THE NEW GOVERNANCE and the NONPROFITIZATION of the WELFARE STATE
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1 THE NEW GOVERNANCE and the NONPROFITIZATION of the WELFARE STATE Lester M. Salamon Johns Hopkins University and International Laboratory for Nonprofit Sector Studies Higher School of Economics I-Lab Conference, November 2015
2 THE NEW GOVERNANCE A revolution in the technology of public action Proliferation of new tools
3 ILLUSTRATIVE TOOLS Direct government Contracts Grants Direct loans Loan guarantees Economic regulation Social regulation Corrective fees
4 THE BEAT GOES ON Tort law Administrative adjudication Vouchers Tax expenditures Carbon credits Social impact bonds
5 RISE OF THIRD-PARTY GOVERNMENT Common feature: Use of Third Parties Sharing of discretionary authority Deconstruction of public action
6 DECONSTRUCTION OF PUBLIC ACTION DELIVERY Public FINANCE Private Public (1) National A C (2) State/local Private (1) Nonprofit B D (2) For-profit
7 SCALE OF U.S. FEDERAL GOVERNMENT ACTIVITY, BY TYPE OF TOOL, FY1999 DIRECT GOVERNMENT Goods and Services Income support Interest Direct loans (obligations) SUBTOTAL, DIRECT INDIRECT GOVERNMENT Contracting Grants Vouchers Tax expenditures Loan guarantees (commitments) GSEs (loans) Deposit insurance (net additions) Regulation SUBTOTAL, INDIRECT GRAND TOTAL Amount ($ bns) % % % %
8 SOURCES OF CIVIL SOCIETY REVENUE, 40-COUNTRY AVG. PHILANTHROPY 12% GOVERNMENT 35% FEES 53%
9 SOURCES OF CIVIL SOCIETY REVENUE, BY COUNTRY GOVERNMENT DOMINANT FEES, CHARGES ALL COUNTRIES 53 % GOVERNMENT 35 % PHILANTHROPY 12% Ireland 16% 77% 7% Belgium 19% 77% 5% Germany 32% 64% 3% Israel 26% 64% 10% Netherlands 39% 59% 2% France 35% 58% 8% Austria 43% 50% 6% Canada 39% 51% 9% United Kingdom 45% 47% 9% Romania 29% 45% 26% South Africa 32% 44% 24% % may not add to 100 due to rounding
10 WHY? Complexity of problems Limits on public resources Dissatisfaction with performance of centralized government agencies Popularity of market ideology Producer political power
11 EXISTING THEORIES LIMITED Classical public administration New public management Economic theories of N/P sector
12 NEEDED: A NEW PARADIGM NEW GOVERNANCE + VOLUNTARY FAILURE Governance New collaboration, interdependence recognition of challenges Voluntary Failure inherent N/P weakness
13 THE NEW GOVERNANCE
14 THE NEW GOVERNANCE vs. CLASSICAL P.A. Classical Public Administration Program/Agency New Governance Tool
15 DEFINITION A tool of public action is an identifiable method through which collective action is structured to address a public problem.
