What Kind of Third Sector What Kind of

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What Kind of Third Sector, What Kind of Society? Citizen’s Forum Council of Europe

What Kind of Third Sector, What Kind of Society? Citizen’s Forum Council of Europe Strasbourg, October 2002 By Helmut K. Anheier LSE & UCLA

Facts n n n 4 -7% of total employment in EU, 2 -4% in

Facts n n n 4 -7% of total employment in EU, 2 -4% in CEE Significant growth in economic importance of third sector, with 5% growth rates annually in some countries Increase in associational density Increase in number of foundations, assets Greater policy recognition Heightened expectations

What is more… Greater economic pressure—German Free Welfare Associations n Consultation fatigue—UK charities n

What is more… Greater economic pressure—German Free Welfare Associations n Consultation fatigue—UK charities n Value dilemmas – secularization n Future of welfare state, East and West n Grey zones more frequent (profit, non profit, public benefit, private benefit) n CEE: local innovation, import of models n

Two underlying trends 1. The rise of non-profit organisations as service-providers -- part of

Two underlying trends 1. The rise of non-profit organisations as service-providers -- part of public-private partnership under the rubric of new public management and the rise of markets and quasimarkets in areas that have hitherto been part of the welfare state.

Two trends… 2. The (re)discovery of civil society --as part of the growing awareness

Two trends… 2. The (re)discovery of civil society --as part of the growing awareness among policymakers and scholars that the very social fabric of society is changing. The third sector serves as a panacea to counteract social isolation and the negative impact of individualism.

New Public Management less government = less bureaucracy = more flexibility = greater efficiency

New Public Management less government = less bureaucracy = more flexibility = greater efficiency n from third party government to mixed economy of care / welfare n from simple contracts to quasi markets or ‘constructed and managed’ markets n from long-term relations to short-term considerations, greater uncertainty n

NPM -- basic idea Better technology and improved monitoring invite market solutions n Competition

NPM -- basic idea Better technology and improved monitoring invite market solutions n Competition across form possible, desirable n Nonprofit one form among others n Competitive contracting as tool to implement policy = modernized welfare state n

Nonprofits as service provider Long history, now: neo-liberal role n Germany’s new subsidiarity n

Nonprofits as service provider Long history, now: neo-liberal role n Germany’s new subsidiarity n New Labour’s Compact in the UK n Clinton’s welfare reforms and Bush’s faithbased communities in the US n France’s unemployment policies of ‘insertion’ n Public sector reform in CEE, privatisation n

Implications Commercialisation: Nonprofit services become more ‘commercial’ in a broad number of fields such

Implications Commercialisation: Nonprofit services become more ‘commercial’ in a broad number of fields such as social services, health care, education, culture [shifts in revenue structure; rise of financial and revenue management; rise of nonprofit marketing and branding] cultural change within organisations!

Implications… Professionalization • • nonprofits are under pressure to become more ‘professional’; social workers,

Implications… Professionalization • • nonprofits are under pressure to become more ‘professional’; social workers, accountants, health care professionals, teachers – even volunteers ‘corporatization’ of nonprofits, from association to firm, von Anstalt zu Betrieb

Implications … Organisational form questions: Is ‘charity’ still adequate, how far can we ‘push

Implications … Organisational form questions: Is ‘charity’ still adequate, how far can we ‘push the limits’ of the nonprofit form? Many countries are considering legal changes that would make it easier for nonprofits to function as economic actors [UK: PUI/Treasury reviews; public benefit corporation; Social Investment White Paper; Ireland’s Green Paper; Germany: reform of public benefit and tax law; reforms in CEE from 1990 onward]

Implications… ‘Ethos’ implications Is the sector still the same? Operates in changed environment; complex

Implications… ‘Ethos’ implications Is the sector still the same? Operates in changed environment; complex partnerships. What happens to traditional role of sector? What is the role of values in the context of new mangerialism. Many nonprofits rooted in values, often religious and political

The (Re)discovery of Civil Society In contrast to the neo-liberal role (NPM), the neo-Tocquevillian

The (Re)discovery of Civil Society In contrast to the neo-liberal role (NPM), the neo-Tocquevillian approach emphasises the sector’s social integrative function and indirect contributions. n Notion of social capital, self-organization n Social capital as the glue of modern, highly diverse societies n

Norms, networks, civil society n “strong and vibrant civil society characterised by a social

Norms, networks, civil society n “strong and vibrant civil society characterised by a social infrastructure of dense networks of face-to-face relationships that cross-cut existing social cleavages such as race, ethnicity, class, sexual orientation, and gender that will underpin strong and responsive democratic government” (Edwards, Foley and Diani, 2001: 17).

