| Robert Zdenek |
In a recent article in The Atlantic Monthly on "The Age of Social Transformation", Peter Drucker made the statement that the social sector or what is referred to as nonprofit organizations are increasingly taking care of the social challenges of a modern society. He goes on say that the nonprofit sector in modern society is the best vehicle for creating responsible and achieving citizenship, by providing a sphere where individuals can make a difference in society, and re-create community (Drucker, 1994). Thoughtful observers from Alexis de Tocqueville to Robert Putnam have noted that nonprofit organizations build networks, relationships, trust, self-help, and many other characteristics that are essential to the functioning of a civil society.
Strengthening and understanding nonprofit organizations is a major goal for citizens, government, and the private sector. The first level of understanding an organization is to know its culture through values, meanings, images, language, metaphors, and messages. Warren Bennis uses the analogy that a good organization can articulate its culture, and a lousy one is incapable of explaining its culture (Bennis, 1989). Organizational culture helps people better understand the hidden and complex aspects of organizational life (Schein, 1992). This article will explore the role and growth of nonprofits, major concepts of organizational culture, application of organizational culture to nonprofits, and offer some conclusions. Examples of organizational culture will be drawn from my current experience at New Community Corporation, the largest community-based development corporation in the U.S., and other organizations who I have good working knowledge.
Nonprofit or voluntary organizations have been an essential part of the American fabric, since our founding. Voluntary and self-help groups predate most government and private sector responses to societal concerns. Despite the rich history of nonprofits, the 20th century saw the ascendancy of large-scale governmental and private sector institutions and initiatives. The last thirty years has seen an enormous growth of nonprofit organizations responding to a myriad of issues and concerns. Over one million organizations in the U.S. were registered as nonprofits with 70 percent having come into existence in the past 30 years (Drucker, 1994). Independent Sector, a national coalition of voluntary organizations and foundations, estimates that there are over three million nonprofits, many of which are not registered with the government. Many of these organizations are single issue organizations, especially human and civil rights and environmental organizations, and a number of the organizations have been formed by diverse groups of individuals and communities. These organizations provide services, reinforce culture, advocate, educate, address faith and spiritual needs, provide health, housing, jobs, and numerous other objectives. Nonprofit organizations as expressions of human construct are as diverse as our society, and often provide the vehicle for expressing the enormous creative potential of individuals and society.
Some of the major aspects of nonprofits include mission, service or function, constituency. Nonprofits exist to serve a mission, to respond to a situation or opportunity that has not been addressed. Nonprofits are mission driven, while government tends to be program or policy focused, and for-profits are profit oriented. John Gardner, noted nonprofit practitioner and theorist, observes that in the best organizations the mission and leader are inseparable (Gardner, 1990). It is the mission which provides the meaning and direction of an organization, as well as the uniqueness or niche of an organization. In a national study of over 200 organizations, Independent Sector found that the first hallmark of excellence is a clearly articulated sense of mission that serves as the focal point of commitment for board and staff. The mission is also the guidepost by which the organization judges its successes and makes adjustments in course over time (Knauft, Berger, and Gray, 1991).
Another major feature of nonprofits is that most of them have a strong service ethos. These organizations have a commitment to helping individuals, a particular group of people, communities, and in some cases national organizations fulfill a purpose. Nonprofits are often motivated by purpose and causes, and often the benefits such as salaries and prestige are more limited compared to the profitmaking sector. It is often hard to define and measure services and concepts such as success or effectiveness on the part of nonprofit organizations. Understanding an organizations culture often provides an anchor in terms of assessing the purpose, services, and initiatives of a nonprofit. Awareness occurs through paying attention to the meanings and images of an organization.
Edgar Schein, a noted management theorist of organization's and their cultures views the relationship between leadership and organizational culture as crucial. Schein views the essential function of leadership as the manipulation of culture, since a leader must have the vision to create a culture and the ability to articulate and enforce the vision (Schein, 1992). Leaders are especially important for nonprofit organizations, since they help develop and translate the vision and ideas of an organization into action and change. This enables people to understand how their efforts will contribute to an improved future. Good leaders focus on the future and they intuitively know how to use organizational culture to transform an organization. To quote Warren Bennis, "a good leader keeps his eyes on the horizon, and a good manager on the bottom-line" (Bennis, 1989).
