Nonprofits and the Social Economy

1. Nonprofits and the Social Economy OISE/UT Social Accounting Certificate Course B.J. Richmond Faculty of Education, York U. Bjrichmond@edu.yorku.ca

2. Nonprofits as Part of A Social Economy • To understand NP value, we need a framework to understand why, how NPs function • Conceptualizing NPs as part of a social economy helps to clarify: • Nonprofit role • NPs social and economic dimensions • The need to account for social value

3. Nonprofit Role Theory: Overview • Nonprofit role in U.S. literature prior to 2000 primarily evolved from economic theory (derivative role for NPs) • Market Failure • Public Failure • Government-Nonprofit Partnership • Role of the partners • Some social theory • Religion • The Commons • Social Capital

4. Nonprofit Role: Market Failure • NPs in areas where the market cannot profit • E.G. daycare (Hansman, 1986) • Private sector failure creates a role • Because nonprofits devote their entire earnings to the production of services (Hansman, 1986)

5. Nonprofit Role: Public Failure • NPs in areas where government cannot operate effectively • Beyond median demand (Weisbrod, 1988) e.g. specialized services for people with disabilities • Also where consumers want services that government cannot supply • A greater variety of services, locally-based services (Weisbrod, 1988; James, 1987)

6. Nonprofit Role: Partnership with Government • Salamon (1987) shifted the debate • Nonprofits in partnership with government • Issue: What kind of partnership (equity, dependency, collaboration) • In Canada, Hall and Reed (1995) and Hall and Banting (2000) • Downloading, role, relationships of nonprofits and governments

7. Nonprofit Role: Social Theory • Religion the “Godmother of NPs” (O’Neill, 1989) - altruism • The Commons (Lohmann, 1992) - tendency to organize for any civil purpose • Social Capital (Putnam, 2000) - Trust relationships • Alternative to market relations (Shragge et al., 2001) - community development

8. Social Economy Framework: Benefits for NPs • Shows NPs along with other social organizations, not as “failures” or derivative • But as community development activities • Identifies advocacy, social development roles of NPs • Rich social history e.g. AIDS organizations, rape crisis centres,etc.

9. Social Economy Framework: Benefits NPs • Emphasizes social and economic dimensions of NPs • Understanding double bottom-line is key to NP management • Clarifies categorization, • Using SE criteria, we can look at orgs on a continuum in relation to: governance, surplus, funding, etc.

10. Social Economy Framework: Benefits NPs • Legitimizes NPs values • As alternative to market values, methods • Clarifies accountability issues • Shows importance of lateral accountability to key stakeholders (Quarter, Mook & Richmond 2003; Shragge et al., 2001), not just upwards to funders

11. Social Economy Framework: Benefits NPs • Shows NPs as part of an infrastructure • That supports the ‘productive economy’ by providing social, cultural, recreational, environmental benefits • At the same time, provides an alternative or buffer for effects of the market • And also contests the market’s dominance

12. Market Sector Profit is bottom line Accounting reflects Value is ‘obvious’ Unit of value is $ Framework: profit Standards Valued Social Sector Social outputs Accounting ignores Value is intrinsic Value not defined Framework missing Few models Devalued Accounting for Value in the Market and Social Economies

13. Need for Further Research • Extend use of a social economy framework outside of Quebec • Investigate relationships within the social economy, with the other two sectors • Further document history, case studies, social accounting statements for organizations in the SE

14. References Hall, M. & P. Reed. 1995. Shifting the burden: How much can government download to the nonprofit sector. Paper presented at the annual conference of ARNOVA, Cleveland. Hall, M. & K. Banting. 2000. The nonprofit sector in Canada in The Nonprofit Sector in Canada: Roles and relationships, ed. K. Banting, 1-28. Kingston: Queen’s University Press. Hansman, H. 1986. The role of nonprofit enterprise. In The Economics of Nonprofit Institutions: Studies in structure and policy. S. Rose-Ackerman, 57 –84. New York: Oxford University Press.

15. References James, E. 1987. The nonprofit sector in comparative perspective. In The Nonprofit Sector: A resource handbook. W. Powell ed., 397-415. New Haven, CT: Yale University Press. Lohmann, R. 1992. The Commons: New perspectives on nonprofit organization and voluntary action. San Francisco: Jossey-Bass. O’Neill, M. 1989. The Third America: The emergence of the nonprofit sector in the United States. San Francisco: Jossey-Bass.

16. References Putnam, R. 2000. Bowling Alone:The Collapse and Revival of American Community. New York: Simon & Schuster. Salamon, L. 1987. Partners in public service. In The Nonprofit Sector: A research handbook, ed. W. Powell, 99-117. New Haven: Yale University Press. Shragge, E., MacDougall, P., Lachance, E, and K. Church. 2001. Accountability and evaluation: In which direction? Montreal: Concordia University. Photocopy. Weisbrod, B. 1988. The Nonprofit Economy, Cambridge, MA: Harvard University Press.