32 A significant difference between non-profits and commercial and government organisations with regards to human resources pertains to the fact that while commercial and government organisations can attract highly skilled and experienced people into their working environments, NPOs often have to perform their functions with people who may not have the necessary skills or experience, but who want to assist the organisation purely out of a desire to contribute to its social mission. This is effectively encapsulated by Smit(cited in Leuvennink, 2010, p. 32) when he says: “ Both (commercial and NPOs) need staff to do the work; but in the case of commercial business, staff are carefully recruited, paid according to market rates and performance is managed, while in the case of non-profits the work most often gets done by unpaid volunteers.”
In addition, unless employees or volunteers are highly committed to, and passionate about, the social mission of the NPO, they will be prone to offering their services and skills to the non- profit only for a limited amount of time, or until a better offer comes along, or they may not even consider getting involved with a NPO at all. Thus, attracting and keeping skilled and experienced professionals, while being of critical importance, can also be challenging for NPOs.
33 Dees (1998, pp. 56-57) proposed the following reasons for non-profit organisational interest in the for-profit method of operation and management:
For-profit efficiency and effectiveness is often chalked down to their desire to generate a profit, as well as the motivation to outperform competing companies. This motivation can lead to greater discipline and innovation capacity on the part of NPOs as they too need to find more effective ways of dealing with competitors.
Secondly, NPOs are moving away from the notion of providing goods and services to disadvantaged or disenfranchised groups in the hope of breaking the reliance of these groups on their donated services and products. More and more non-profits are adopting an approach that focuses on equipping these groups with the necessary skills and knowledge to enable them to become self-sufficient, thus breaking the cycle of beneficiary over-dependence on donations. Thus, they are running their operations in a more business-like manner to ensure that this aim can be met, by for example establishing small shops and enterprises through which their beneficiaries can earn a steady income.
NPOs are also coming to the realization that their sustainability can no longer depend only on funding and donations from external agents or actors, as such funding and donations are unpredictable and may be insufficient for the overall operation and management of the organisation. Therefore, they have come to recognize the benefits of engaging in commercial activities to broaden their sources of funding in order to receive a constant, dependable source of income that can ensure the sustainability of the organisation (cited by Habberton in Leuvennink, 2010: 32). The revenue generated from these commercial pursuits have the added advantage of being able to be utilized for any purpose of the organisation, unlike grants and funding from particular agencies that may come with certain conditions or restrictions with regards to the manner in which it can or cannot be used. As such, these ventures serve as a means for NPOs to break away from their dependency on external funders and to take responsibility for their own sustainability. Ironically however, this could also attract more external funders, as funders are more likely to donate to a non-profit if they feel that such an organisation is taking responsibility for its sustainability in a more proactive manner, instead of depending on donors and external funders alone.
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Another reason for the move towards a more professional and commercial look and method of operation by non-profits is due to the fact that government funders are increasingly seeking out more professional and self-sufficient NPOs on which they can rely to provide the social services that they can no longer provide. Thus, it is in the best interest of NPOs to appear and operate as professionally as possible so as to attract the attention of significant government (and commercial) funders. For-profit enterprises and grant-providers are now becoming more interested in the value they can accrue from their partnerships with non-profits, than on the quality of the programs offered by these NPOs. This signals a progression to donor and beneficiary relationships in which the donor (or business/government agency) is also concerned about what they can get out of the relationship with the beneficiary (or NPO), beyond a simple donation from the donor to the beneficiary without any attached conditions or requirements. In this way, the changing dynamics in the donor-beneficiary relationship is pushing NPOs to become more commercialized and professional in order to attract continuous funding that will ensure their sustainability.
Finally, non-profits are taking on a more commercialized approach because they are increasingly in competition with other non-profits, as well as commercial and government agencies, and thus the move toward commercialization is seen to be a way of equipping them with a competitive edge. Since all these types of organisations are competing for funding for the provision of similar social services, whatever can be seen as a method of gaining some kind of edge is immediately (and often, unquestioningly) adopted.
Many NPOs have being making the move toward commercialization and professionalization simply to continue to attract funding amidst growing competition and declining funding. Others have adopted such an approach simply because they see other non-profits doing it and assume that it is something they must do as well. Competition has also led non-profits to establish commercial enterprises through which they can derive a constant source of income, instead of having to continuously compete with others for funding.
Besides the above points suggested by Dees (1998) as to possible reasons for why non-profits are becoming increasingly similar to for-profit organisations, we have to also consider how for- profits are becoming more socially orientated in nature. Social work or development is often
35 conceived of as the domain of non-profits and government departments alone, but many of the commercial enterprises today either engage in some social development initiative/s, or allocate funds to social programs/projects, while others contribute funds directly to the NPO itself. For this reason, and because the commercial world is beginning to appreciate such social contributions as being an important part of the work they do, for-profit organisations are increasingly making use of social accounting methods.
Quarter, Mook and Richmond (cited in Richmond, Mook, & Jack, 2003, p. 309) define social accounting as “ a systematic analysis of the effects of an organization on its communities of interest or stakeholders, with stakeholder input as part of the data that are analyzed for the accounting statement.” Such ‘communities of interest’ are not limited to the organisation’s contribution to social initiatives alone, but does not preclude such initiatives either. The emphasis is on understanding the effect of the organisation (and its related operations) on the people they come into contact with and acknowledging such effects (both positive and negative) in the “social account” which is provided as a supplement to the financial accounts and statements (Richmond et al., 2003). Social accounts are more relevant to non-profit organisational operation and accountability because many of the positive outcomes of the NPO cannot be measured financially. A non-profit that distributes mosquito nets to poor families in malaria infested areas can calculate how much the nets, traveling expenses, consumables, etc. of such a mission will amount to, but they cannot truly calculate a numerical figure for the benefits derived by the assisted families. The same reasoning applies to for-profits engaging in social initiatives, thus enhancing both the for-profit’s and non-profit’s need for social accounts that document the social benefits that they have brought about, not just the financial transactions that they have engaged in in the course of their operations.
As the partnerships and networks between non-profits and government and commercial enterprises grow, non-profits are finding it more necessary to discover and utilize the knowledge and expertise demonstrated and possessed by the for-profit or private sector (Lewis, 1998) in an attempt to remain sustainable and competitive. However, while adopting a more professional and commercialized approach may improve a NPO’s effectiveness and sustainability, the adoption of such approaches can erode the very essence of the non-profit form, thus blurring the boundaries between not-for-profit and for-profit organisations even further.
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