January 28, 1999 | Read Time: 2 minutes
The debate over the role of non-profit versus for-profit organizations in providing social services has been drawn too narrowly, writes William P. Ryan in Harvard Business Review (January-February).
As government agencies increasingly hire for-profit companies to provide social services, the salient question is not only whether non-profit groups can compete successfully against such corporations, which may greatly eclipse them in size, efficiency, and financial resources, says Mr. Ryan, a consultant to non-profit groups.
Just as important, he says, is whether, by adopting many of the business principles honed by their for-profit colleagues, non-profit organizations may also be shifting their own focus away from the community-service elements of their original mission.
Governments reducing their own administration of welfare-to-work programs now often hire companies that see lucrative markets in providing job training and placement, counseling, special education, and other services that have traditionally been offered by non-profit organizations. Such companies have the luxury of choosing where and how to offer such services, according to their potential profitability.
Non-profit groups, by contrast, often focus their attention on the most intractable problems and neighborhoods — which are most expensive to serve. And many organizations, in addition to providing services, advocate public policies that promote long-term social change. What’s more, he writes that charities encourage citizen involvement by offering volunteer opportunities that companies do not.
Government administrators who focus on efficiency and measurable results rather than on such wider community concerns put non-profit groups at a distinct disadvantage, while subtly pressuring them to play down the elements that have been their traditional sources of strength, Mr. Ryan asserts.
“The greatest peril is not that non-profits may ultimately be driven out of the social service marketplace,” writes Mr. Ryan. “Rather, the danger is that in their struggle to become more viable competitors in the short term, non-profit organizations will be forced to compromise the very assets that made them so vital to society in the first place.”
