Non-profits, sometimes referred to as “the third sector,” share some similarities with both the public and private sectors, as listed below (because of the diversity of non-profits in terms of size and mission, some generalities will have to be made):
similar to public sector
• they are not as motivated by profits but strive more to achieve important non-financial goals (social justice, environmental benefits, human services)
• they are sometimes the only provider of a given service in a given geographic location
• they often fulfill tasks that are highly subject to rules and regulations (social services)
similar to private sector
• they can come into existence and go out of business more easily than government agencies, as they share a similar risk/reward response to innovation as businesses
• they can more nimbly develop specialized competencies and attract skilled workers, like for-profit businesses
• they can compete for and fulfill contracts like the private sector
Certainly, non-profits have an important role to play in our economy and society. But should governments pattern themselves after the non-profit sector? Of course, the answer to that question is “it depends,” as there are a number of benefits and limitations to government agencies operating like non-profits:
benefits
• a more mission-driven approach would have benefits in agency effectiveness, staff recruitment, and public relations
• many non-profits are exemplary in their innovativeness and commitment when it comes to serving their customer
• non-profits tend to engage their communities and constituencies in their actions, creating collaborative partners rather than dependent clients
limitations
• there are good reasons why governments tend to be rule-oriented rather than mission-oriented, including considerations of safety, equity, and stability
• too much risk-taking can threaten a government’s ability to offer services that are too acute and vital to lapse
• governments cannot mimic non-profits’ flexibility in terms of geographic focus and overall mission, for they exist to serve certain places and perform certain functions
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