Emerging Trends: Nonprofit Organizations in the 21st Century - Essay Example

Emerging Trends: Nonprofit Organizations (NPOs) in the 21st Century of the of the Table of Contents Introduction…………………………………………………………………………………….3 Emerging Trends in Nonprofit Organizations .…….………………………………………….4 Personal Reflection…………………………………………………………………………….6 Summary ….………………………………..………………………………………………….7 References………………………...……………………………………………………………8 Introduction Nonprofit organizations (NPOs) have taken such a distinct role in society that it has become an integral part of social development as time evolved. More commonly known years earlier as nongovernment organizations (NGOs) this sector of society have deep roots that can be traced to thousands of years. These organizations are driven by the requirement of private participation since the government is inevitably incapable of providing for all the needs of different members of the society. Many ascribe as far back as biblical origins to explain the concept of generosity as a necessary teaching that God demands from His children. Most religions, if not all, would give priority to benevolence and to the importance of sharing to the less fortunate. In the bible, a rich man asked Jesus what he must do to achieve eternal life and He replied, “If you want to be perfect, go, sell your possessions and give to the poor, and you will have treasure in heaven. Then come, follow me” (Matthew 19:21). Though it may not be to this extreme of complete abandonment of possessions, the traditional structures of NPOs rely on philanthropy to sustain projects. By this virtue, NPOs are regarded as donation-based and as a conduit to reach out to the marginalized sectors of society and in addressing social issues according to individual core principles. Subsistence is based mainly on donations given by individuals or partner corporations in order to provide an NPO’s services. Thus, without funding, many groups are often limited in their functions. This distinction of a nonprofit to a for-profit institution is the main characteristic that has shaped a positive association to nonprofit management as an effective tool in promoting transparency. Nevertheless, the use of business principles in NPOs is not uncommon as well as the adaptation of business methods to achieve results. Recent developments have shifted to a broader understanding of the roles of NPOs to an extent that hybrid models are swiftly emerging as a new alternative to the old models of nonprofit management. This inherently results to the blurring of the lines between nonprofit and profit which is the direct implication of a commercialization in an originally pure understanding of nonprofit organizations as its very moniker suggests. Consequently, it also leads to matters that need to be addressed and further studied such as its tax implications, veering from traditions and market competition. Nevertheless, it is important to keep in mind the core values of NPOs that serves as guide to their very existence. Review of the item Salamon, Geller and Newhouse (2012) found that there are seven core values shared by experts and practitioners of the nonprofit sector. The study concluded that an NPO is essentially committed on being caring, effective, empowering, enriching, productive, reliable and responsive. Those surveyed share a consensus that these values must always be present in their organizations and are qualified as either ‘very important’ or ‘important’ characteristics. The highest percentage gathering the ‘very important’ response include effective and responsive while the two lowest ranked as ‘important’ among the seven are empowering and productive, respectively. Empowering to rank lower than expected is surprising as the association to civic advocacy is at the very heart of nonprofit organizations. The authors ascribe that this “seems to add credence to concerns that fiscal pressures on nonprofits, limitations on financial support for advocacy, and the drive toward more readily measurable functions as part of a shift toward commercialism may have muted this function” (p.5). The recurring tone of commercialization of NPOs shed light to the common misconceptions that this segment of society are all exclusively without the function of generating profit and are thus wholly tax exempt. On the contrary, these revenues are actually subject to Unrelated Business Income Tax (UBIT) since they are considered to engage in business not in accordance with their primary purpose. This results in an added pressure to equalize the situation and to address a diverse set of concerns that were not a problem to the traditional NPO model. There is also caution since market competition will necessarily be a factor once an NPO engages in business activities to gain revenue (Worth, 2014). In Nardia Haigh and Andrew Hoffman’s “Hybrid organizations: The next chapter of sustainable business” (2012), they emphasized that this new form of NPOs are sustainability-driven that break the perceived barriers of the sector. A hybrid business model has three fundamental roles: (1) Driving positive social/environmental change as an organizational objective; (2) Creating mutually beneficial relationships with stakeholders; and (3) Interacting progressively with the market, competitors, and industry institutions (p.127). This type of organization gives importance to the stakeholders and the sustainability of the corporation as well as not failing to include in its ethics the protection of the environment. Another term to be considered in this venture is ‘perpetual economic growth’ which is something that is “tempered with the need to continue creating positive social and environmental change and maintaining their autonomy” (Haigh & Hoffman, 2012, p.129). Equally worth further inquiry is Michael Porter and Mark Kramer’s “Creating Shared Value” (CSV) (2011) which discusses the inclusion of communities as part of a business’ goals by providing opportunities for wealth creation among the people. This concept is founded on the notion that progress, both economically and socially, should be tackled using shared value principles. Personal Reflection The emerging trends in nonprofit organizations are a deviation from the conventional forms of the nonprofit sector as they have been in existence for decades. Perhaps the changing times also call for a change in attitude to be able to better address the plethora of social issues that demand solutions. In an ideal world where civic societies are insignificant, the business-as-usual attitude would be normative behavior. The revitalized attitudes of new businesses that incorporate the values of NPOs open up new possibilities for the people in general. In the same way that NPOs would also be able to learn a great deal from businesses without having to compromise their identity as the vanguards of civil society. These blurred distinctions may open up a Pandora ’s Box of new possibilities as well as dilemmas. It creates a situation of Dr. Jekyll and Mr. Hyde proportions and it is yet on its early stages that accurate judgment is inopportune. Nonetheless, they must be welcomed with optimism as evolution requires change, and most importantly, an open and accepting mind. Summary NPOs have grown to play a central role in social development. Recent times has developed new models for NPOs that created hybrids which to an extent eliminates the categorization of a nonprofit being also for-profit, but, with more charitable purposes. The literature on this area continues to increase while ventures which have adopted this model are increasing in number. More and more people are seeing the benefits of adopting a fresh perspective though it creates some conflicts especially with government policies such as taxation. There are also valid concerns since this is a clear deviation from what a nonprofit organization fundamentally is. Looking at the ultimate roles of a hybrid business model of effecting social change, mutual benefit for stakeholders, and market interactions, it can be seen that it is not that far off from the seven core values of an NPO. Under any circumstance, the latter prevails to be the most important consideration to look at to determine if a nonprofit organization’s purpose is given effect regardless of the means on which it is carried out. Differences are inevitable especially when it involves radical changes. But to be able to determine its effectiveness, all sectors must pave the way and allow for its development. Through these emerging trends, so long as the basic goal of equalization is in check, the consensus must be on its favor. References Haigh, N., & Hoffman, A.J. (2012). Hybrid organizations: The next chapter of sustainable business. Organizational Dynamics, 41, 126-143. http://doi:10.1016/j.orgdyn.2012.01.006 Kramer, M.R.,& Porter, M.E. (2011). Creating Shared Value. Harvard Business Review, Jan-Feb, 1-17. Salamon, L.M., Geller, S.L., & Newhouse, C.L. (2012). What do nonprofits stand for: Renewing the nonprofit value commitment. Listening Post Communique, 22, 1-23. Worth, M. J. (2013). Non profit management: Principles and practice. (3rd ed.). London: Sage. Read More