterans of America Foundation.”

Our three readings look first at some international context (from The Economist), then at

infrastructure organizations (Abramson and McCarthy). Next we take a sort of macro perspective

(Provan, Veazie and Staten) on networks (looking at it from on high), and then I’ll also draw a

bit on a chapter on partners and allies from the Jossey-Bass book (Yankey & Willen).

The non-governmental order

This topic was alluded to in the brief al-Qaeda reference above.

Global civic activism. This global civic activism is peaceful, unlike al-Qaeda. The ‘Battle for

Seattle’ reference is not quite a peaceful one, as violence did occur. This raises the article’s

questions about...

Democracy. Again, the Seattle example is a good one. Keep in mind that the world is more

democratic now than it has ever been (click here), and many of the poor countries that

attended the Seattle WTO meeting wanted more trade (this would include India, Brazil,

Indonesia and South Africa). Instead, they were confronted by a bunch of white upper middle

class North American college kids who wanted to shut down (‘derail’) this meeting, in the

name of the global poor. What was the basis of the legitimacy of the activists who claimed to

speak on behalf of the global poor, when democratically elected representatives of many poor

global societies (including India, Brazil, Indonesia and South Africa) were in attendance?

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Other peaceful, market-based campaigns. The article does identify other peaceful, essentially

market-based campaigns carried out by many of these groups:

“Nike has been targeted for poor labour conditions in its overseas factories, Nestlé for the

sale of powdered baby milk in poor countries, Monsanto for genetically modified food.”

By ‘market-based’ I mean these groups are engaging in free discussion, and encouraging

consumers to make free decisions to boycott the products in question. On the other hand:

“In a case in 1995 that particularly shocked business, Royal Dutch/Shell, although it was

technically in the right, was prevented by Greenpeace, the most media-savvy of all

NGOs, from disposing of its Brent Spar oil rig in the North Sea.”

ICT facilitates this. “When groups could communicate only by telephone, fax or mail, it was

prohibitively expensive to share information or build links between different organizations...”

Service providers, too. “Citizens' groups play roles that go far beyond political activism.

Many are important deliverers of services, especially in developing countries. As a

group, NGOs now deliver more aid than the whole United Nations system. Some of the

biggest NGOs, such as CARE, or Médecins Sans Frontières, are primarily aid providers.

Others, such as Oxfam, are both aid providers and campaigners.”

The article doesn’t elaborate on this, but a source I’ve used a lot (Thierien 1991) notes

cooperation between rich world funders and developing world implementing agencies.

Rather than sending an overpaid, under-prepared American to Ghana to provide a service,

contract instead with a Ghanaian NGO.

Nothing new here!!! And let’s not forget that while there may be more of it, there is nothing

new here: “organisations like these have existed for generations (in the early 1800s, the

British and Foreign Anti-Slavery Society played a powerful part in abolishing slavery laws).”

Infrastructure organizations

Economies of scale. To me, the central logic of infrastructure organizations in the nonprofit

sector is tied to the great imbalance in the size of NPOs, with a few large organizations, and

myriad small ones. A large majority of Salamon’s nearly 2 million NPOs (p. 7) are small, with

budgets incapable of supporting a single full-time professional employee. This means no public

relations specialist, no business manager, no information technology specialist, no legal

representation, no lobbyist, etc. Infrastructure organizations try to fill these gaps.

Information gaps. As a side comment, note the (p. 424) reference to very little information about

these small organizations. Welcome to nonprofit studies!

Roles. Beyond the short laundry list above (public relations, business manager, IT specialist,

legal representation, lobbyist, etc.), Abramson and McCarthy especially focus on:

Advocacy. This is the ‘lack of lobbyist’ mentioned above. The Nonprofit Center of

Northeast Florida, especially, seeks to advocate for regional NPOs as a group (the United

Way of St. Johns County highlight advocacy, as well), and encourages (and trains) local

NPOs to advocate on their own behalf. In short, as that august institution of higher learning

Faber College puts it: knowledge is good.