Nonprofits exist to serve a constituency, whether individuals (American Association of Retired Persons), group of individuals (girl or boy scouts), individuals who have common interests (AIDS, music, or recreation), or a physical community such as a community development corporation (CDC), whose mission is to help revitalize a low-income community for existing residents. Constituents benefit from both the association with a nonprofit and the services and products that are offered by the organization. They often have a more significant role in shaping the direction of a nonprofit then a forprofit organization which treats individuals as consumers or a governmental organization which views individuals and organizations as clients (McKnight, 1995). Nonprofits provide numerous forums for people to interact and develop common objectives that they can implement in a collective manner.
Before defining organizational culture and exploring concepts, it would be useful to place nonprofit organizational culture into a larger social and political context. Ott views that there are three strong determinants of organizational culture: the broader societal culture in which an organization resides, the nature of its business and its environment, and the basic assumptions of the founders or early dominant leaders (Ott, 1989). American society since its inception has encouraged community and societal action through voluntary associations and nonprofits. As society became industrialized coupled with the enormous growth of population, government increasingly responded to societal issues and problems as demonstrated by the New Deal and World War II and its implications. The mood in the U.S. over the past decade has shifted more towards the limitations of government, and the opportunity for nonprofits to service particular constituents and specialized opportunities. This is in part reflected by the growth of nonprofits and their resources in the past 30 years. Finally, founders and leaders have an enormous impact on organizational culture as mentioned earlier in this paper. John Gardner views that "leaders cannot be thought apart from the historic context in which they arise, the setting in which they function and the system over which they preside" (Gardner, 1990).
Organizational culture can be defined as a pattern of shard basic assumptions that a group learns as it solves major problems of external adaptation and internal integration (Schein, 1992). These concepts include espoused values; social construction; meaning; language; metaphors and symbols; group norms; and sense of community and commitments. Values are at the heart of any organization, especially nonprofits, and espoused values are the articulated, principles and values that an organization is trying to achieve. Religious organizations articulate values around faith and service to mankind, while community development organizations emphasize values of self-help and economic independence. Espoused values can lead to shared meanings within an organization, which Edgar Schein refers to as emergent understandings that are created by group members as they interact. Without shared values and meanings, it is exceedingly difficult for a nonprofit organization to achieve its vision and mission. Bolman and Deal view that what is most important about any event is not what happened but the meaning of what happened (Ott, 1989). Since nonprofit organizations are not motivated by profits or market share, clarity around mission and goals are paramount. Deal and Kennedy go so far as to say that organizations become institutions only after they have a clear sense of values (Ibid.).
Since organizations are artificial entities, organizational culture leads to dynamic social construction. Culture is realty created by its members (Ibid.). Social construction is a learned product of group experience, and it evolves as the organization adapts to change from internal and external sources. Since nonprofits have many stakeholders, social construction provides a necessary framework and continuity as the organization tries to serve its mission and primary constituents.
Language and metaphors are important tools of organizational culture. Language allows people to express thoughts, perceptions, and feelings. Greenfield observes that those who control language control thought, and thereby themselves and others (Ibid.). One particular type of language which lends itself to organizational culture is the usage of metaphor and symbols. Metaphors lend themselves to analogies and expressions. Theories and explanations of organizational life can be based upon metaphors that enable us to understand organizations in distinctive ways (Morgan, 1986). Gareth Morgan has proposed a series of metaphors for organizations varying from the organization as an open system (biological model) to organizations as a psychic prison. Nonprofit organizations encompass a number of these metaphors, especially organizations as open system, and the organization as a brain to improve means of increased organizational intelligence..
Symbols are also an important way of explaining nonprofit culture. Most nonprofit organizations have simple offices and have an informal appearance. Nonprofit executives are often viewed as do-gooders with limited management and technical skills, but many nonprofit executives are quite savvy and competitive. It is important for an organization to be aware of the symbols that they project, since symbols are laden with meanings.
