Management in the Non-Profit Sector

A Necessary Balance between Values, Responsibility and Accountability

Renato Civitillo

• Publisher: Routledge
• Year: 2021
• eBook ISBN: 9781000401899
• Topic: Betriebswirtschaft
• Subtopic: Business allgemein

Despite the significant importance of the non-profit Sector, there is a relative limitation of possible modelling related to the management of the Non-Profit Institutions (NPIs). The studies and the research are concentrated in the analysis of the characteristics and the limitations related to the NPIs, rather than to the identification of possible models that can guarantee virtuous paths to these organizations.

This book provides hypothetical trajectories for the construction of a theoretical model of reference for the management of NPIs—it accounts for the difficulties and the peculiarities of the non-profit sector, without however renouncing the concrete necessity and the great importance of approaches that try to avoid, or limit, the search for hybrid approaches constituted by the simple "transplant" of tools and techniques taken from the market or from the public administration context. Ultimately, it asserts that the non-profit sector is increasingly becoming the "pillar" on which modern civil society stands, to move towards a better future. The main aims of this book are to identify a link between accountability, responsibility and public trust in NPIs through a potential multidimensional managerial model in which these conceptual elements can be represented in a coordinated and systemic way.

It will be of interest to researchers, academics, policymakers, and students in the fields of public and non-profit management, business management and administration, and public administration.

1
Introduction

Summary

This chapter deals with Non-Profit topic, which undoubtedly represents a phenomenon of difficult interpretation and treatment. These difficulties can already be found in the same definition of the concept: it, in fact, lends itself to being somewhat ambiguous, blurred and equivocal, in both virtue and the vagueness of its use in common language, and especially in consideration of its application to the empirical reality, which today consists of innumerable and varied organizational forms traditionally made to fall within this complex term.

First of all, we need to highlight the residual use of the not-for-profit concept, which is generally used to indicate any form of organization with which citizens act on the public stage. In this perspective, we could theoretically distinguish two different forms of non-profit:

• A form that we could define “healthy”,
• A category that we could call, on the contrary, “pathological”.

The “healthy” form of non-profit coincides with the set of organizations whose mission is to provide a wide range of services and products to citizens and communities (Frumkin & Andre-Clark, 2000; Moore, 1995, 2000): this is the reason that justifies the particular protection regime present in many legal systems. In other terms, Non-Profit Institutions, very often, can benefit from particularly favorable tax treatment, through a preferential regime based precisely on the particular social and welfare purposes of these organizations. In the Unites States, for example, the Government provides supply-side tax subsidies related to specific forms of charity (Brody & Cordes, 2006). In addition, individuals and corporations can deduct the value of charitable contributions against income and estate taxes and against the taxable value or estates.

On the opposite end of this continuum, instead, we find the form that we could define as “pathological non-profit” to refer to the aggregative forms aimed exclusively at the enjoyment of favorable measures (above all of fiscal, as well as competitive, labor law and of another kind) and therefore lacking the actual canons of social utility which, instead, should represent their founding presuppositions. For example, in the Unites States, nonprofits can lose their tax exemption or face penalties called “intermediate sanctions” if they do not respect some rules: according to IRS, the revenue service of the United States federal government, tens of thousands of nonprofit organizations have their tax-exempt status revoked every year.

On this point, it is really necessary to note how the “deviated” forms of non-profit sector do not constitute mere and simple distortions of the original associative phenomenon, but rather manifestations of intrinsic characteristics of the same.

1.1 The Non-Profit Phenomenon

The non-profit sector can be defined as the set of private, voluntary and nonprofit organizations and associations (Anheier, 2014), through which citizens and communities can act for the protection of a general public interest.

The term non-profit sector is also defined as “third sector” to underline its peculiar intermediate position between government and public administration, on the one hand, and business or private for-profit market, on the other.

The term, therefore, refers both to a theoretical concept and also to a sector that has recently acquired ever greater importance.