The essence of US debate n civil society creates social capital, which is good

The essence of US debate n civil society creates social capital, which is good for society and the economy. For Neo. Tocquevillians, civil society is not only a bulwark against a state that could become too powerful, or a mechanism that creates social cohesion, it is much more than that: a general principle of societal constitution.

Persistent myth or solution? n The genius of Putnam was to link de Tocqueville’s

Persistent myth or solution? n The genius of Putnam was to link de Tocqueville’s 19 th century diagnosis (or age-old mythologies, as some would say? ) to modern issue of American society. This made his work so attractive to policymakers in US and elsewhere: It identified a problem (isolation, exclusion) to a solution (voluntary associations, community) and offered a solution from the past, suggesting tradition and continuity to an unsettled presence. This connection ‘clicked’ not only in the US, but also in Britain (see Third Way) and countries like Germany (long history of associationalism).

The essence of the European debate The strong and positive link between social capital

The essence of the European debate The strong and positive link between social capital and civil society that is typical of the US debate, is seen as more problematic in Europe, and requires the State to make it work. Economic redistribution, social redistribution of capital, life chances

Where Europe is different n the French tradition (Pierre Bourdieu) sees social capital primarily

Where Europe is different n the French tradition (Pierre Bourdieu) sees social capital primarily as a form of inequality and less as a force of cohesion; this contradicts the US (Putnam) theme that sees social capital as social ‘super glue. ’ Of course, distinctions between bridging, linking and bonding capital help, but the French approach is more critical than US one.

Where Europe is different … Civil society and ‘social capital’ require ‘good governance’ to

Where Europe is different … Civil society and ‘social capital’ require ‘good governance’ to function for the greater public good. n Government needed to create and implement such policies of social inclusion and integration. n European state remains active state (even in UK), in contrast to US (minimalist state). n

Key questions • Do these trends (NPM, civil society) share common sources, what do

Key questions • Do these trends (NPM, civil society) share common sources, what do they have in common? Or are they parallel developments? Do we find the same diagnosis across countries, and are there commonalities? What are some of the major implications for research and policy-making? What can we say about the future of the nonprofit sector in developed countries?

Or, in different words… • How can nonprofit organisations be efficient providers and neo-Tocquevillian

Or, in different words… • How can nonprofit organisations be efficient providers and neo-Tocquevillian associations -‘be all’ -- at one and the same time; how can they serve such dual functions beyond a certain threshold? Does emphasis on one, e. g. , service provision under new public management, come at the expense of the other, e. g. , creating a sense of belonging and social trust, or can both be combined, and if so, how?

The Nonprofit Form Nonprofits exist under certain suply and demand conditions 1. Supply -

The Nonprofit Form Nonprofits exist under certain suply and demand conditions 1. Supply - entrepreneurship (ideological, social) - organisational skills, human resources, finance 2. Demand - heterogeneity, public fund shortage - ‘voice‘ problems for diverse segments, groups - information asymmetries, trust problems Much of expansion demand driven!

Fundamental Revenue Problem Preferred good: quasi-public good, difficult to price, to raise funds for,

Fundamental Revenue Problem Preferred good: quasi-public good, difficult to price, to raise funds for, charge fee (freerider problem etc). Nonpreferred good: related or unrelated to purpose, meant as ‘cash cow, ‘ necessary evil Cross subsidisation: (use revenue from nonpreferred good to support preferred good) or e Direct subsidy: (grants, donations, tax concessions)

Stakeholders and Revenue • Related and unrelated buisness income have different stakeholder attached to

Stakeholders and Revenue • Related and unrelated buisness income have different stakeholder attached to them • Leads to innovation but also tension • Goal displacements, taming, growding out • Conversion, merger, form changes • Grants have ‘strings’, can reduce autonomy

Basic Issues Like all organizations, NGOs have to address issues of n. Power /

Basic Issues Like all organizations, NGOs have to address issues of n. Power / principal agent problem / professional control (Michels, Olson) n. Economic pressures (revenue, competition, fitness) n. Environmental uncertainty (political, economics)

So… n Can nonprofits be both? Service provider … and source of social capital?

So… n Can nonprofits be both? Service provider … and source of social capital?

Initial answers… n n Nonprofit can be both if they are value-based, small and

Initial answers… n n Nonprofit can be both if they are value-based, small and locally bound, or focused on well defined issues, groups. They can be both if they are supported by key stakeholder that provides financial security In most other cases, nonprofits are transient form if pushed—but vitally important. Nonprofit require supportive, enabling legal environment to develop, ‘deliver’ and to either sustain or transform themselves.

