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Change in Net Worth – U.S. Households & Nonprofits
Peter Frumkin‘s On Being Nonprofit: A Conceptual and Policy Primer (Harvard University Press, 2005) is, as its title states, a primer on the nonprofit sector. It explores what Frumkin describes as the four important functions that define nonprofits—delivering needed services, promoting civic engagement, expressing values and/or faith, and channeling entrepreneurial activities. The book also looks at the interconnectedness of the nonprofit, business, and government sectors. It explores some facets of public funding, politics, nonprofit missions, and the tendency toward increasing commercialism. This book provides a good general guide for nonprofit practitioners as well as explores many aspects of the nonprofit sector.
Frumkin divides the purposes of nonprofits into four functions:
- Promoting civic and political engagement,
- Delivering critical services within communities,
- Providing an institutional vehicle for social entrepreneurship, and
- Allowing the expression of values and faith.
The book looks at problems within each of these four functional realms as well as nonprofits’ competitions and collaborations with the private sector and government. The problems of nonprofits include politicization, vendorism, commercialism, and particularism. The successes of nonprofits demand commitment to expression, engagement, entrepreneurship, and service. Balancing nonprofits’ four functions while overcoming these challenges enable nonprofits to gain support and acceptance. The survival of nonprofits depends on the quality and relevance of each to its mission and its capacity to deliver value.
Frumkin succinctly defines the nonprofit sector as “the contested arena between the state and the market where public and private concerns meet and where individual and social efforts are united.” (p. 7)
Over time, he explains that the boundaries between the public, private, and nonprofit spheres have changed and evolved. Nonprofits have contributed to democratization by opening societies and giving voice and collective expression opportunities to their constituents.
The main types of nonprofits (and their primary funding bases) are described as follows:
- Hospitals (fee-based, stable and long-term)
- Universities (tuition-based, stable, and long-term)
- Mentoring programs (charitable contributions, fragile and transient)
- Service organizations (e.g. elderly, poor, often rely on government funding)
- Arts organizations (charitable contributions)
- Licensing bodies (fee-based)
- Private member organizations (non public funding)
- Religious organizations (non public funding, stable and long term)
Frumkin lists the three defining features of nonprofits as follows:
- They do not coerce participation (most fundamental feature, depends on good will, increases trust, moral “high ground”, closer to market than government),
- They operate without distributing profits to shareholders, and
- They do not have simple and clear lines of ownership and accountability.
These features can either make nonprofits weak, inefficient, and direction-less or, more likely, they give nonprofits unique advantages over other organizational types. They enable nonprofits to service niches not addressed by the private sector or government.
Frumkin goes on to explore the politics of nonprofits and the motivations of nonprofits. He sees some nonprofits as (generally) liberal –leaning (i.e., people willing to toil in low paying or voluntary positions, self-selected group that consist of untainted partners of government, and many political activists) or right-leaning (i.e., faith-based organizations, organizations promoting self-help and independence, and innovation factories). Perhaps, however, this definition is more motivational than political. In other words, some nonprofits are demand- or supply-side driven. Demand-side nonprofits rely on the the instrumental character of their outcomes (obligations); supply-side nonprofits depend on the expressive quality of their activities. Ultimately, Frumkin sees elements of both in many nonprofits, but he sees nonprofits’ tradeoffs with respect to equality and efficiency as their central challenge.
- IRS Definition of a Nonprofit Corporation (thinkup.waldenu.edu)
- Tom Sheridan: Nonprofits Must Stand Up and Fight for Themselves, or Perish (huffingtonpost.com)