AN OUTLIENE OF CIVIL

SOCEITY AND
MANGEMENT
CHALLENGES OF NGOs OR
NOT-FOR-PROFIT
ORGANIZATIONS

Amjad Nazeer
4/2/2010
 AN OUTLIENE OF CIVIL SOCEITY AND

MANGEMENT CHALLENGES OF NGOs OR NOT-FOR-PROFIT ORGANIZATIONS

Abstract:

While stepping into its middle ages the nonprofit-sector is struggling with and discovering its
own management system as do the experts and academicians. The questions are, can it
learn from public and private sector management models? If yes! How far? If not! What is
the way out then? What type of management is already in place, if any? Nevertheless,
delving into the management debate is difficult without having an idea of civil society first, of
which nonprofits are the strategic constituent. That is why the article will begin drawing an
outline of civil society. It will then proceed to the concept of, but mainly to the management
approach and challenges of the non-profits. Management dilemma and complications that
contemporary not-for-profit sector faces with, is the main theme of this article. Along with
political, economic and ethical inevitabilities, internal and external tensions of the sector are
given a due consideration. Quandaries caused by the sources of revenue, autonomy and the
complex relation with state and market are also seen through. A co-relation between the
governing board, accountability and performance-measurement is also explained.

Describing the inapplicability of the bureaucratic and the scientific management theory, the
article proceeds to the management approaches of the not-for-profits, though heavily relying
upon H.K. Anheier’s understanding and analysis of the not-for-profit management. Although
it is difficult to speak about adequacy and inadequacy of a particular approach but certain
ideas and insights are shared for the guidance of policy makers and managers in the sector.
Precisely, it is intended to demonstrate that not-for-profits’ management is widely different
from both public and private sector. In reality, it is far more complicated and multifarious than
is usually perceived to be. It will demonstrate that a nonprofit-organization is actually a
conglomerate of more than one organizations or a complex array of multiple components,
hence calling forth a complicated management system. The methodology used here is
descriptive and analytical rather than prescriptive.

Introduction:

It is weird to speak about management without knowing the kind of organizations subject to
our consideration. Nonprofits are civil society organizations but not civil society in exclusion.
Systematic study of civil society is no more than two-and-half decades old. Therefore,
theories of its nature, rai-son-de-tre and impact on state and society are quite novice. The
phenomenon, however, is gradually taking shape and freeing itself from preordained
conventional economic and welfare approaches. The growth of a sustained and vibrant civil
society cannot be attributed to a single political, cultural or economic factor or to a historical
era. It is the outcome of decades' long process even centuries (Anheier 2005, 35). Civil
society, neither as public sphere nor as part of a society, rather as a kind of society
(Edwards 2004, 10-40) is the framework of present analysis.

Understanding Civil Society:

While endeavouring for a better understanding, a lot has been said and written about civil
society groups and organizations. One of the major difficulties is caused by the mind
boggling variety of the organizations we find under the rubric of civil society. They are as

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varied in terms of structure, scope, objectives, staff and source of funding as they are in
identity and nomenclature i.e. non-governmental, non-profits and philanthropic
organizations, voluntary, associational or independent sector, third sector, social economy,
charities, self-help groups and possibly some other recognitions too, each having its own
conceptual and practical implications (Anheier 2005, 38). In this context, it is difficult to come
with a universally accepted definition. However, one can find a functional agreement on its
defining features amongst experts and practitioners saying that ‘civil society is an arena of
voluntary action, self-governance and non-profiteering, where people come together for the
advancement of common interests. Driven by higher ethical values, the sphere lies
somewhere between family, state and the market which is usually populated with charities,
non-government organizations, women’s and self-help groups, religious and ideological
associations, trade unions, advocacy alliances and social movements (CCS, 2010, Civicus
2008, 3-4).

