On Being Nonprofit: A Conceptual and Policy Primer

On Being Nonprofit: A Conceptual and Policy Primer, by Peter Frumkin. Cambridge, MA: Harvard University Press, 2002, 244 pp., $37.50.

The historic "contested area" between government and business has fostered the continuing growth of the nonprofit sector in the United States. This contest is increasingly significant because so many of the most vexing and intractable public issues resist single-sector solutions, much less single-organization ones.

Given the boundary-spanning nature of the nonprofit world, it is fitting that On Being Nonprofit: A Conceptual and Policy Primer was written by a self-described "organizational sociologist who teaches strategic management in a public policy school," namely the Kennedy School at Harvard, where Frumkin is also affiliated with the Hauser Center for Nonprofit Organizations. Moreover, his front-line experiences (foundation program officer, nonprofit manager, program evaluator) provide a credible context that strengthens the application of his scholarship.

Nonprofit organizations go by many names: tax-exempt, nongovernmental, independent, third sector, civil society, charitable, voluntary, nonproprietary, private voluntary, community based, public benefit, not-for-profit. Quite often, then, these organizations are characterized as being "not" something, rather than a more positive description.

Frumkin believes that nonprofits actually derive their unique advantages from these "not" attributes. Unlike government, nonprofits do not coerce participation, thus creating a reservoir of goodwill that attracts and sustains broad involvement. Unlike private sector businesses, nonprofits do not distribute profits directly to stakeholders, but rather to the support of programs and services, thus encouraging charitable and volunteer support. And unlike either government or business, non-profits lack clear ownership and accountability regimes, thus creating more avenues for involvement and participation.

Frumkin measures nonprofits on an expressive or instrumental dimension and on a supply or demand dimension. Within this "matrix" of action, he argues that non-profits play four vital functions: (1) by promoting civic and political engagement (expressive/demand-side), nonprofits help to build social capital and also encourage citizen involvement in politics and advocacy; (2) through service delivery (instru-mental/demand-side), nonprofits fill important gaps in government and market services; (3) by allowing for expressions of values and faith (expressive/supply-side), nonprofits enable staff, volunteers, and donors to see their important commitments embodied in the work of an organization; and (4) through social entrepreneurship (instrumental/supply-side), nonprofits are able to achieve charitable objectives through commercial means.

Nonprofits enhance civic and political engagement, according to Frumkin's analysis, by bringing people together to address community, national, or global issues. Indeed, as Tocqueville would argue, "associations are the crucible" for democratic action. If inequalities of resources or opportunity impede individual participation in public issues, then nonprofits help to overcome some of these imbalances. In addition, nonprofits encourage problem identification and the development of policy alternatives through advocacy and community organizing.

Service delivery by nonprofits contributes as much as 10 percent of United States GDP. Unmet needs, usually attributed to failure of government or businesses, become the focus of many nonprofit organizations. Frumkin chronicles this rationale as well as many related concerns, including whether nonprofits are a default service provider rather than a positive choice, whether nonprofits are becoming a "third party" government provider, whether government contracts inhibit nonprofit autonomy, whether nonprofits are unfairly competing with for-profit providers, and whether nonprofits may experience mission drift if they try to take on large community or national issues while competing with government or private sector organizations.

Frumkin finds a natural affinity between philanthropic work and faith and values, though he recognizes the inherent difficulties in documenting that relationship. As "mediating structures" between individuals and society, he notes that nonprofits ranging from churches to voluntary associations help to connect isolated individuals to larger public issues through the organized expression of core beliefs. This particular function attracts conservatives and liberals alike, although for differing reasons (devolution and privatization by the former group, community empowerment and self-determination by the latter). Frumkin's insightful analysis includes a discussion of how community needs may be balanced against the interests of donors, and also provides a timely context for examining emerging "faith-based" initiatives.

Finally, through social entrepreneurship, nonprofits may be able to combine both expressive and instrumental dimensions. Frumkin suggests that nonprofits, either independently or in cooperation with business, can integrate both commercial innovation and social motivation. He offers constructive illustrations, such as the Robin Hood Foundation of New York and Social Venture Partners of Seattle. At the same time, he cautions against using measures such as "social return on investment" unless the donor and the organization have a full understanding of this met-ric's benefits and its shortcomings. He also reminds us that pluralism, diversity, and innovation actually may be imperiled by an overemphasis on efficiency and commercial activity.

Frumkin cautions that the growth of the nonprofit sector may soon "outstrip soci-ety's ability to support these endeavors adequately." He makes a persuasive case for collaboration, noting the large numbers of nonprofits that tend to work independently on similar problems "will find it hard to achieve economies of scale and instead be drawn into an exhausting struggle for organizational survival."

As with most aspects of life, effective nonprofit leadership is a question of balance. Resource shortages, management effectiveness, and public policy challenges are just some of the perplexing issues that must be juggled. Nonetheless, with the further battering of the domestic "safety net" resulting from public service cutbacks, the nonprofit sector becomes even more vital. Peter Frumkin has provided a comprehensive appraisal for the scholars who study the sector and for the practitioners who manage these important national resources.