Competitive Practices of NPOs

May 20, 2012 2 Comments

Perhaps the dominant force shaping the non-profit sector at the present time is the widespread commercialization or “marketization” of social and economic life. While commercialization is nothing new to the non-profit sector, in recent years the sector has not only reacted to the market but also embraced it on a scale not previously seen, integrating market impulses into non-profit operations in often creative ways, though with consequences that are not completely clear.

Sources of Market Pressures. the pressures propelling non-profit organizations towards greater engagement with the prevailing market system are multiple. They include declining government financial support, slow growth in private giving, increased service demands from widely disparate population groups, growing competition from for-profit and non-profit organizations, increased accountability demands, and the increasing presence of potential corporate partners.

Growth of Fee Income. In response to this combination of push and pull factors, many more non-profit organizations seem to be reaching out to the market, and on a much broader front. Perhaps the most obvious evidence of this is the growth of non-profit reliance on fees for service charges. But non-profits are also deriving money from the sales of ancillary goods and services, such as merchandise in gift shops and facility rentals.

Social Purpose Enterprises. Non-profits are also integrating the market more directly into the pursuit of their social missions through the formation of “social purpose enterprises,” or “social ventures.” These hybrid organizations use market means to pursue non-profit objectives. Here the market is not simply a source of revenue but a preferred vehicle through which to achieve a social purpose.

Corporate Partnerships. Non-profits are being drawn further into the commercial orbit by alliances with the corporate world. Businesses have found that teaming up with non-profits adds respectability and trust to their images while cultivating new markets, new sources of employees, and new pools of research and expertise. In exchange, corporations donate money, form employee volunteer programs, sponsor events, loan out executives, and provide equipment, space and contacts.

Incorporation of the Market Culture. As they have come to operate in an increasingly competitive, market-oriented environment, non-profits have also increasingly absorbed the culture and manner of the market into their internal structures and operations. Non-profits are no longer bashful about aggressively advertising their services or competing for charitable contributions. Indeed, they have become increasingly “entrepreneurial,” worrying about their “market niche” and engaging in “strategic planning.” Agencies are increasingly adopting performance measurement techniques, adopting smaller, corporate-style boards, and building more elaborate organizational structures.

A New Enterprising Social Sector. Emerging from these various developments is a new picture of the “social sector,” a picture of a self-propelled set of organizations loosened from their original moorings in charity or as a passive agent of government and much more closely connected to the market system, while still somehow tied, however tenuously, to the pursuit of public benefit. Unquestionably, the non-profit sector has gained many advantages from this closer association with the market. Marketization has offered the non-profit sector access not only to an enlarged resource base but also to the energy and creativity that the market system has long represented. Armed with earned income, non-profits may become more fully independent than either government support or private charity has made possible. Engagement with the market also opens possibilities for leveraging enormous private resources and talents for social purposes, and for erasing widespread images of non-profit ineffectiveness, establishing instead the image of a set of organizations that has learned how to bring the most efficient means to the service of the most valued ends.

But if the potential advantages of the non-profit sector’s embrace of the market are considerable, so too are the risks. Market pressures can undermine non-profits’ commitments to their core values, to doing what is right as opposed to what is popular or commercially viable. They can also threaten the sector’s public support if efforts are not made to keep the public engaged and informed.

The solution to these problems may not lie either in restricting the commercial involvement of the non-profit sector or in relying blindly on the restriction on distribution of profits to ensure appropriate non-profit performance. Rather, more direct mechanisms of control may be desirable—performance measurements and mechanisms that empower key stakeholders, such as donors or the users of non-profit services. Under any circumstances, while it is essential to keep the challenges posed by the market clearly in view, it would be foolhardy to let the opportunities it presents to the non-profit sector go unexplored.

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Social Capital in India: Old wine new bottle

May 12, 2012 2 Comments

Photo source: http://entrepid.sg

India faced the problems of economic development and poverty eradication twice on a massive scale. Firstly, it was felt acutely just after independence and secondly, it is being felt still more acutely, today, when under the pressure of globalization, India has to turn to United States of America and western countries for its development. When Indiabecame independent from the British rule in 1947, Pt. Jawaharlal Nehru as the first Prime Minister of India, felt the need to develop an independent economic system. To strengthen independence and make it more meaningful for the common man, the issue was hotly debated. The American and western experts termed the debate on independent economic system as a futile exercise. They argued that as India was divided into so many castes, religions, languages and regions it could not create a large, well organised market system. They believed that Indians were people with spiritual leanings who cared more for the world here after. And therefore, it was believed that these Indian common men had little interest in savings or profit making. They even quoted Shankaracharya, in their support whose teachings said, ‘O fools, wealth can never give you satisfaction. So renounce all desires. Be wise and contented and happy with your lot.’