Civicus employed 74 indicators for measuring multiple aspects of civil society, further
grouped into 25 sub-dimensions and broadly classified into 4 dimensions i.e. environment,
structure, values and impact; each broken down into several other factors such as society,
economy, politics, culture, participation, democracy, rights and freedoms, gender,
transparency, public policy, social interest, information etc to evaluate the state or strength of
civil society (Civicus, CSI 2008, 6). Precisely, civil society is making substantial contributions
in the area of health (14%), education (23%), social services (19%), environment (2%),
culture (19%), development (6%) and civic advocacy (4%) just in the 32 developed and
developing countries that were surveyed. The sector accounts for over $1 trillion economy,
approximately employing 30 million (7%) of the workforce ranging from 12.5% to 0.4%
population. Out of which volunteers make a 5% of the ratio. Overall contribution approaches
to 37.2% and 38.5% in the transitional and developing countries figuring up to 38% in all the
countries studied (Salmon & Wojciech et-al 2000, 23).

Corresponding to the richness and diversity of the specie, there are several sector-specific
definitions too that reflect upon its legal, economic and structural aspects. In the simplest
terms nonprofits are defined as, “....the institutions that are legal or social entities created for
the purpose of producing goods and services whose status does not permit them to be a
source of income, profit or other financial gains for the units that establish, control or finance
them. In practice their productive activities are bound to generate either surpluses or deficits
but any surpluses that they happen to make cannot be appropriated by other institutional
units” (UN Hand-Book on Nonprofits 2003, 12).

Social capital, which is unlikely to develop without an associational fabric, provides the basis
for democracy. Democracy is almost impossible to exist and sustain without a vibrant civil
society. The void created by excessive individualism in a liberal democratic and capitalistic
society is abridged by the social capital, be it the product of Kantian rational devils’ long-term
self-interest. Civil society serves as a school of citizenship that underpins mutual cooperation
and support in public life. On the other hand social capital is the outcome of religious ethics
in Hindu, Islamic and Buddhist societies. Though social capital is difficult to be created but
non-profits make substantial contribution under favourable circumstances (Fukuyama 2001,
11, 16, Gellner 1994 & de-Tocqueville 1963 as cited in Fukuyama 2001).

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 The state (public agencies)

Formal Nonprofit

Informal for profit

PublicThird
Association

Private

The Community (Households, families) The Market (Private firms)

(Source. Evers & Laville 2004)

Nonprofits have marked their significance by performing three main functions: provision of
basic amenities that governments are unable either or unwilling to extend for catering the
needs of majoritarian constituency in a heterogeneous society. Minorities and socially
marginalized communities are often unattended or under-served. Market would yield basic
commodities to those who can afford to pay at a competitive price. Nonprofits instead serve
the purpose empathetically and innovatively imbued with ideological, cultural and human
values. Advocating and influencing government policies in favour of the poor and powerless;
exposing corporate greed and exploitation and stewarding natural resources essential for the
sustenance of life and livelihood is another strategic role that nonprofits fulfil. Pluralism,
economy and redistribution are added values - indispensable for democracy and social
justice - that nonprofits engender. They constitute a kind of organizational infrastructure for
social activism and basic services usually employed to achieve a larger common good.

Welfare state model emerging in the aftermath of great depression (1930s) and World War II
(1940s) rolled-back in 1980s and 1990s. Extended states are unmanageable, inefficient and
unnecessarily intrusive, were the arguments against. The trend continues to date. Recent
erosion of the state carved out spaces for nonprofit action and governments are increasingly
assuming voluntary sector as partners in delivering services (Anheier 2005, 30-31). Diversity
and development of civil society and nonprofits depend on socio-cultural, political and
economic circumstances of a state and society. Several factors account for the accredited
importance of nonprofits like shrinking role of the state, wider acceptability of democracy,
freedom of expression and association, cross-border activism and specially the abounding
influence of communication technology (Anheier, 2005, 14, 28, 174-175).