Public education. I’ve separated this from advocacy, mostly because education needn’t have

a specific, or overt advocacy intent. All else equal, though, if your cause is just and makes

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sense, to the extent that the public and policy makers are educated regarding the issue, the

organization (or the coalition it is part of) might need to do little overt advocacy.

Reason v. ideology. This implies that reason is driving policy decisions, and not ideology.

Take mental health funding in Florida, which hit the buzz saw of taxcutmania in 2013

(source). This under-funding of mental health services became untenable when gun

violence resulted in gun owners (many of whom are also taxcutmaniacs) blamed mental

illness for the deaths, rather than the guns. Unfortunately, it turned out they had been

cutting mental health funding (and preventing gun ownership control for mentally

unstable people). Years later in 2018, after the Parkland high school shooting, Governor

Scott has finally decided to put more money in to mental health (source). How many died

in the interim?

Research. Public education can help. As an example, the Nonprofit Center recently put out

another in their series of studies on the sector, the Fall 2015 State of the Sector report.

Professional development. This is a key function of these groups, providing specialized

training and updates on a wide range of management functions. The Nonprofit Center, for

instance, lists a range of these sorts of activities on its Events calendar page.

o Accountability. The above hardly scratches the surface and, for our purposes, it certainly

ignores the need to account to key stakeholders. Beyond the process of ‘giving an account’,

something meaningful has to be accounted for, which is where ‘Effectiveness’ comes in.

o Communication, fundraising, management, etc. ...are also emphasized.

o Equity! “Making Infrastructure Organization services more available to underserved

nonprofits.” At least in terms of cost, the Nonprofit Center of NE Florida (memberships

starting at $100, with workshops available generally for free), are making these services

available at low cost.

The societal perspective and network analysis

It ain’t easy. Provan, Veazie and Staten open noting that despite

the popularity and attraction of partnerships, “such networks are

difficult to establish and even harder to sustain” (p. 603). One

way to help with this: network analysis.

What is it? The general idea is to analyze a group of folks (or

organizations), check to see who they interact with, as well as

perhaps the nature of those relationships, and then (in the old

days) map it out. The article from which I cribbed the image on

the right has a truncated example of this, which I’ve copied in

(reducing it to not take up too much space). I was just looking at

links of the four organizations (ACM, ACE, OAB and SBPC1)

that were the focus of my study. I was not trying to identify the

dense network between all of the two dozen or so organizations

shown here.

1 The acronyms (and links) are in Portuguese, but they refer to the professional associations for doctors, engineers,

lawyers and scientists in the Brazilian state of Santa Catarina.

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That, again, is the old fashioned way. Now there is software that can produce wildly complex

graphics illustrating a network. See, for instance, the link, which looks at links between

language competencies. A good portion of the idea is to identify key players in these networks:

the hubs.

Why it matters. For Provan and co-authors, network analysis therefore can assist

“...community leaders, whether they are from the public or nonprofit sectors, in building and

sustaining local networks in [various]... In particular, by using this approach, managers can

see exactly where their organization fits within the structure of the network, based not just on

their own impressions, but also on the experiences of the other network participants.

Depending on the findings, managers may then choose to shift priorities and resources so that

their organization becomes more (or less) involved in the network as a whole or with certain

key organizations that may be critical to its own effectiveness” (p. 604),

Key concepts. I’ll combine some of the Provan (et al) bullets:

Network bounding: how widely will the network be mapped? The graphic above from my

earlier paper only looks at those groups that four organizations – the engineering, medical,

legal and scientific professional associations in the Brazilian state of Santa Catarina – had

with other groups. Links between the groups linked to these four hubs were not analyzed.

Link content. What is the nature of the link, how frequent, and between whom?

Trust. How close do the organizations work together?

Cross-sectional verses longitudinal. How often are the links assessed, so that change over

time can be measured?

Density. The overall level of connectivity within the network.

Centrality. Who are the ‘hubs’?

Cliques. Subgroups within the broader network.

Eight questions: the Provan, Veazie and Staten method (p. 606).

1. Which community agencies are most central in the network, and are these agencies

essential for addressing community needs?