16 POLITICAL ECONOMY OF TOOLS Actors SOPs Skills Tasks Advantages
17 CLASSIFICATION: TOOL DIMENSIONS Coerciveness Directness Visibility Automaticity Consumer side vs. producer side
18 NOT JUST TECHNICAL TOOLS Tool choices as technical choices Tool choices as political choices
19 THE NEW GOVERNANCE vs. CLASSICAL P.A. Classical Public Administration Program/Agency Hierarchy New Governance Tool Network
20 HIERARCHY NETWORK Principal Agent Theory Network Theory Asymmetric interdependencies
21 THE NEW GOVERNANCE vs. CLASSICAL P.A. Classical Public Administration Program / Agency Hierarchy Public vs. Private Command & control Management skills New Governance Tool Network Public + Private Negotiation & persuasion Enablement skills
22 NEEDED: NEW ENABLEMENT SKILLS Activation Orchestration Modulation
23 NEW GOVERNANCE vs. NEW PUBLIC MANAGEMENT New Public Management (NPM) Hierarchic government the problem outsource / quasi-market tools Quasi-markets self-regulating New Governance Outsourced already Indirect gov t MORE complex
24 CHALLENGES: FOR GOVERNMENTS Management Challenge Accountability Challenge Legitimacy Challenge
25 NEW GOVERNANCE vs. NEW PUBLIC MANAGEMENT New Public Management (NPM) Streamline gov t agencies / outsource / quasi-market tools Quasi-markets automatic Advantages market enterprises New Governance Outsourced already Indirect gov t more complex Level playing field for NPs
26 WHY GOVERNMENTS NEED N/Ps: THE N/P PLUS Flexibility Boots on the ground Human scale personalized service Overcome funding silos holistic approaches Tap special resources: philanthropy, volunteers Foster civic engagement / solidarity
27 NEW GOVERNANCE vs. N/P ECONOMIC THEORIES Nonprofit Economic Theories Market failure / gov t failure New Governance Voluntary failure
28 VOLUNTARY FAILURES Philanthropic insufficiency Particularism Amateurism Paternalism
29 WHY NONPROFITS NEED GOVERNMENTS Overcome funding insufficiency Attract professionals/paid staff Broaden recruitment, beneficiaries Reduce fundraising costs Create sustainability
30 NEW GOVERNANCE vs. N/P ECONOMIC THEORIES Nonprofit Economic Theories Market failure / gov t failure Gap fillers / mostly philanthropic support New Governance Voluntary failure Enormous synergies / much government support
31 CHALLENGES: FOR NONPROFITS Loss of autonomy Vendorism & mission drift Bureaucratization Stunting of advocacy Marketization threat & access to capital
32 CAPITAL CONSTRAINED
33 The Revolution in Social Purpose Finance
34 PHILANTHROPY S BIG BANG Bovespa Pooled Income Funds Venture philanthropy Accion Lester M Salamon, Ed., The New Frontiers of Philanthropy, (New York: Oxford University Press, 2014).
35 THE REVOLUTION IN SOCIAL PURPOSE FINANCE Beyond grants Beyond bequests Beyond foundations Beyond cash LEVERAGE Lester M Salamon, Ed., The New Frontiers of Philanthropy, (New York: Oxford University Press, 2014).
36 NEW FRONTIERS OF PHILANTHROPY ECOSYSTEM NEW SOURCES OF FUNDS NEW ACTORS NEW TOOLS NEW AGENTS BENEFICIARIES Lester M Salamon, Ed., The New Frontiers of Philanthropy, (New York: Oxford University Press, 2014).
37 WHY? DEMAND FACTORS: The New Inferno Tapped-out government and charity Rise of social entrepreneurs SUPPLY FACTORS: Early responders New concepts: Fortune at the Bottom of the Pyramid New players / New mindsets: Philanthrocapitalists Financial crisis and tepid capital markets Infrastructure Technology
38 ACTORS / TOOLS TYPES OF ACTORS Capital Aggregators Enterprise Brokers Secondary Markets Capacity Builders Online Portals Social Stock Exchanges Corp-Originated Charitable Funds Foundations as Philanthropic Banks Conversion Foundations Quasi-Public Investment Funds Funding Collaboratives TYPES OF TOOLS Loans / Credit Enhancements Bonds Securitization Equity Investments Micro Insurance Social Impact Bonds Social Investing & Purchasing Prizes, Crowd-sourcing
39 REMAINING OBSTACLES No good deed goes unpunished The social-impact measurement conundrum Still a boutique business The pesky issue of deal flow Getting beyond comforting assumptions
40 NEXT STEPS VISUALIZE PUBLICIZE INCENTIVIZE CAPACITIZE ACTUALIZE
41 NEEDED: NEW SENSITIVITIES By partners: for the accountability needs of government By governments: for the distinguishing functions of private partners
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