Figure2, Civil Society Diamond, Source: CSI, Civicus Mati, M 2009, p.6
3 Structure

3
2
1
0
Values Environment

Impact

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Forms and Complexities of Nonprofits:

Although similarities between public and private organizations and the nonprofits cannot be
denied but distinctions and dissimilarities are substantive enough to impart entirely a
separate character to nonprofits. Democratic governments are held accountable to their
electorates by being voted in or out every four to five years. Public firms are subject to
market forces and are answerable to the owners and shareholders. People’s participation in
government is natural for citizens cannot avoid it being voters, tax-payee and depending on
for public services and law and order. In private-sector people participate following their
desire and affordability but in the field of nonprofits, it is purely voluntary. Public sector is
financed by government’s taxing authority. In private sector owners and shareholders invest
to earn and multiply profit. Nonprofits rely on philanthropic donations, grants and gifts,
voluntary and paid labour, dues and users-fees, and contracts and endowment-building.
Revenue optimization without profit-maximization, labour-intensiveness, accountability to a
range of stakeholders (members, users, volunteers, staff and state), uncertainty, goal-
orientation and locality between public and private push-and-pull factors makes non-profits’
structure, governance and management multifaceted and complicated. Upshot, nonprofits
are essentially different and differently organized both from public and private firms (Anheier
2005, 181-195, 229).

Complicated relationship of the not-for-profits with the state further adds to its complexity. All
three i.e. complementary, supplementary and adversarial relationships simultaneously exist
between state and nonprofits depending on the times, situation, country and the context. In
other words a kind of cooperative, complementary, co-optive and confrontational relationship
runs at a time depending on needs and priorities of the two. (Young 2000, Najam 2000 as
cited in Anheier 2005, 283-285). What David Billis (1993, 160-165) delineates as an
ambiguous arena between the unambiguous personal, associational and bureaucratic
worlds characterised by formality and informality and hybridness of identity, is also a
depiction of nonprofits’ complicated construction.

The peculiar quality of non-profiteering, non-distributiveness and absence of electorate,

makes their performance assessment highly convoluted. No surprise that non-profits are
expected to measure and report their effectiveness and impact to their supporters, donors,
board of governors, members and the communities they work for. They employ methods like
goal-based, outcome-based and process-based evaluation along with day-to-day monitoring
to demonstrate their performance. Benchmarking, scorecard-balancing and dashboard-
scaling are some of the performance measures, originally popular with private sector, but
now increasingly applied by the not-for-profits too. This is in response to the growing
demands of nonprofits’ accountability, competitiveness and building public-trust (Anheier
2005, 196-201). Ideals like social justice, honesty and human dignity are always difficult to
evaluate. The value-dimension causes both organizational complication and evaluation-
challenges to the nonprofits (Anheier 2005, 204).

Humanitarian organizations experience conflict between human-rights principles and local-

cultural norms and preferences. Collaborating or not with undemocratic or authoritarian
governments, ethical abrasion with a source-of-funding and constant demands to address
structural and institutional issues is another intricacy that nonprofits go through, each having
its implications for organizational mandate and management practices. Most of the INGOs

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situated in the west, for instance, operate in the rest of the world, whose culture and values
are largely different. In the face of civil war, tribal feuds and oppressive governments, people
want them to work on preventing the very evils than concentrating on relief, rehabilitation
and resettlement of the affectees. Avoiding conflict with a government itself causes conflict
within the organizational mind and community’s perceptions. Put succinctly, nonprofits fight
with teething troubles inwardly and outwardly (Bell & Cranes 2004, 301-329).