Organizational culture also lends insight concerning the development of groups norms, since norms are implicit standards that evolve in working groups. Norms are the way that groups become socialized into understanding the mission and understanding of an organization. More and more decisionmaking in the forprofit and nonprofit world is occurring within groups, and understanding groups help facilitate exchanging ideas and developing solutions to different situations. Nonprofit board of directors, based on numerous experiences, place a high priority on reaching decisions by consensus, which can delay important decisions that need to be made. Group norms can be inhibit change that needs to be made, since norms are based on traditions that are hard to alter. A significant debate that has increased in the nonprofit world is between having clients participate in decisionmaking, as opposed to relying on professionals for complete guidance.
This discussion has pointed out that organizational culture is a binding force that encourages a sense of community and commitment. Nonprofits serve a myriad of different communities from individuals to complex ecosystems. The more the participants and nonprofit organization thinks of itself as a community, the greater the sense of commitment to the nonprofit and its mission. People tend to affiliate because of the mission and services that it offers and less for financial and economic reasons. A nonprofit organizational culture that stresses commitment and purpose along with personal interest will have greater involvement on the part of the participants.
The concepts of organizational culture can be applied to features and practices of nonprofits, including: unique characteristics of non-profits; mission and philosophy; the service culture of nonprofits; structures and processes of nonprofits; managing diversity of nonprofits; and the dependency of most nonprofits on external funding sources. Nonprofits fill both a unique and important role in American society. They combine functions and characteristics of both government and forprofit organizations. The organizational culture of nonprofits adapts the service and public purpose features of the government sector with entrepreneurial and goal orientation of private sector institutions. Most nonprofits serve a public purpose whether it is health or education or community development, and they are also private organizations formed by individuals and/or other groups. As a private organization, they can respond rapidly to opportunities and changes in society, yet at the same time need to reflect the priorities of their constituents. Many of the innovative initiatives and programs that government has implemented varying from headstart to environmental clean-up emanated from nonprofits. Both the public and private sector turn to nonprofits to respond to social needs and opportunities. Nonprofits have a hybrid organizational culture compared to the other two sectors. New Community Corporation, the largest grassroots community-based development corporation (CDC) in the U.S., has an entrepreneurial culture that has lead to the development of several businesses coupled with a culture focused on religious values emphasizing serving the least fortunate, as demonstrated by the fact that they opened the first daycare center for HIV positive children.
The philosophy and mission of nonprofits is reflected in the organizational culture. Independent Sector's Profiles of Excellence study of 200 nonprofit organizations found that effective executive and board leadership developed an articulated an organizational culture based on mission (Knauft, Berger, and Gray, 1991). The executive helped shape and communicate the mission. Monsignor William Linder, the founder and CEO of New Community Corporation, views New Community Corporations mission as helping city residents to improve the quality of their lives to reflect individual dignity and personal achievement. The organization developed a transitional housing project for homeless residents that provides intensive technical support, but limits the stay of families to one-year or less, since the goal is to help them achieve economic independence. Profiles of Excellence also found that the most crucial aspect of board effectiveness is the culture of the board. A positive culture is where members participate and are dedicated to the mission of the organization (Ibid.).
Earlier this article mentioned that nonprofits are oriented to providing services to their identified constituents. An organization that knows it mission will be more effective in terms of the services that it provides. There is growing concern among astute social observers such as John McKnight, William Juilus Wilson, John Gardner, and others that just providing services to individuals emphasizes their deficiencies and dependency. McKnight observes that services should enable people to build their capacities, to have a decent income, and to join with fellow citizens in creating a productive community (McKnight, 1995). This notion of moving from services built on needs to services that enhance capabilities will require a shift of organizational culture. One of the major changes is the movement away from children services to family services, reflecting the importance of strengthening the family. An assumption behind the recent welfare reform legislation is to provide training and supports to people coming off public assistance that will enable them to find permanent jobs, whether there are jobs or not. New Community Corporation organizational culture recognizes that training and services have to be designed to enable low-income residents to become more economically independent, and to create the culture that training and learning are life-long objectives. NCC's Center for Employment Training (CET) encourages residents to get certifications, take college courses, while ensuring that participants have child-care and other basic services that they need to effectively learn.
