By David Bornstein
July 10, 1999
Twenty years ago social activists could identify only one independent organization working to protect the environment in Indonesia. Today there are more than 2,000, an environmental network based in Jakarta reports. Citizen organizations have been similarly emerging across much of the world. In Slovakia, there were a handful of such organizations active in the 1980's; now there are more than 10,000. In the Philippines, registered nonprofit organizations grew from 18,000 to 58,000 between 1989 and 1996. And in the United States, aside from religious groups and private foundations, 70 percent of nonprofit organizations filing returns with the I.R.S. are less than 30 years old; a third are less than 15.
To some economists and social scientists the astonishing growth of citizen-led organizations signals a new kind of global revolution. "It is reshaping politics and economics both at the domestic and global levels," said Lester M. Salamon, the director of the Center for Civil Society Studies at Johns Hopkins University. "I believe it is as important a development to the latter part of the 20th century as the rise of the nation-state was at the end of the 19th century." Consider recent events in which citizens' groups were major players: the defeat of apartheid in South Africa; the end of the dictatorship in Chile; the political transformation in the Philippines; the overthrow of Communist regimes in Central Europe; the creation of an international treaty prohibiting land mines; the establishment of an international criminal court.
Organizations founded by private individuals have historically played a vital role in democracies. Writing in the 1830's, Alexis de Tocqueville remarked that nothing was more deserving of attention than America's associations. Women's suffrage, organized labor, civil rights, consumer protection, environmental protection, gay liberation and the rights of the disabled are all movements pioneered by citizen organizations.
What is different today, however, is not only the increasing number of these groups worldwide, but also the view that they are a distinct sector, one that, like government, serves essential social functions, but that has many of the entrepreneurial qualities of business. The profit, in this case, is primarily social progress.
"This new sector really is competitive like business," said William Drayton, the president of Ashoka, an organization, named for an altruistic emperor of India, that supports people working to bring about social changes in Asia, Africa, Latin America and Central Europe. "It's got open entry. Organizations are competing for money, for recognition, for staff." Mr. Drayton and others hold that the citizen sector is leading the social half of society through the same type of changes that transformed the European economy three centuries ago.
"In the early business environment, the right to conduct different businesses was given by the crown," said Sharon Oster, a professor of economics at the Yale School of Management. "That monopoly model fell apart and became a competitive model." As controls on economic enterprises were loosened in the 17th and 18th centuries, new players flooded the field of business.
Just as trade and manufacturing were monopolized centuries ago, colonial and authoritarian Governments pretty much monopolized the social arena. The viceroys in India, the Communists in Central Europe the generals in Latin America and Africa had little tolerance for citizens who tried to engineer broad social change. As colonies gained independence and democracy spread, opportunities opened up for what Mr. Drayton called social entrepreneurs. These people, he said, have vision, practical ability and drive, they cannot rest until they have solved social problems not just locally, but system-wide. Think of Florence Nightingale, who developed modern nursing; Ralph Nader, who Pioneered the consumer, movement, or Muhammad Yunus', who founded the Grameen Bank in Bangladesh and spread the idea of microcredit - small loans to fight poverty - around the world.
At the same time, such breakthrough movements as Gandhian self-reliance and nonviolence, civil rights, liberation theology and feminism have helped prime hundreds of millions of people for social engagement.- And the growth of the middle class has increased the pool of potential recruits.
Mr. Drayton sought to catalyze the citizen sector by adapting the venture-capital approach. The idea was to search for budding innovators to supply them with seed money and connect them in a global fellowship. In 1980 he created Ashoka, which has its headquarters in Arlington, Va., and now supports nearly 1,000 social entrepreneurs , in 33 Countries. Among them are Vera Cordeiro and Wojciech Onyszkiewicz. Ms. Cordeiro has built a program in Rio de Janeiro to help prevent recurring illnesses by providing post-hospitalization assistance to poor children and their families. Mr. Onyszkiewicz built an unusual food bank in Poland, through an exchange in which farmers donate food to the urban poor and rural children are taken on educational trips to Warsaw.
Mr. Drayton said that the business sector had grown in productivity because it developed a beneficial competitive approach that rewarded innovation. He believes competition in the social sector could generate the same kinds of productivity increases.
"When there is a critical mass of institutions, people and ideas, and they feed on one another and strengthen one another, the competitive revolution begins to set in," Mr. Drayton said. "You begin to get a culture that says: 'This is great. We're proud to be doing this. We admire people who do this well. We reward them.' It happened in business and it's exactly what you're seeing at the moment in the citizen sector."
J. Gregory Dees, who teaches social entrepreneurship at the Graduate School of Business at Stanford University, said: "I'm seeing two broad trends. One is a shift away from the idea of this sector being primarily about charity and the transfer of wealth to being about a desire to find more systemic and sustained solutions to social problems. And the other is an increased openness to experimenting with business methods and market-based approaches."
These days, donors are more apt to stop financing organizations that cannot demonstrate their effectiveness. Some winning ideas, on the other hand, are rewarded. The Grameen Bank and the Bangladesh Rural Advancement Committee, a citizen organization, have been so successful in alleviating poverty and educating millions of villagers that they have attracted hundreds of millions of dollars of financing from around the globe. More than a thousand development programs worldwide are emulating their experiences.
Some activists fear too, much competition, arguing that groups can be more effective by forming coalitions. "We need to find better ways to cooperate with one another if we are going to advocate effectively," said Laurie Regelbrugge the chief operating officer of Civicus, an international network of citizen organizations.
Barry Nalebuff, a management professor at the Yale School of Management, points to a different kind of problem: that growth does not necessarily lead to productivity gains unless accompanied by market discipline. "There are too many nonprofits today and the reason is simply the difficulty in getting them to merge," Mr. Nalebuff said. "In the for-profit sector, if an organization is doing poorly, somebody can, take it over. There is no such thing as a nonfriendly acquisition in this sector. You need to be in bankruptcy, before you lose control, the result, being that we have much redundancy.
And Christine W. Letts, executive director of the Hauser Center for Nonprofit Organizations at Harvard, said that to deliver the goods - i.e., social change - "at a cost that is appropriate for its performance," this new sector needs to develop better information systems and standards. "The issue is how much is wasted," she added.
Still, the advocates are optimistic. "There has been a general questioning of the capacity of the state to carry out a whole host of functions," Mr. Salamon said. "This sector represents another way of organizing the common business of society." Past experience and a faster rate of change mean that in 20 years the citizen sector "will be almost unrecognizably more mature," Mr. Drayton said. Many of the institutions that took business 300 years to develop will be well on their way to development," he predicted.
Link to Introduction on NGOs More Information on the Growing Importance of NGOs