Furthermore, it is a concept that does not have perfectly defined boundaries and, above all, unchangeable over time. On the contrary, some authors (DiMaggio & Anheier, 1990; Salamon et al., 1999; Anheier, 2000, 2014) clearly highlight that, in modern economic systems, the non-profit sector tends to present a rather fluid and nuanced perimeter, with organizational realities that often pass with enormous ease from one category to the other (e.g., some initially public hospitals become non-profit, and then come to organizational forms of a profit-oriented type).

On the other hand, some Non-Profit Institutions have particularly intense and close relationships with public government authorities and with profit-oriented organizations through, for example, specific programs or projects: in these cases, as in many others, it becomes really difficult or misleading to exclusively qualify such contexts such as Non-Profit Institutions (LeRoux & Feeney, 2015).

Another term commonly used as a synonym for non-profit sector is that of “voluntary sector” or “volunteering”, traditionally used to highlight the voluntary character of the people commonly involved in this type of entity. However, even in this case, it is a term that can lend itself to misinterpretations, when these tend to a high degree of generalization. In fact, the empirical reality presents many organizations whose staff are highly professionalized but, above all, fairly and physiologically paid.

1.2 “Healthy” and “Pathological” Forms of Non-Profit Institutions

The non-profit phenomenon undoubtedly represents a logical category that is difficult to deal with (Fiorentini, 1997; Barbetta, Cima & Zamaro, 2003; Anheier, 2000; Bronzetti, 2007; Anheier, 2014). The interpretative difficulties can be found in the definition of the concept itself: in fact, it lends itself to being somewhat elusive by virtue of both the vagueness of its use in common language, (and more) in consideration of its application to empirical reality, which consists of today of innumerable and variegated organizational forms traditionally included in this term.

In fact, it is not at all difficult to imagine the substantially residual use of the concept of non-profit, generally designed to indicate any form of organization with which citizens act on the public scene. However, this conceptualization also represents the “healthy” form of non-profit, such as to justify the particular protection regime present in our legal system. On the opposite extreme of this continuum is the form that we could define as “pathological” of the non-profit sector, if it refers to the aggregative forms aimed exclusively at the enjoyment of the tax incentives (especially of a fiscal nature, as well as competition, labor law and other types) and therefore lacking the effective canons of social utility which, instead, should represent their founding assumptions. On this point, it is really necessary to note how different authors (Moro, 2014) are who believe that the “deviated” forms of non-profit do not constitute mere and simple distortions of the original associative phenomenon, but rather manifestations of intrinsic characteristics of the same. This critical reflection is by no means insignificant; on the contrary, it probably allows us to highlight the crucial point of the question: the correct conceptualization of non-profit.

With regard to the second aspect, the theme is once again connected to the definitional question. In this sense, it should be borne in mind that, in some countries the primordial roots of the non-profit phenomenon can be traced back to the Middle Ages: it is in this period that works and congregations of charity, religious and lay people who use the huge resources at their disposal to guarantee the support of the weakest people or, in general, for interests belonging to the community. Nonetheless, the official recognition of the central role of forms of associations aimed at protecting social needs can only be obtained with the approval of the Constitutions of some countries where this sensitivity was deemed relevant by the people involved in the respective constitutional foundation: it is the inclusion of the Non-Profit Institutions in the Constitutions that decrees the formal birth of the “nonprofit sector,” which is thus defined as the set of all organizational forms having a social purpose aimed at guaranteeing the collective and subsidiary needs of the institutions typically state-owned.