Structure and processes are often how organizational culture is articulated and reinforced. Katz and Kahn point out that organizations that encourage open systems are able to adapt to constantly changing environmental factors (Ott, 1989). Organizations that have structures and processes that emphasize horizontal decisionmaking rather than vertical decisionmaking generally have active board of directors, committees, and input from a broad range of staff and stakeholders. Hierarchical organizations are more into control and less into sharing information and learning. These organizations have more difficulty adapting to changing environments. Mid-Iowa Community Action (MICA), a large community action agency in central Iowa has embraced Peter Senge's Learning Organization framework. MICA has reoriented its organizational structure and processes to emphasize team learning and individual mastery represented by the commitment of all employees to developing individual learning plans that will enable them to contribute to MICA's mission of making central Iowa the best place to raise children. MICA has also taken the lead in organizing a 57 member human service collaborative to improve outcomes for children.
One of the major challenges that organizations face is how they manage the growing diversity of our society in terms of gender, race-ethnicity, language, communities, and special interests. This is especially true for place-based nonprofits such as community development corporations (CDCs) and national associations and networks that serve diverse constituencies. Shared assumptions, values, and beliefs vary among different cultures and ethnicities. Organizations need to test their basic assumptions in light of growing diversity, and reflect whether the mission and philosophy of the organization should be altered. Strong leadership can help the organization respond to a more diverse society. Brian O’Connell, the former President of the Independent Sector, observes that true leaders need to have the "vision to see beyond the horizon, along with sensitivity to really feel human needs, plus an almost contradictory toughness to build an organization capable of translating the vision and sensitivity into change" (Knauft, Berger, and Gray, 1991). This type of visionary leadership coupled with working and learning effectively in groups can help an organization adapt its culture to internal and external changes. NCC, which serves a predominately African-American constituency noted that its neighborhood was becoming more Latino, and has taken the lead in organizing a Hispanic Development Corporation (HDC) to serve the Latino aspirations of the community. HDC will be affiliated with NCC, and will help NCC organizational culture reflect increased diversity.
Most nonprofit organizations lack an understanding of their economic markets, and have primitive information on economic opportunities. They are heavily dependent upon governmental and charitable funding sources, who are experiencing increased competition and shifting priorities. While nonprofits are not in business to generate profits, they do need to serve their constituents and customers and generate revenue and raise funds that will enable them to be economically independent. These organizations need to have the capacity to attract and sustain sufficient financial resources. Many successful nonprofits have changed their organizational culture to reflect a more entrepreneurial market oriented approach that ties back to the mission of the organization. This notion of being a more economically independent organization usually enables the nonprofit to offer better services and programs for the major constituents and stakeholders of the organization. Funders and consumers are willing to support a nonprofit that offers a valuable service tied to an important purpose. New Community Corporation derives over 85% of its annual budget from rental fees from housing, a joint venture supermarket with Pathmark groceries, fees and subsidies for child care and senior services. The remaining revenue comes from foundation and corporate grants, religious institutions, individuals, and contracts and grants from the city, county, state, and federal government. Eastside Community Investments (ECI), a CDC that serves a low-income community in Indianapolis has a stated goal of trying to diversify its budget by 10% each year, and has met that goal consistently over the past ten years. One of their strategies is to sponsor an annual event called "Caulk of the Town", where the organization raises money and uses volunteers to fix-up housing for low-income families and seniors.
As this brief article demonstrates, an awareness of the concepts and applications of organizational culture to nonprofits provides a valuable lens for understanding the assumptions and practices of nonprofits. Both the public and private sector are increasingly turning to nonprofits to address and solve complex social issues, needs, and opportunities. The challenge is to enhance the purpose and effectiveness of nonprofits, since they are not able to solve all problems or take advantage of all opportunities. Shared assumptions about values, meaning, language, symbols, and group norms and behavior create the framework from which a nonprofit can implement its mission and programs. Learning and knowledge are becoming essential competencies for organizations, and those organizations that have a culture which embraces team learning and participation, will be most effective in fulfilling their mission. As Independent Sector and other organizations have pointed out, it is the organization with a strong mission and vision coupled with capacity and resources that can take care of the social challenges of a modern society, through helping to re-create community.