In this way the western masters did all they could to dissuade India from modern industrialisation. But JL Nehru and the subsequent PM Smt. Indira Gandhi never felt discouraged and made concerted efforts to develop an independent economy and achieved unprecedented success in this direction.

Surprisingly enough, these advisors have appeared again, this time in the form of institutional system like World Bank. They claim that lack of Social Capital is at the root of growing socio-economic disparity, corruption and rising crimes in the country. Therefore,India should desist from opposing international economic system (as witnessed inCancun) and make an all-out effort to create Social Capital. Robert Putnam, Francis Fukuyama and World Bank worked as Think Tank behind this campaign. Putnam was the chief exponent of the modern concept of Social Capital. He discussed this concept in detail in his famous book, ‘Making Democracy Work: Civic traditions in Modern Italy’ published in1993. In his opinion ‘Social Capital’ is closely associated with the kind of social organization which is based on mutual trust and accepted standards of social conduct. These elements work as networks that develop the work culture of the society that pave the way for combined social efforts for economic progress and prosperity. In other words, ‘they create a social affinity that helps people work together and thereby increase production’.

Francis Fukuyama underlined the importance of ‘Social Capital’ in his book ‘Trust and the Great depression’. He further emphasised its role in his pamphlet ‘Social Capital and Civil society’, which he wrote for International Monetary Fund. According to Fukuyama Social Capital is essential for modern economy to function efficiently. No liberal democracy can function without it nor can modern culture survive without it.

World Bank considers Social Capital as the lost link of development. The concept of Social Capital with its inherent implications is not entirely new for India. Right form the ancient times people were instructed to work together. It has been the basis of joint family, caste-system, society and religion. Lord Buddha preached, ‘Sangham Sharanam Gachhami’. Today it is said that ‘strength lies in unity’ (‘Sanghe Shakti Kalyuge’ in modern times). The question is if we already know the importance of Social Capital, it means that there is nothing new in the concept. It is only old wine in a new bottle. Then what is the justification for launching such a great campaign again!

The reason is not far to seek. Western countries and their experts and their mouthpieces in the form of Organizations viz., International Monetary Fund and the world bank, nourished by them do not want that developing nations should see their economic backwardness and mismanagement in their historical perspective and take positive steps to redress them. Nor do they want that these nations should launch a crusade against the present unjust International economic system. These western powers want that the developing countries should follow their dictates, in every area of economic development, as modern day economic colonies. So, they try to convince the people of the developing Countries that they alone are responsible for their present miseries. If they stop fighting among themselves and create an atmosphere of mutual co-operation and trust they will progress with rapid speed.

It is useless to blame Capitalism and Imperialism. If land-lords and farm-workers, Capitalists and imperialists, forwards and backwards, developed and developing nations shun the path of confrontation and live amicably by creating mutual trust, the problems of poverty, exploitation and backwardness will be solved in due course. The spokesmen of the present concept of Social Capital strongly believe that in a country like India, the root and source of Social Capital still exist, but they can be revived not by Government machinery but by non governmental organizations. As the present political system has become utterly corrupt, these organizations should keep above politics while discharging their duties.

They are opposed even to Gram Panchayat and decentralisation because they are fully under the control of the Government. In this way, they want to keep all developmental work beyond the jurisdiction of the government. The supporters of Social Capital are in the favour of making all development work non-political. They have faith only in non-governmental organizations. But as we all know that these NGOs are not above controversy. Most of them are interested only in earning money by fair or foul means. They receive money from many donor agencies, which are not above suspicion themselves. The data collected by NGOs may be used by the foreign agencies against the government, which may go against our national interests. In short, these so called NGOs are not free from corruption. More over, the Social Capital generated by NGOs is not equally used for the benefit of every section of the society.

Today India needs all-round social, economic, political and cultural changes to create congenial conditions for development. This is a tremendous task which can be accomplished by political parties alone by using people’s power. This is because; the party in power is answerable to the people and the parliament. The NGOs which create Social Capital do not own any such responsibility. In India, NGOs like Ram Krishna Mission, Bharat Sevashrana, etc have been functioning for decades. They have done commendable work, but have never claimed that they can bring about comprehensive economic and political development. Today NGOs which are known for their integrity can not do more than providing temporary relief. However, permanent changes can be brought with a proactive partnership between the government and the civil societies. Therefore, it is wrong and even dangerous to think of development without government and political power.

In the end attention should also be drawn to the fact that some people want to encourage casteist, regional and communal organizations in the name of creating and developing Social Capital. It is a signal of danger which should be taken note of. If Brahmins form their organization to help their kinsmen and backward and schedule castes work on the same lines, it will aggravate only sectarian feelings. India, which is already divided on sectarian lines will break into fragments if programs of Social Capital are implemented with such narrow minded aims and ambitions.

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