Classical Bureaucratic Management and Nonprofits:

Since the last decades of the 19th century, down to the end of 20th century there has been a
conflict between two forms of management theory i.e. the mechanical-bureaucratic school
that assumes organizations to be machines created for enhanced productivity and problem-
solving; and the people-oriented biological school advocating for accommodation, trust,
autonomy and openness (Morgan 1989, 41-43). Max Weber is one of the pioneers of the
former, i.e. the bureaucratic form of management. It is a form of management best suited to
for production-based profit-driven-organizations working in a reutilized task-environment. It is
where specialized workers, selected on the basis of technical competence, perform certain
tasks without any powers to appropriate resources, save a fixed salary. Administratively
decisions are taken under stipulated rules and policy guidelines; performance and best
practices are measured against productivity and relationships are hierarchical, predisposed
to authority with asymmetrical division of labour. Profit-motive and profit-maximization drive
any such organization distributing its proceeds among the owners/shareholders. Obviously,
the bureaucratic management is inappropriate for not-for-profit organizations and
organizations working for a mission (Anheier 2005, 142-143).

Bureaucratic order of the organizations was, and by and large still is, accepted as the most
efficient system for industrial production. Borrowing the model from Max Weber (1910s) and
Henri Fayol (1916), F.W. Taylor (1967) perfected it to the ideals of scientific-management
and workplace-optimization for maximum possible output with minimum input in a given
timeframe. Bigger the salary - greater the productivity, irrespective of mechanical task-
fragmentation, authoritative behaviour and tense human relations that workers do not care
about, was the key assumption behind his conception of scientific management In this
sector, authority is centralized and is distributed according to one’s position or expertise.
Tasks and responsibilities are demarcated and specialized. Rules and procedures govern all
the functions and relationships. System and supervisors exercise direct control. Social
relations are impersonal and instrumental. Recruitment is determined by papers,
qualifications and experience. Incentives are extrinsic such as salary, increments and
career-advancement. Efficiency and success is rewarded by high pay differentials and
upward movement in the hierarchical ladder (as cited in Anheier 2005, 144).

In the latter ones authority emanates from the centre but is adequately shared by all the
members. Rules and procedures govern to a limited degree. Supervision is exercised
through interpersonal dynamics in a relatively homogenous environment. Relationships are
personal, comprehensive and valuable in themselves. Recruitment is based on shared
ideals, interests and personalities. Incentives are intrinsic say seeking ideals and enjoying
work. Rewards take the form of limited pay differentials but increased respect. Tasks and
responsibilities are generalized, rotated and shared (Zimmeck, M. 2000, 16-17). ‘Rational’,
‘strategic’ and ‘optimized’ management lead by Max Weber, Henry Fayol, W.B Taylor and
several of their followers dominated organizational theory for over a century but failed in
dealing with the organizations not vying for profit. The bureaucratic management model falls

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in conflict with value-driven social-service-organizations that are largely collectivist and
democratic in character

Management Complications and Challenges of Nonprofits: Role of Structure,

Leadership and Values:

Coupled with civil society theorization, nonprofits’ management theories are also evolving.
Like structure, origin and functions, its’ management typology is also on its way to be
analysed and understand properly. For being voluntary, philanthropic, and value-driven,
management in this sector remained an abhorring idea for long, in favour of informality and
flatness. But its’ ever growing size, increased social obligations and declining governmental
support compelled it to assume one or another form of management. Beyond concerns of
cost-minimization and financial controls, nonprofits are adopting innovative and enabling
management style (Anheier 2000, 2-6, 12). It might hold a few similarities with public and
private sector but nonprofits’ management is far more complex and multidimensional,
henceforth looking for a different approach and managerial practices.

Broadly Pearce and Robinson (1998) describe management as, ‘the process of optimizing
human, material and financial contributions for the achievement of organizational goals’.
Post 1980s management was heavily influenced by the ideas of equity and market
efficiency. Nonprofits were not immune from the trend. But that change could only serve if
nonprofits are assumed to be an extension of the public-sector or for-profits in disguise. For
being unique, they need a management model of their own what they are gradually getting
at. There are number of structural distinctions and entirely a different vision and values that
shape them separately and set them apart. Normatively all management approaches are
context and environment specific, so do the nonprofits. Given their componential structuring,
federative alignments, multiplicity of constituency and mission-determination a
comprehensive and multifaceted management approach suits the sector (Anheier 2005,
240-244).

