NONPROFITS AND DEVELOPMENT:

THE CHALLENGE AND THE OPPORTUNITY

Statement of the Johns Hopkins International Philanthropy Fellows

Mexico City, July 17, 1996

Preamble

Nonprofit organizations, long known for their contributions to the alleviation of distress and the provision of assistance, have increasingly assumed an additional role in recent years as promoters of development, as vehicles for attacking the root causes of poverty and distress and encouraging individual and group autonomy and self-support.

This new role is not a simple one, however. It embraces not only the encouragement of economic development and job creation, but also the establishment of the supportive climate of trust and personal capability on which economic development ultimately depends. In addition to business development this role therefore requires the opening of meaningful channels of political expression, the promotion of basic human rights, investment in human capital, and protection of the natural environment.

Nonprofit organizations cannot achieve these objectives on their own. Government retains a fundamental obligation in the development sphere as does the private business sector. Nevertheless, nonprofit organizations also bring special advantages to the task of development that are all too often overlooked. As a consequence, significant barriers continue to impede the important contributions that nonprofit organizations can make in this field.

The purpose of this Statement is to call attention to the special competencies that nonprofit organizations bring to the process of development, to identify the barriers that nonprofit organizations confront in this field, and to outline the actions that will be needed in order to take fuller advantage of the important contributions nonprofit organizations can make.

The Statement reflects the work of more than 50 participants from 32 countries who took part in the VIIIth Annual Johns Hopkins International Philanthropy Fellows Conference in Mexico City, Mexico, from July 12 to 18, 1996. These participants include scholars and practitioners with years of experience in the nonprofit field in virtually every part of the world. The Statement is offered here in the hope that the collective wisdom of this unusual group of nonprofit experts might aid nonprofit agencies, government officials, international agencies, private donors, and the general public take better advantage of the important strengths that the "nonprofit sector" brings to the serious development challenges facing our world at the present time.

I. Special Strengths and Roles of Nonprofit Organizations in Development

Nonprofit organizations have special strengths and competencies that equip them to contribute in often unique and important ways to the task of development. Nonprofit organizations therefore do not simply "fill in" for limitations of other social institutions. Rather, they bring something special, and something important, to the equation. In particular, they enjoy special qualities that in turn translate into a capability to perform special roles. To be sure, these qualities and roles are not unique to nonprofit organizations. Nor is it the case that all nonprofit organizations exhibit these qualities to the same degree, or, in some cases, even at all. Nevertheless, these features are more commonly and more distinctively evident among nonprofit organizations than among most other social institutions and they consequently contribute to the ability of these organizations to perform special roles in the development process.

A. Special Qualities

Nonprofit organizations are entities that exist outside the contours of the state, that do not distribute profits to their members or directors, and that govern themselves. As such, these organizations enjoy certain common qualities or strengths as contrasted with other institutions. These include:

(1) Flexibility--the capacity to react quickly to new circumstances and needs and to accommodate and encourage diverse approaches to the challenges that development entails;

(2) Relative independence--freedom from many of the constraints of the market and the state and hence the ability to address neglected issues or needs;

(3) Trustworthiness--a reputation for operating in the public interest and for serving public purposes;

(4) Accessibility and Responsiveness--close ties to affected communities and groups, including many that are ignored by other institutions, and a special inclination to represent and give voice to their needs.

B. Special Roles

These special strengths and qualities enable nonprofit organizations to make distinctive contributions to the process of development. These contributions include:

(1) Empowerment-- the mobilization of grass-roots energies through self-help, mutual aid, and  the promotion of social participation of all sorts;

(2) Issue Identification--identifying new issues and bringing them to public attention;

(3) Resource Mobilization--mobilizing untapped human and  financial resources and bringing them to bear on the task of  development. This can include, for example, channeling  personal savings into productive investment and energizing underemployed human capabilities.

(4) Mediation--serving as a bridge among social groups, between fields, and across political boundaries, thus reducing the social, professional, bureaucratic,  and geographic divisions that often impede effective action;

(5) Promoting Change--exerting pressure outside the political system in order to produce change in public or private policies on unsolved issues;

(6) Monitoring--serving as a watchdog to ensure the fair and effective         implementation of public policies;

 (7) Leadership Development--facilitating the emergence of              new leadershipcadre by offering opportunities for meaningful engagement in public issues on the part of large numbers of community activists;

 (8) Ensuring Representation--representing alternative perspectives on        important issues and ensuring that these perspectives are heard;

 (9) Legitimization--helping to secure popular support for  needed policies and hence promoting their implementation;

(10) Promoting Participation--securing the active participation of  various social strata in development activities and thus minimizing the dangers of exclusion either of particular groups or points of view.

