Nonprofit Development: Political, Economic and Cultural Influences

By Jessica Vaughn

Nonprofit development: Political, economic and cultural forces

The nonprofit sector is constantly changing and growing due to political, economic and cultural forces. This section of the presentation introduces several key factors, which continue to help shape the nonprofit sector. Emphasis is placed on how governmental contracts and conflict over limited resources have influenced nonprofit growth and how cultural influences created by environmental and political factors continue to shape the nonprofit sector.

Political and economic forces

The governments use of nonprofit organizations was spawned from a political and economic base to first, lesson the role of governmental provision of services contributing to the 'welfare state' and secondly, to reduce cost expended on providing aide to several social causes or interests. These factors resulted in the establishment of legislation, which shuffles social demands away from government and to the nonprofit sector (Anheier, 2005). Additionally, these factors have ultimately distorted the nonprofit mission through funding and accounting requirements (Brown & Troutt, 2007).

The partnership between government and the nonprofit sector has influenced the shape and function of nonprofit organizations. Many studies (Brown & Caughlin, 2009; O'Regan & Oster, 2002; Blau & Rabrenovic, 1991) have documented the resulting effects of this partnership as related to nonprofit stability and growth. Brown & Caughlin (2009), assert that due to the nonprofit status, non-distribution constraint and donor support, nonprofit organizations are prime candidates to provide social goods and services, traditionally provided by government, more efficiently and effectively. However, the nonprofit-government relationship has also caused strain within the sector. Through the introduction of government contracts, competition has emerged within the sector between agencies and between nonprofit and for-profit organizations. For example, the for-profit sector has argued that the relationships between NPOs and the government sector is unfair and have rallied to assert their own ability to provide similar services more effectively and at lower costs. Contractual responsibilities and infused accountability standards also cause fluctuation and a steady push away from the core mission of nonprofits. As a reliance on government funding, competition for contracts and limited resources continues, small nonprofit organizations will find it more difficult to survive. This is especially true in the current economy where donors are giving less to support social causes.

Forces that influence culture

The current political and economic climate is also affecting the nonprofit organizational culture. As Guo (2007) asserts, the sectors reliance on government has pushed nonprofit leaders away from the community and from decision-making. For example, competition and an increase in nonprofit / for-profit collaborating have led to an acceptance of for-profit values to obtain nonprofit goals. There is also a shift away from advocacy within the nonprofit sector caused by the need to satisfy the demands of stakeholders and to fulfill contractual relationships and partnerships. These and other factors can lead to the community and donors questioning the motives of nonprofit organizations, ultimately harming the trust relationship. In addition, constituents or consumers may find it more difficult to differentiate between the three sectors because of this blurring of the lines.

These are some of many issues assisting in reshaping the nonprofit arena and increasing the need for professional nonprofit management. A changing economic, cultural, and political terrain challenges nonprofits to utilize strategies, including forming alliances or partnerships, without losing sight of the Global Ends of the sector and its true function within society.

As stated by Jon Van Til (2009): In such times of crisis, the third sector is thought of in a variety of new ways and relationships, resulting from such disparate motives as desperation, innovation, and creative accounting thus emerges a bewildering range of partnerships, a flourishing of subcontracted relations between state and the third sector, and a (usually specious) hope that somehow philanthropic giving can replace the declining resources provided by the public purse (pp. 1072).