Gomez and Zimmerman (as cited in Anheier 2005, 245) present a good beginning to
comprehend nonprofits’ management. The key to nonprofit management, they believe, is to
understand the role of multiple bottom-lines, normative-orientation and informational-
adequacy of the nonprofits conjoined with operative necessities of personnel, accounting
and service delivery. To control, communicate and integrate multiple components, managers
usually have a series of choices to make or not to make. Both centralized and decentralised
structures and functions converge in the nonprofits for variant wants and purposes. Say
policy-demands and positions need to be centralized while local needs are better served
being decentralized. Multiple management models, therefore, are concurrently active and
effective in nonprofits each suitable to the component and bottom-line it serves (Anheier
2005, 244-246).

Leadership and the exercise of power are most problematic features of public and private
organizations but far more challenging in not-for-profit sector where the exercise of power is
more than getting a job done. It is not productivity, efficiency or a public office but loyalty to
ideology and commitment that imparts them a profound sense of success (Anheier 2005,
160). Values are deeply embedded in the nonprofits’ culture, manifested across
organizational objectives, activities and person to person relationship. Unlike the owners-

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board-management triangle, mainly concerned with profit in the business firms, governance
and management in the nonprofits is predominantly concerned with organizations mission.
Decision making, financial control and accountability are distributed among several groups
and interestingly board has a share of it rather than having all authority (Billis 1993, 157).
Performance measurement is easier in public agencies and private firms against very clear
bottom-lines i.e. profit and political power. Difficult it becomes in the non-profits as they have
too many bottom-lines contrary to the conventional view of having none. It is the mission and
stakeholders’ expectations what a nonprofit board considers for performance assessment
(Anheier 2005, 226-7).

The most effective management framework takes the sector’s multidimensionality into
account i.e. structure-hierarchy dimension, identity-orientation dimension, formality-task
dimension and longevity-performance dimension. The organizational life (seasoned or
beginner), size (large or small sometimes analogy made with tent or palace), culture
(technocratic or social), and form (coalition, network or professionally organized), direction
(outward or inward) and lastly interconnectivity of its multiple components. In other words
multiplicity is the signature of non-profits. Therefore a management model corresponding to
its various components, culture, mission, values, operating-procedures, activities and the
outcomes is most effective for nonprofits. And this is the multiple management model that
functions effectively in this sector without causing inertia, rigidity and inefficiency (Anheier
2005, 244-246).
Identity vs context

efficiency vs effectivene

Soci Tent
Cult

Techno Palace
Culture
People vs. Task orient Permanent vs. Temporary
Identity vs context

External Hierarchical
Internal vs. External Monolithic vs. Polycentric
Flat vs. steep

Organizat.

Int. Net
org Source: Anheier 2005, p.252 work

(Source: Gomez & Zimmerman as cited in Anheier 2005, p.252)

Complications Arising from Modern Management:

Role of volunteers is the cornerstone of voluntary sector. If, all of the volunteers stop working
all at once, the working of the whole sector will come to a halt. However managing
volunteers, of all abilities and orientation, complicates nonprofits’ management further.
Volunteerism is becoming more and more problematic in the sector. Formalization,
professionalization, equal-opportunity-employment-principle, accountability, freeing itself
form risk and ensure funding are few of the reasons. On the other hand, volunteerism, the
root-canal of nonprofit functioning, is becoming increasingly frustrated. Inability to employ
their knowledge and skills, friction with professional staff, lower status, distrust and
regulatory burden are discouraging volunteerism. Interestingly such complaints are
emanating from modern management practices that nonprofits are gradually adopting
(Zimmeck 2001, 7-12).

