OTHER PRESSURES FOR CHANGE IN PUBLIC AND NONPROFIT ORGANIZATIONS

Issues of structure and accountability are clearly among the important drivers of public and nonprofit change; nonetheless, other, equally important forces also influence how public and nonprofit organizations carry out their responsibilities. Among those forces are the increasingly competitive nature of delivery of goods and services, globalization, and the demand to be more performance-oriented—to prove to consumers, voters, and funders alike that public and nonprofit organizations are using their resources wisely and efficiently.

Competition

Nonprofit and public sector organizations and their employees are facing pressures to become more competitive and entrepreneurial, and they often find themselves competing with the private sector (e.g., competitive sourcing, bidding for contracts) to fulfill their organizational mission. In addition, the growth in the number of nonprofits creates a competitive environment for donor funds, and nonprofits may have to position themselves differently to obtain needed funding.

The “conservative revolution” that began with Reagan in the 1980s and continued through the Clinton and Bush presidencies favored nonprofit enterprises, manifested in a huge expansion in the contracting out of government programs. The number of full-time employees in public agencies has been reduced, but the number of private and nonprofit sector workers involved in public service has increased. This shift also intensified competition by making for-profit businesses eligible for grants and contracts that previously had been restricted to nonprofits (Hall 2005). Some nonprofit leaders have voiced concern that in a competitive fundraising environment the distinction between what is charitable and what is commercial gets blurred: “too many nonprofits are chasing the money and not their mission” (Eggers 2002, xvii).

Public sector employees increasingly find themselves competing with the private sector to “prove” that they can deliver goods and services as efficiently and effectively as their private counterparts. While “competitive sourcing” has existed in government for some time, the Clinton and Bush administrations (see, e.g., the President’s Management Agenda, U.S. Office of Management and Budget 2007) have placed new emphasis on this approach. Competitive sourcing requires public employees to depart from the safety of their program hierarchy and create “most efficient organizations” that compete directly with their private (and sometimes nonprofit) counterparts. While the results of such competition are heartening for public employees (U.S. OMB 2007), they nonetheless necessitate major changes in the manner that public organizations operate.

Globalization

The world is becoming flatter; Friedman, for example, notes that the U.S. role in the world’s economy has changed dramatically as a result of open-sourcing, outsourcing, insourcing, offshoring, and supply-chaining (2006). One consequence of growing interdependence is that the problems of the world can no longer be treated as distant concerns. Instant communication of problems, such as pandemics or agricultural failures, forces us to become more responsive; the changing nature of who produces the nation’s goods and services raises the problem of lack of oversight of health and safety issues in other countries (such as China).

O’Toole and Hanf highlight the growing influence of globalization on all levels of governance, asserting that “the globalized future of public administration is already emerging” (2002). The authors examine how increased interconnection of multinational authorities (e.g., United Nations, World Trade Organization, European Union) and the influence of international nongovernmental organizations are shaping policies at every level of domestic government.

Public and nonprofit managers increasingly are seeing the impact of global actions on their service delivery. For example, international agreements can force modification of local law, and local governments are entering into international agreements with the power to impact national policy. One illustration of the latter is the use by state and local governments of tax breaks to encourage the location of global companies in their jurisdiction. O’Toole and Hanf conclude that: “internationalization shapes the perspectives of U.S. administrators…[the] professional orientations of those involved are molded by their interactions, especially collegial ties with others working on similar challenges…as a result, administrators are likely to develop a more transnational perspective” (2002). Globalization creates the situation in which a public manager’s closest working partner may be located across international and intersector borders rather than in the office across the hall.

The nonprofit sector also is becoming more international (Anheier and Themudo 2005). Oxfam, Save the Children, Amnesty International, the Red Cross, and Greenpeace have become “brand names” among international nonprofit or nongovernmental organizations (NGOs). The free flow of funds across borders means that a donor can fund nonprofits in any continent; indeed, the activities of major nonprofits often span the globe. While globalization has enabled nonprofits to operate across national borders, it also has further eroded traditional boundaries between the public and private domain and what is considered “commercial” versus “charitable” (Hall 2005).

The Performance Imperative

Leaders of public and nonprofit organizations are being pressured by their funders (legislatures and donors) to become more performance-oriented. Beginning in the 1980s, the for-profit sector began to be influenced by the works of Peters and Waterman (1982), Senge (1990), and others to create more competitive, performance-oriented, creative learning organizations. The global “new public management” movement of the 1990s (Kettl 1998) produced success stories, especially in the “Westminster” nations (Australia, New Zealand, and the U.K.), that inspired more dialogue on the need to reinvent government.

In the U.S. federal government, the National Performance Review of the Clinton administration, the Government Performance and Results Act (GPRA), and the President’s Management Agenda under George W. Bush instituted policies that required managers to document and report data on performance. At the turn of the century, nonprofits began to ask the same types of questions: How can we better focus on our mission, reduce bureaucratic structures, and become more performance-oriented and accountable to our clients and donors?

Just as government is being asked to become more “business-like” and “accountable for results,” nonprofit organizations are feeling the pressure to mimic their private and governmental counterparts (Oster 1995). Some of this pressure is coming from donors and other stakeholders, but some is internally generated by nonprofit leadership that is trying to better fulfill the mission of the organization. Both public and nonprofit organizations also are experiencing increased expectations from their constituents, boards of trustees, and legislatures for service delivery to be more consumer-friendly and results-oriented.