 

II. Barriers to Effective Nonprofit Action in Development

      Despite their significant qualities and distinctive contributions, nonprofit organizations confront considerable barriers in playing as effective a part as they might in the development process. Among the more important of these impediments are the following:

1. Inadequate Support from Government and International Agencies

Understanding and support for the nonprofit role in development remains inadequate on the part of governments and international agencies dealing with government. This is particularly true at the administrative level but often characterizes policy strata as well. More specifically, nonprofit organizations often confront the following constraints in their developmental role as a result of government and international agency policies and attitudes:

a) Lack of recognition of, and support for, the developmental role of  nonprofit organizations;

b)   Passive or active resistance to perceived competition from nonprofit       organizations, whether on the part of public sector  workers in the provision of     services or on the part of elected officials in the legitimate representation of the     interests of citizens;

c)   Excessive legislative or regulatory controls that either restrict the ability of nonprofits to organize or impede their ability to carry out their development role;

d)  Lack of mechanisms through which nonprofit organizations can access       government decision-making and open dialogue on areas of common interest;

e) Restrictions on access to relevant information.

f)   In the special case of human rights and some environmental organizations, the    potential for direct conflict with governments.

2) Public Misperceptions

Public awareness and understanding of the scope and role of the nonprofit sector in development is generally inadequate. In particular:

o    Reliable information about the sector and its contributions is largely lacking;

o     This has led to misperceptions of the sector, and, even distrust or hostility toward nonprofit organizations, especially in high profile, conflictive fields such as human rights and the environment.

o     These attitudes are often exacerbated by media coverage that focuses on abuses and scandals if the media reports on the sector at all.

o     Complicating matters further is a frequent lack of appreciation on the part of significant segments of the public not only about the role and character of nonprofit organizations but also about the legitimacy of independent social action in general. This can manifest itself in widespread passivity and cynicism and an apparent lack of confidence in the possibility of, or need for, real social, economic and political change.

o    Passivity among those who are the target of development efforts is often matched by a lack of appreciation on the part of those who are better off that everyone has a stake in long-term equitable and sustainable development.

3. Lack of Adequate Financial Resources

While access to financial resources is a perennial problem for all nonprofit organizations, it is a particular problem in the development field. This is so for a variety of reasons:

o     The lack of appreciation on the part of governments, aid agencies, and the private business sector of the nonprofit role in this field;

o     The special problems nonprofit organizations have in        generating capital because of their "non-profit-distribution constraint" and because of the lack of financial infrastructure for underwriting the important role these organizations can play as credit intermediaries.

o     The false arguments often advanced suggesting a conflict between business investment and presumably "unproductive" investment in environmental protection or social development; and

o     The special problems that arise in the human rights and environmental fields because of the reluctance to antagonize governments that are often the targets of human rights and environmental protests.

 

4. Insufficient Business Support

As in the case of government, the for-profit business sector also fails to recognize the important contribution that nonprofit organizations can and are making to development, with the result that important opportunities are lost. Misperceptions on the part of private business about the special role and competencies of nonprofit organizations keep it from providing the support and cooperation that are so badly needed. In some instances, businesses interpret nonprofit development activities as competition. Furthermore, in the absence of suitable financial infrastructure and support, private financial institutions, such as banks, are reluctant to take on the apparent risk of extending credit and other financial services to nonprofit organizations, thus depriving them of resources that they could put to effective use in the development process.

5. Weaknesses Within the Nonprofit Sector

Nonprofit organizations themselves often exhibit a number of internal weaknesses that also inhibit their effective contribution to development. These include:

o       Lack of a shared identity as a sector, which sometimes leads  nonprofit organizations to work at cross-purposes or to lose opportunities for collective action to engender favorable public attitudes, enabling government policies, and broad public and business support.

o       Management and operational weaknesses that hamper the ability of some nonprofit organizations-- large and small -- to effectively pursue their missions.

o       Occasional, but often highly publicized, abuses by        nonprofit organizations which contribute to feelings of mistrust and lack of confidence in the sector as a whole.

o       Lack of transparency and democratic processes on the part of some nonprofit development organizations, which creates suspicions and doubts on the part of both government and the public;

o       Negative biases on the part of some nonprofits toward governments and the private, for-profit sector, which can lead to missed opportunities for constructive collaboration.

III. Overcoming The Barriers: The Roles of Key Institutional Actors

Each of the major actors in the development process has important contributions to make to overcome these barriers. Among the most important are these:

1. Government

National governments have a major role in removing the obstacles to nonprofit sector action in all aspects of development. Governments should:

o       guarantee basic human and civic rights, including the right to associate;

o       Make provision for the basic human services that  are fundamental building blocks for development;

o       Ensure transparency in development policy-making and implementation;

o      Work with nonprofit organizations as partners in development activities through grants, contracts,  and other possible means and commit themselves to consult with nonprofit organizations in their fields of expertise and to establish concrete mechanisms for such consultation and/or collaboration, including training their own personnel to deal with nonprofit organizations;

o       Put in place and implement legislation, regulations,  and policies (including tax policy) that encourage development action on the part of nonprofit organizations;

o       Learn about and acknowledge the important contributions that nonprofit organizations make in development and include information about these contributions in national statistics and public information;

o       Provide financial and technical support to nonprofit        organizations.

