A Timely Analysis of Issues Confronting the Nonprofit Sector
Nonprofits have a dual identity, notes author Lester M. Salamon, professor at Johns Hopkins University and an internationally recognized expert on the nonprofit sector. Relying on volunteers and donations, nonprofits operate in a profit-oriented market economy and have to adhere to professional performance and efficiency standards, while at the same time they are part of the private sector performing critical public purposes.
While this is not a new condition, the environment in which nonprofits operatecharacterized by significant shifts in demographics, public policy, lifestyles, attitudes, technology, and accountability demandshas become especially difficult.
The nonprofit sector has long been the hidden subcontinent on the social landscape of American life,” Salamon observes. But, nonprofit managers, who have to figure out how to survive and fulfill their mission, he writes, have been left to their own devices and have turned increasingly to the market to survive.”
Salamon outlines the key challenges confronting the sector, particularly those surrounding fiscal, competitive, effectiveness, technology, legitimacy, and human resource issues.
Not least is what one may call an existential threat from emerging competitors: Despite the important contributions [nonprofits] make...new competitors, some of them taking new institutional forms, are challenging not only the nonprofit sectors market share in fields that nonprofits once dominated, but also its claim to distinctiveness as the sector that uniquely mobilizes private initiative for the common good.”
Contributing to what Salamon describes as a serious fault line” in public trust in nonprofits may be unrealistic expectations that the public has of these institutions, expectations that the charitable sector ironically counts on and encourages.” While nonprofits face other risks, including how to manage increased demand and fulfill their basic mission, loss of public trust may be the greatest potential peril nonprofits face.
What to do?
Salamon outlines three possible paths forward: the status quo scenario, the social enterprise scenario, and the renewal scenario. As one might expect, he puts little faith in the first. The second, which appeals especially to the emerging generation of activists and socially conscious entrepreneurs, may offer greater possibility for solving social and environmental problems. The third, however, has the greatest potential by enabling all parties to rethink the relationships between nonprofits, citizens, business, and government.
Perhaps more than anything else the book recognizes, even celebrates, the intricate relationship of nonprofits in American life ” and invites all stakeholders, which really is all of us, to shape the future together.
The Resilient Sector Revisited: The New Challenge to Nonprofit America is available from the Brookings Institution Press.
Reviewed by Peter Lowy