The Role of Nonprofit Organizations in Compensating for Market Failure
ABSTRACT: This paper reviews three social scientific accounts of the civic sector's role in society: the government failure, contract failure, and voluntary failure theories. All three explain the role of nonprofit organizations as compensating for the market's failure to provide certain collective goods. This approach involves a radical misinterpretation of the underlying principles of civic sector organizations. An account is needed that explains their economy in terms of their normative concerns, rather than explaining normative concerns in terms of their economy. I lay a foundation for such an account by examining (1) the self-understanding among civic sector organizations that they should be "mission-driven," and (2) the implications of this self-understanding for the sector as a "social economy." Whereas "mission-drivenness" calls attention to service-provision, resource-sharing, and open communication as the normative core of civic sector organizations, the notion of a "social economy" suggests a recirculation of money into channels where standard economic logic no longer holds. The key to the civic sector's role lies not in responses to market failure, but in the short-circuiting of a money-driven capitalist economy.
Three trends will shape the future of education around the world: the revolution in information technologies, the crisis of the welfare state, and the globalization of a consumer capitalist economy. In the face of such powerful developments on a massive scale, philosophy's efforts toward "educating humanity" (1) can seem both presumptuous and quixotic: presumptuous, because much of philosophy has given up global theorizing of sort that could evaluate these trends; quixotic, because the trends will shape the prospects of philosophy itself as a pedagogical practice housed in academic institutions. We philosophers easily appear to tilt with windmills.
Nevertheless, megatrends carry with them potentials for their own resistance or redirection. One such potential deserves special attention from philosophers today, not only because it is so close to philosophy's own self-image but also because it is often overlooked. I refer to the potential of the civic sector, a zone within national and international economies where organizations refuse to do business as usual. Economically, as Rifkin argues, the civic sector may well become an increasingly important location for meaningful activity and paid work as new information technologies eliminate millions of jobs and the welfare state shrinks. Politically, as Habermas argues, "autonomous public spheres," whose economic underpinnings often lie in the civic sector, will remain crucial to the democratic development of solidarity in modern societies. (2)
Unfortunately, standard explanations of the civic sector are inadequate both as normative theories and as sources for public policy. What is needed, and...