2. Which core network members have links to important resources through their

involvement with organizations outside the network?

3. Are critical network ties based solely on personal relationships, or have they become

formalized so that they are sustainable over time?

4. Are some network relationships strong while others are weak? Should those relationships

that are weak be maintained as is, or should they be strengthened?

5. Which subgroups of network organizations have strong working relationships? How can

these groups be mobilized to meet the broader objectives of the network?

6. Based on comparative network data over time, has reasonable progress been made in

building community capacity through developing stronger network ties?

7. What is the level of trust among agencies working together, and has it increased or

decreased over time? If it has declined, how can it be strengthened?

8. What have been the benefits and drawbacks of collaboration, have these changed over

time, and how can benefits by enhanced and drawbacks minimized?

No panacea.

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Network analysis is an analytical tool, a potentially powerful one, but nothing more.

It also requires community buy-in to get this information, on the Provan et al model.

There are other ways to get a sense of connections, though: news stories (see who gets

mentioned together), web links, etc.

The organizational perspective on partners & allies

Origins. Yankey & Willen open with the assertion that partnering among nonprofits “traces its

origins to the 1980s” (p. 375). This is clearly incorrect (after all, the AFL-CIO formed in 1955),

but the trend increased from around that time (or perhaps we noticed it more).

Strategy. By way of a George whine: Yankey & Willen distinguish between collaboration and

strategic alliances.

Strategic alliances. “Purposeful quality of relationships in which two or more entities

come together in a planned way in order to accomplish a mutually valued goal” (p. 377).

Collaboration. Implicitly: a more or less haphazard, unplanned union of two or more

entities with no goals of value, and who probably just smoke pot. Is there a purpose in

this distinction? How many folks set out to ‘collaborate’, on this definition?

Punchline: next to leadership, strategy may be my second least favourite word in the

public and nonprofit management lexicon.

Drivers of partnerships and alliances.

Environmental drivers:

New technologies – not developed by Yankey & Willen (save for ‘working wikily’ on

page 397), but presumably

better communication = more opportunity for coordination

...perhaps also more awareness of best practice elsewhere.

Regionalization – pressures from funders for better coordination, and less wasteful

competitive duplication.

But is there a risk here in oligopolization of services through this coordination?

A positive benefit of funder pressure to coordinate can be fewer gaps in service

provision, a serious weakness of the nonprofit sector as alternative to government.

Redefinition of performance and demand for greater accountability.

Increased competition – especially in light of economic challenges.

Internal drivers.

Finances.

Management: we learn from each other.

Programmatic: cooperation can result in better service.

Types of partnerships and alliances.

A continuum: loose --------------------------------- tight

Stages of alliance development. Essentially the traditional policy analytical model:

Agenda setting: some sort of factor put on the organization’s agenda the question of a

partnership or alliance.

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Analysis: assessment of whether alliance is a good idea, and if so, what options are

available regarding how best to go about it.

Selection: choice between the options developed in the previous stage.

Implementation. Take ‘er out for a test drive!

Evaluation. Was it the ultimate driving experience? If not, rethink.

Agenda setting: if post implementation evaluation suggests that problems exist, then

reform is put on the agenda, and analysis of options to address this begins anew.

Partner selection.

History of previous relationships

Mission, values, and organizational culture compatibility

Consistency of vision and future direction

Receptivity to giving up some degree of autonomy

Program strengths, weaknesses, and potential operational synergies

Organizational size

Board, trustee, and especially management compatibility

Financial, human resource, funders, community approval

Challenges. Much of this is implied from the above, so I won’t repeat. New stuff:

Egos -- A factor that has often been raised as inhibiting collaboration among NPOs is

personnel competition, and/or the personal ego of the managers of these organizations. A

merger would leave only one slot for an Executive Director.

Turf issues -- Yankey and Willen indirectly raise this issue, by referring to nonprofit

agency “competition for consumer attention and market share, nonprofits must vie for a

diminishing pool of human and financial resources” (p. 378).

Cost, both financial and in staff time.

(Organization) cultural differences.