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‘Formalization’ and ‘professionalization’ perhaps resolve some of the problems but generate
several others. For example most of the national campaigning organizations are losing touch
with their local groups that once generated ideas and issues for national organizations
sustainability. Traditional bond between the national and local organizations is getting
thinner and weaker. Both social services and campaigning is progressively becoming
professionalized and specialized in functions. Like volunteerism, local-support-base is also
waning away. Increased funding, professionalism and trained-staff are shifting powers
towards the centre. Traditionally, local campaigns were driven by people’s emotional
reaction for righting a perceived wrong. Balance is now shifting towards more professional
and resourceful national organizations supposed to be planned, analytical, strategic, rational
and articulate. But overall organizational success is not possible without a stronger and
strategic linkage between grassroot and the national campaigning organizations. The
growing split in turn will dilute their public mandate. Bridging the gap between emotion and
strategy also calls for an adequate managerial response (Ritchie, D. 2007, 5, 11, 27-33).

Conclusion:

Civil society cum nonprofits is a complex phenomenon. It is loosely defined as a spatial

entity between state, family and the market. Academicians and experts are increasingly
getting interested to understand the nature and role of civil society and nonprofits. Nonprofit
organizations are far more diversified, complicated and challenging than they are usually
perceived to be. Nonprofits are a strategic and significant component of civil society. They
are in-fact more than one organizations or a complex integration of multiple components
each with a different bottom-line. Nonprofits are playing several vital roles both in the
developed and developing societies. Their inevitability is now globally acknowledged both in
terms of service delivery and expressive functions especially in the wake of state withdrawal
and expanding market. Their management structure and adequate approaches are as
complicated as the organizations themselves. Classical bureaucratic management theories
and models fail non-profits in practice. Dynamic, multidimensional and proactive
organizations as nonprofits are, need proactive and multidimensional management.
Therefore a multidimensional model of management is the best model that is most suitable
for non-profits and is mostly in practice with or without the knowledge of its practitioners.
William Wallace, the former professor of a business school once said that “public and private
management are alike in all unimportant aspects (Allison, 1980, 27-38)”. Likewise we can
say that not-for-profit, for-profit and public managements are similar except in all important
matters. Their peculiarity composition is established. Therefore there management is
peculiarly complicated.

******

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References:

1. Books and Articles:

Anheier, Hemult K. January 2000. Managing non-profit organizations: Towards a new

approach, Civil Society Working Paper, London School of Economics, Centre for Civil
Society.

Anheier, Hemult K. 2005. Nonprofit organizations: Theory, Management, Policy, Routledge

press, Canada and USA.

Bell, Danial A. and Cranes, Joseph H. 2004. The ethical dilemma of international human
rights and humanitarian NGOs: Reflections on a dialogue between practitioners and
theorists, Human Rights Quarterly, 26, 300-329 John Hopkins University Press.

Fukuyama, Francis. 2001. Social capital, civil society and development, Third World
Quarterly, Vol 22, No 1, pp7-20.

Ritchie, Donald. October 2007. Bridging the gap between emotion and strategy: a study of
change between national campaigning organizations and their networks or local groups,
Voluntary sector working paper No. 5, Centre for Civil Society, London School of Economics.

Salmon, L.M. Wojciech, S. & Anheier, H.K. December 2000. Social origins of Civil Society:
An overview, John Hopkins Centre for Civil Society Studies, Working Papers of the John
Hopkins comparative Nonprofit Sector Project, Baltimore, USA.

Zimmeck, Meta. September 2001.The right stuff: New ways of thinking about managing
volunteers, Institute for Volunteering Research, London.

Morgan, G. 1989. Creative organization theory: A resource book, Sage publications, Sage.

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17.56hrs.

Edwards, Michael. 2004. Civil society, Cambridge: Polity, also cited in

http://www.infed.org/association/civil_society.htm#public_sphere, Site hit on March 23,
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Fayol, Henri. 14 Principles of Management,

http://www.12manage.com/methods_fayol_14_principles_of_management.html,
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