Academic journal article Australian Journal of Social Issues

Holding Our Own: Value and Performance in Nonprofit Organisations

Academic journal article Australian Journal of Social Issues

Holding Our Own: Value and Performance in Nonprofit Organisations

Article excerpt

Half a century ago Milton Friedman articulated that a free society relies on the private sector to focus purely on making a profit, regardless of other consequences.

   ... few trends could so thoroughly undermine the foundations of our
   free society as the acceptance by corporate officials of a social
   responsibility other than to make as much money for their
   shareholders as possible

   (Friedman 1962)

In a time when some for-profit leaders talk about social responsibilities and triple bottom lines, the nonprofit sector has much to offer the business world. In this essay I will argue that the nonprofit sector, precisely because of its commitment to values, operates effectively and efficiently. Rather than assuming private sector forms of organisational management and leadership must be adopted for the nonprofit sector to advance, I will argue that the nonprofit sector's commitment to values is central to driving and improving performance. The organisational knowledge and experience of the nonprofit sector has something to teach the private sector. Indeed the future success of the nonprofit sector requires it holds onto its values, rather than adopting without question or modification, the organisational strategies from the private for-profit sector.


Over the last twenty years or so the values and approaches of the private sector have swept through the Australian public sector, "reinventing government" as focused on outputs, outcomes, and efficiency. (Yeatman 1987; Considine 1988; Sinclair 1989; Pusey 1991). Osborne and Gaebler (1992) produced a best-selling collection of tools and strategies to make the public sector more like the private sector, and therefore more efficient.

   ... the philosophy of neo-liberalism (or economic rationalism), ...
   has a powerful grip on Australian governments these days. In
   neo-liberal theory there is only one economically efficient form of
   organisation and that is the profit-seeking firm. (Lyons 2001: 221)

The value of embracing neo-liberal business models, language and values by the public sector in Australia has been questioned by some

   In the end, how we should manage the public sector must be informed
   by our answer to the broader moral question of how we are to live.
   Even the most committed of managers asks, at some stage, 'what is
   it all for?' ... Thinking of oneself as 'just a manager' removes
   from the activity of administration much of the meaning and force
   that enable the job to animate commitment and courage.
   (Sinclair 1996: 243-4)

In turn the Australian public sector has attempted to pass these ideas on to the nonprofit sector by developing markets of community groups, creating internal purchaser/provider splits and using competitive tendering to 'purchase services' from non-government organisations (Brown and Ryan 2003; Pearson 2003).

While the third sector has been significantly affected by this neo-liberal agenda, it has questioned and resisted this approach by holding on to its values: what I will argue is a key distinguishing feature of nonprofit agencies performance. There is no doubt that while differences amongst public, private and third sector organisations have reduced, and there are now hybrids and blurred boundaries (Flack and Ryan: 2003) a commitment to core values remains one key characteristic of the third sector.

In this essay I will demonstrate the centrality of values by discussing the motivations and performance of staff, CEOs and Boards in nonprofit agencies. These values are expressed in nonprofit organisations through an organisation's purpose, vision or mission. Throughout this essay I will refer interchangeably to values-driven or mission-driven agencies and individuals. While the business sector is driven by profit maximisation, nonprofit organisations exist to pursue their values and mission. …

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