2. International Aid Agencies

Multilateral and bilateral development agencies can play a particularly important role as advocates or intermediaries for nonprofit organizations in development. Such agencies can help break down the identified barriers by:

o       Recognizing the important contributions nonprofit          organizations    make to development and increasing their own commitment to working together with nonprofit organizations as partners. This can endow nonprofit organizations with enhanced legitimacy and credibility;

o       Encouraging national governments to create a favorable environment for nonprofit involvement in the development  process and promoting dialogue and working partnerships between nonprofit             organizations and governments;

o       Facilitating the exchange and dissemination of        information, experience, and technical expertise relating to the nonprofit role in development across borders, fields of development, and sectors;

o Creating special funding windows for direct financing of nonprofit development activities without the need for governmental approval.

3. Foreign Nonprofit Organizations and Donors

Externally based nonprofit organizations and private donors, as relatively independent actors, can facilitate nonprofit involvement in the development process in a variety of ways. These include:

o       Financing model projects that demonstrate the              potential contributions that nonprofit organizations can make to development;

o    Bringing international attention to bear on local development and human rights problems;

o     Pressuring their own governments in bilateral relations and in  multilateral aid agencies to advocate for more favorable postures toward nonprofit involvement in development activities in other countries;

o      Exerting influence on host country governments to facilitate the contributions that nonprofit organizations can make to development;

o       Providing financial resources in a more direct, responsive, and flexible manner;

o       Playing an intermediary financial role, facilitating the flow of resources from abroad to indigenous nonprofit development organizations;

o       Encouraging the formation and strengthening of local nonprofit organizations by providing needed technical assistance, training and support.

4. Local For-Profit Businesses

Though their principal objective of profit-making may seem counter to nonprofit ideals, for-profit enterprises can bring valuable resources to bear in overcoming many of the obstacles to effective nonprofit development activities. In particular:

o       They can provide funding and other important resources, such as expertise in special fields of business, general management assistance, facilities, and equipment that might be difficult for nonprofit        organizations to obtain on their own.

o       They can provide financial support that could facilitate nonprofit organizations' access to needed credit.

o       Through their own involvement, they can set an example for social responsibility through marketing agreements and other joint ventures with nonprofit organizations in the development  field.

5. Local Private Donors

Both indigenous foundations and local private donors can contribute importantly to overcoming the barriers that nonprofit organizations confront in the development field. They can do this by providing financial support to individual nonprofit organizations and by leveraging cooperation with other donors and with government agencies. In the process they can add important legitimacy to nonprofit development efforts.

6. Nonprofit Organizations

In the spirit of the philosophy of empowerment and self-reliance they have adopted, nonprofit development organizations themselves must dedicate themselves to reducing or eliminating barriers to their own effectiveness. They should:

o       Seek financial self-sufficiency, whether by undertaking economic activities or honing their resource mobilization skills;

o       Organize to advocate for a legal and regulatory              environment favorable to their independent action;

o       Inform themselves about their own situation and engender a sense of self-awareness as a sector;

o       Develop and conduct public education efforts to        overcome  misperceptions about the sector and its contributions and to break down existing cultural barriers;

o       Set an example of accountability and transparency in their own operations so as to counteract distrust and lack of confidence on the part of the general public and the government;

o       Actively promote collaboration and networking both within the sector and with government, for-profit enterprises, and other relevant actors;

o       Recognize the important contributions of members,        volunteers, and others who participate in their activities and establish internal decisionmaking processes that facilitate their participation; and

o       Adopt professional management and service practices.

6. Others

Other institutions also have a role to play in overcoming the barriers to effective nonprofit contributions to development. Thus:

o    The media should seek to understand the specific role     of nonprofit organizations in development and report objectively on it;.

o    Academic institutions should dedicate resources to     bringing  together and analyzing best practices so as to disseminate models of effectiveness and increase understanding of the contributions of the nonprofit sector in development.

o    Last, but not least, the Johns Hopkins International         Philanthropy  Fellows should not only adopt this statement, but also make every effort to disseminate it.

Conclusion

Significant challenges continue to confront the world in the field of development. Fortunately, nonprofit organizations have important assets to bring to the task of overcoming these challenges. However, their ability to mobilize these assets and bring them to bear has been impeded by a variety of impediments, some of which arise from within the nonprofit sector, but many of which arise from outside it.

Nonprofit organizations cannot solve the problems of development on their own. Government and the business sector also have vital roles to play. But without the contributions that the nonprofit sector is especially equipped to make, the task of development may prove even harder than it now appears. Hopefully, this Statement will help call attention to these special contributions and encourage the cooperation and collaboration among all the sectors that are now so urgently needed.