Conservatism and reluctance to change:

o Putting organization ahead of mission, Loss of control, Staff fears of job losses.

Factors contributing to success.

Shared vision...

...sound (presumably transparent) process...

...open communication...

...and as a result of the previous three factors: an atmosphere of trust.

Effective management

Hard work

Lessons from the field

There is no such thing as a ‘zero defects’ alliance.

The size of the NPO is not positively correlated to success.

Being proactive is better than reactive.

Think long term.

Establish criteria for success.

Get financial support for planning and implementation.

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Defenestration of a ‘leader’ a good time to pursue alliances, and it is always a good time

to defenestrate a ‘leader’.

Developing a corporate culture will be difficult.

Allow complaints, but celebrate success.

Summary. Get together: come on people now, smile on your brother, everybody get together try

to love one another right now!

References

Brody, E. and J.J. Cordes (2002). “Accountability and public trust.” In L.M. Salmon (ed.), The State of

Nonprofit America. Washington, D.C.: Urban Institute Press.

Candler, G.G. (2000). “The professions and public policy…” International Political Science Review

21(1), pp. 43-58. Available online.

Dumont, Georgette and George Candler (2005). “Virtual jungles: survival, accountability and

governance in online organizations.” American Review of Public Administration 35(3), available

online.

Galbraith, John Kenneth (1958). The affluent society, Boston: Houghton Mifflin.

Hayek, Friedrich (1945). The road to serfdom. Chicago: University of Chicago Press.

Hopkins, Bruce and Virginia Cross (2010). “The Legal Framework of the Nonprofit Sector in the United

States.” In Renz and Associates, Handbook of Nonprofit Leadership and Management, San

Francisco: Jossey-Bass.

Mises, Ludwig Von (1949). Human action: A treatise on economics. New Haven: Yale University Press.

Smith, Steven Rathgeb (2010). “Managing the Challenges of Government Contracts.” In Renz and

Associates, Handbook of Nonprofit Leadership and Management, San Francisco: Jossey-Bass.

Therien, Jean-Phillipe. 1991. ‘‘Les organisations non gouvernementales et la politique canadienne d’aide

au de´veloppement.’’ Canadian Public Policy 17 (1) March: 37–51.

Yankey, John and Carol Willen (2010). “Collaboration and strategic alliances,” in David Renz and

Associates (eds.), Nonprofit Leadership and Management. San Francisco: Jossey-Bass.

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Figure 5

Accountability relationship of various types NPOs with Government

Typ

e of

NP

O

Accountability “For What”

Consequential Procedural

Inputs Outputs

Financial

resources

Volunteer

resources

Reputational

capital

Goods

and

services

Social

capital

Policy

impact

Law Formal

mission

Ethics Legiti-

macy

Human service IRS, and

if receive

public

money

N/A,

except

perhaps as

grant

match, and

perfunctory

Form 990

reporting.

N/A If

receive

public

money

N/A Yes, if

engaged

in policy

advocacy

Yes IRS tax

exempt

status,

and if

receive

public

money

N/A N/A

Arts & culture

Education(K-16)

Hospitals

Churches

Member service IRS No

Policy advocacy IRS Yes: rep’n =

access

Yes: as

target

Yes Yes: legit

= access

PAD 6164 week 3

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Figure 6

Accountability relationship of various types NPOs with the public and media

Typ

e of

NP

O

Accountability “For What”

Consequential Procedural

Inputs Outputs

Financial

resources

Volunteer

resources

Reputational

capital

Goods

and

services

Social

capital

Policy

impact

Law Formal

mission

Ethics Legiti-

macy

Human service

Yes, as the

result of

tax exempt

status.

Perhaps,

if the

NPO

wants to

attract

and retain

such vols.

Rarely

accounted

for, but

public often

cares. Media

often reports

on these

issues.

Should,

to show

the NPO

merits

support!

Should

(however

difficult)

if stated

in

mission.

Yes, if... N/A Should Should Should

Policy

advocacy

Yes

Membership

service

Yes, if

engaged

in policy

advocacy Arts & culture

Churches

Hospitals

Education

(K-16+)