While considering the necessary and obvious differences between the various countries (Salamon & Anheier, 1992, 1996; Salamon, 1999; Anheier, 2014; LeRoux & Feeney, 2015; Skelcher & Smith, 2015), we can highlight that the non-profit phenomenon has undergone a complex evolution which, essentially, can be divided into four main periods:

1. 1970s–1980s: the pioneering period.
   It is the period in which the non-profit sector is oriented toward the search for solutions to needs generally not guaranteed by the public sector. Consequently, it finds substance mainly through Catholic charitable associations committed to particular categories of people considered disadvantaged (such as drug addicts and disabled people) which represent a sort of response to the revolutionary movements of 1968. Furthermore, in this phase, in the various countries the first legislative interventions aimed at defining the characteristics of the Non-Profit Institutions are beginning to be approved.
2. 1990s: the expansion and organizational consolidation.
   The non-profit sector, after the embryonic phase of a self-organizational type, undergoes an evident dimensional development that requires a greater commitment at the organizational level. This phase is also characterized by many regulatory measures that continue to define, in an increasingly analytical way, the peculiarities of the non-profit sector and its organizations.
3. 2000s: the institutionalization period.
   The significant growth and expansion recorded in previous periods pose, with the beginning of the new millennium, an evident need for the institutionalization of the non-profit phenomenon. For this reason, this phase is particularly important and delicate because Non-Profit Institutions are beginning to be given the fundamental leading role in the design and planning of local social services in various countries.
4. From 2000 to today: the complexification period.
   The continuous and progressive progress of the expansion phase requires, in addition to the institutionalization of the previous phase, greater attention to the organizational aspects of non-profit institutions which become the necessary support for the correct and rational management of increasingly composite, multiform and heterogeneous structures. It is in this phase that Non-Profit Institutions begin to assume increasingly complex organizational characteristics, becoming extremely articulated and complex organizations, due to the need to give adequate response to the growing needs of modern civil society.

The synthetic reconstruction of the main historical phases characterizing the “non-profit” phenomenon cannot neglect the observation of the extreme difficulty in identifying a universally shared definition of a “non-profit sector” even if, on the other hand, there have been several scientific attempts to initiate in-depth and specific studies on the subject. In this sense, an essential point of reference is represented by the definition elaborated in the course of the extensive international survey curated, since 1990, by Johns Hopkins University and promoted by the University of Baltimore. At the helm of the aforementioned project, in 1996, scholars Lester Salamon and Helmut Anheier, in order to systematically collect information on the non-profit sector, conducted a comparative research between 13 countries, including Italy, drawing inspiration precisely from the need to guarantee a correct framing of the non-profit sector through a general reconfiguration of social and economic life which, up to that moment, was anchored to the ideal presence of only two actors: the Government and the private market. In other words, such a conceptual approach did not consider the existence of “private” organizations in form, but having purposes substantially pertaining to the public sphere. For this reason, the research was set precisely in the direction of giving these organizations the right economic and social weight: the goal, however, can only be pursued by passing through an orthodox categorization of organizations falling into the logical category of the non-profit sector.

From what has been explained up to now, it is quite evident how the non-profit phenomenon is characterized by various limits and criticalities and which essentially concern the very conceptual construction of the nonprofit. According to some scholars (Anheier, 2000, 2014; Boris & Steuerle, 2017), the fundamental weaknesses could be classified into three fundamental types:

• Defining limits,
• General limits, and
• Technical, methodological and scientific limits.

The defining limits essentially concern the generalized tendency to the residual construction of subjects (and objects) to be included in the non-profit sector. In other words, the non-profit phenomenon has always been negatively reconstructed, starting from the definition of what it does not represent or, also, what it should not represent. Such an approach, evidently, is absolutely not consistent with the importance represented by the non-profit sector, both in Italy and internationally.

The general limits, on the other hand, concern first and foremost the absolute prevalence of the economic aspect in the treatment of the nonprofit phenomenon which, too often, is abandoned to an isolated evaluation limited to this (single) dimension. The consideration of the non-profit...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Dedication Page
• Contents
• List of Tables
• List of Figures
• Acknowledgment
• Preface
• 1 Introduction
• 2 The Non-Profit Sector and Its Institutions
• 3 Non-Profit Institution’s Business-Like Approach
• 4 Non-Profit Management: Three Key Points
• 5 Recent Evolution Paths of the Non-Profit Sector: Attempts for Legislative Reforms
• 6 Conclusions: Values, Accountability and Managerialism in Non-Profit Institutions
• Index