Preserving the Nonprofit World

To the Editor:

Lester Salamon’s commentary (“Nonprofit World Faces Many Dangers,” January 8) argues that nonprofits are now at a crossroad because steps nonprofit groups have taken to stave off threats to their survival “pose risks to the very qualities that make such organizations so valuable.”

I could not agree with him more, but I would like to offer a different perspective on why this situation came about and what steps need to be taken to preserve the uniqueness of the nonprofit sector.

Professor Salamon lauds the nonprofit sector for reinventing and re-engineering itself by adopting innovative marketing techniques, starting commercial ventures, forging partnerships with for-profits, and utilizing sophisticated fund-raising techniques.

However, he leaves the impression that nonprofits have no other option but to pursue these changes in order to survive and then offers suggestions for alleviating their current problems. He recommends: educating the public regarding the “complex realities of contemporary nonprofit operations” and “a more explicit acknowledgment of the nonprofit world’s substantial and longstanding partnership with government, and its efforts to use business approaches to promote nonprofit ends.”

If Professor Salamon is really saying that the nonprofit sector is on the right track in forging more ties with the government and for-profit sectors, I have serious problems with this position. A more critical look at the conduct of the nonprofit sector over the past few decades produces a different conclusion and provides quite different suggestions for improvement.

Any discussion of what is appropriate conduct for the nonprofit sector must start with an understanding of the unique role this third sector is supposed to play in our society. Having determined what that role is, the test for appropriate conduct should focus on two questions:

• Does the conduct at issue weaken the effectiveness of the sector to carry out its unique role? (This I will call the “unique role” test.)
• Does the conduct at issue undermine the privileges accorded the nonprofit sector? (This I will call the “privileges” test.)

The role of the nonprofit sector is to soften the “oneness” of democratic government (the need to respond to the majority) and the impersonal nature of the for-profit sector (the need to focus on profit). This is a critical role, but it can be carried out only by a sector that cultivates its special avenues of independent support and uses prudence in avoiding financial arrangements that expose it to government and marketplace pressures.

With regard to the privileges afforded nonprofits, the following come to mind: freedom from many taxes, tax systems that encourage philanthropy, freedom to accept volunteer services, and special postal rates. These are the special avenues of support granted to the nonprofit sector in recognition of the fact that, to be effective, the sector must not become dependent on government or the marketplace for its support.

If one uses the “unique role” test for reviewing the appropriateness of nonprofit conduct, many of the “helpful changes” adopted by nonprofits, as described by Professor Salamon, would fail to pass. In Professor Salamon’s article there is no discussion of the overarching need to preserve the unique role of the nonprofit sector as change is contemplated; rather, the emphasis is on how to keep the sector solvent.

With regard to the second test, the “privileges” test, it is safe to say that if the conduct in question can pass the “unique role” test it should have no trouble passing the “privileges” test as well. This is so because the rationale for granting the privileges is that nonprofits need to limit their dependence on government support and the marketplace if they are to be effective.

The nonprofit sector is facing a loss of identity. However, I place the blame for that on the sector itself.

Over the last several decades the sector has given only lip service to integrity, as evidenced by its acceptance of all kinds of compromises in pursuit of income.

The sector needs to accept the fact that it has a unique role to play, and if it hopes to honor that role it has a responsibility to:

• Encourage its members to focus on the integrity of the sector by being far more critical in judging the appropriateness of their interactions with the government and for-profit sectors.
• Educate the public about what the nonprofit sector does and about the importance to the sector of volunteerism and true philanthropy.

There is tremendous wealth in this country, and if nonprofits can demonstrate to the public by their actions that they play a distinct role then it should not be too difficult for them to convince government entities, individuals, and corporations that “giving” to nonprofits, not “bargaining,” is what truly serves the common good.

Marie C. Malaro
Professor Emerita
George Washington University
Washington