On to more basic questions n The numerous government policy initiatives currently under way

On to more basic questions n The numerous government policy initiatives currently under way and being considered suggest a more fundamental policy shift whose ultimate objective is however not clear: what kind of ‘society’ and what kind of ‘community’ does Europe, the current US administration, New Labour etc want?

National - International These nation-state developments contrast with what seems to be happening at

National - International These nation-state developments contrast with what seems to be happening at the global, transnational level Rise of NGOs in humanitarian assistance, development etc and the crisis of multilateralism —is this pointing to a shift in international relations away from nation states as actors and constituting element of multilateralism? Are we witnessing the emergence of a new international welfare system based on private actors? n

Growth of International NGO 1975

Growth of International NGO 1975

More specifically… What does the significant expansion of NGOs at international level signify, mean?

More specifically… What does the significant expansion of NGOs at international level signify, mean? 1. 2. 3. 4. ‘Filling a void’ or ‘pushing open space’ Greater numbers = greater complexity? Quantitative expansion and qualitative change? Beginning of more fundamental shift in organizational form? Something new? 5. Emergence of new power relations, policy regimes at global level? Something different?

The Answers (in staccato) So, what does it mean, then…? 1. ‘Filling a void’

The Answers (in staccato) So, what does it mean, then…? 1. ‘Filling a void’ or ‘pushing open space’ Both, but increasingly more filling than pushing around transnational goods, problems. 2. Greater numbers implies greater complexity – quantitative expansion, qualitative change? Both, but the latter is really what’s important now. 3. Beginning of more fundamental shift in organizational form? Yes, much innovation. 4. Emergence of new power relations, policy regimes at global level? Complicated…but rather likely, and full of uncertainty…

WHAT KIND OF NGO FOR WHAT KIND OF EUROPEAN SOCIETY? WELFARE REGIME? POLITICAL SYSTEM?

WHAT KIND OF NGO FOR WHAT KIND OF EUROPEAN SOCIETY? WELFARE REGIME? POLITICAL SYSTEM? GOVERNMENT?

FOUR SCENARIOUS Here: European Union n But similar diagnosis at country level n ‘Caricatures’—but

FOUR SCENARIOUS Here: European Union n But similar diagnosis at country level n ‘Caricatures’—but indicative n Not either or, but clear tendencies n

NPM-Scenario n NGOs as a set of well-organised, corporate entities to take on tasks

NPM-Scenario n NGOs as a set of well-organised, corporate entities to take on tasks and functions previously part of national state administrations and/or EU, but now delivered through competitive bidding processes and contractual arrangements that try to maximise the competitive advantages of non-profit providers in complex, Europe-wide social markets under some form of State/EU tutelage. (‘The NPM guru’s global delight’).

Social Capital Scenario n NGOs as the self-organising, Europeanised ‘quasistate’ apparatus of the 21

Social Capital Scenario n NGOs as the self-organising, Europeanised ‘quasistate’ apparatus of the 21 st century, as part of a benign global civil society, with high levels of individualism, participation and ‘connectivity’, that prevents social ills, detects and corrects them before they become ‘social problems, ’ well-coordinated, at arm’s length, with and by a technocratic EU regime of minimalist national states and other IGOs? (‘The Dahrendorf warning as global nightmare’)

Liberal Scenario n NGOs as a source of dissent, challenge and innovation, as a

Liberal Scenario n NGOs as a source of dissent, challenge and innovation, as a counter-veiling force to some form of European government (‘super state’) and the power of TNCs—a sector that serves as a social, cultural and political watchdog keeping both global market and state powers in check, a sector that creates and reflects the diversity and pluralism and dynamism of modern, European, even global society. (‘Gellner’s promise gone global’)

The Corporate Scenario n The ‘corporatisation’ of NGOs and the expansion of business into

The Corporate Scenario n The ‘corporatisation’ of NGOs and the expansion of business into European civil society; corporation use extended social responsibility programmes to provide, jointly with NGOs, services previously in the realm of government such as health care, child care, pensions, community services). Entitlements linked to corporate/NGO membership, less to citizenship (‘Perrow’s suspicion gone global’)

Which scenario shall it be? Key issues: divergent answers n. US: corporate, social capital

Which scenario shall it be? Key issues: divergent answers n. US: corporate, social capital n‘Old’ EU: NPM, liberal (neo Social Democrats) n. CEE: NPM, ? ? ? Here: Tension between need for sustainable local innovations and EU requirements, US influence, donor withdrawal

Thank you for listening …

Thank you for listening …