PA RT IINEW TRE NDS IN THE US NON-PROF IT SE CTOR
by Dennis R. Young,
Case Western Reserve University, Cleveland, USA
Introduction
Ever since scholars and policy makers began to study it, the non-profit sector in the United States has been a moving target, constantly adapting and responding to changes in the overall society. Prior to the 1960s and 1970s few even thought of non-profit organisations (also known as “non-profits”) as a sector at all (Hall, 1992). Rather, attention was more narrowly focused on particular industries or fields such as social services, health care, education, the arts or perhaps “philanthropy” (Bremner, 1988). The concept of a sector linking organisations in these fields, distinct from business or government, driven by charitable purpose and relying on voluntary support, did not emerge until the 1970s. At the time, it was federal government’s concern about the growing power of private, grant-making foundations that first galvanised the foundations and later other kinds of charitable an d public purpose organisations into defining themselves as a sector and speaking with a unified voice in the realm of public policy (O’Connell, 1997).
The galvanising of the US non-profit sector in the late 1970s followed an era, born in the social programs of the Kennedy-Johnson administration, in which billions of dollars were poured into the economy to address issues of poverty, health care, education, community development, the environment and the arts. What may have been a relatively staid and stable charitable sector prior to that time became a dynamo fuelled by a government that chose to deliver its new portfolio of services largely through the financing of non-profit organisations rather than expansion of government bureaucracy (Salamon, 1995). Existing non-profits expanded, many new ones were created, and the non-profit sector became the fastest growing component of the newly recognised “third sector” economy (Hodgkinson and Associates, 1992).
With stagnation of the US economy in the late 1970s and the advent of the highly conservative Reagan administration in the 1980s, the picture changed again for the US non-profit sector. The Reagan administration failed to appreciate the degree to which non-profits were financed by government, and seemed to operate under the illusion that charitable support and voluntary effort could somehow fully substitute for the withdrawal of government funding. Federal programs in many areas were cut back dramatically, the profit sector’s rapid growth was interrupted, and non-profit organisations scuttled around to find new sources of support (Salamon, 1995). Non-profits substantially readjusted and survived the 1980s
intact, leaning more on state and local governments and private sources, for their support. But they also learned an important lesson in this era – that they needed to fend for themselves and that government was not a dependable source of sustenance in the long run; nor could the traditional sources of charity and volunteering grow quickly enough to make up for shortfalls in financing in their now expanded agendas.
The turbulence of the previous three decades helped prepare US non-profit organisations for the 1990s and beyond. Non-non-profits learned that they needed to earn their revenues and become less dependent on government or traditional sources of charity. Moreover, they were entering an era in which government was in decline and the free market ascendant in the US and in countries throughout the world. The welfare state was being discredited as an effective means of solving social problems and privatisation touted as a necessary avenue for nations to achieve efficiency and competitiveness in the global market economy. Non-profits found themselves to be part of both the problem and the solution. As part of the private economy, with unique access to volunteer energy, charitable impulse and socially focused entrepreneurial motivation, they were expected to find innovative and effective ways to address the social issues that the old welfare state could no longer manage. At the same time they needed to find new sources of support and to redefine their role vis-à-vis business in the private sector.
This is where non-profit organisations in the US presently find themselves. They have come to understand that they are embedded in a vigorous free market economy and must learn how to survive and prosper in that environment. They also understand that in some ways they have become the new embodiment of social aspirations in an era that stresses non-governmental approaches to social problem-solving. Non-profits are the trustees of much of the new “social capital” upon which society now wants to build its infrastructure of social welfare (Backman and Smith, 2000). In order to meet these diverse expectations, non-profits currently struggle to nourish themselves in the marketplace without becoming disenfranchised by behaving in ways indistinguishable from ordinary commerce.
The purpose of this chapter is to describe the various ways in which non-profits in the US are now accommodating themselves to the new environment of the marketplace. The picture is a mosaic consisting of several important interwoven strands or trends: a changing base of financial support, pursuit of a variety of new business ventures, new partnerships with business corporations, adaptation to a marketplace environment characterised by greater consumer and donor choice, and changes in the internal culture of non-profits themselves. At this point in time, the picture remains hazy and unfocused. In the end, however, non-profits in the US will be forced to embrace a fresh identity that somehow reconciles their new market
orientation with the greater social expectations with which they are now charged.