Bits of Freedom
Bits of Freedom

Tinkerer and thinker on everything free and open. Exploring possibilities and engaging with new opportunities to instigate change.

Jonas Öberg
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Jonas is a dad, husband, tinkerer, thinker and traveler. He's passionate about the future and bringing people together, from all fields of free and open.

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Bits of Freedom

Towards a new understanding of non-profit management

Jonas ÖbergJonas Öberg

The non-profit sector has come a long way over the past decades. A 1999 study1 showed that in a few selected countries, Germany and France included, the non-profit sector employed about 5% of the total workforce. Taking this as the starting point, Helmut Anheier (Yale University), developed his thoughts about non-profit management in his paper Managing non-profit organisations:
Towards a new approach
2 (2000).

Nonprofit organisations are subject to both centralising and decentralising tendencies. For example, environmental organisations are often caught between the centralising tendencies of a national federation that emphasises the need to “speak with one voice” in policy debates, and the decentralising efforts of local groups that focus on local needs and demands. - Helmut Anheier2

Reading this, it immediately struck me how similar the FSFE is in this regard and it prompted me to reflect upon some of the tensions which Anheier has identified and to look at this in terms of where the FSFE could be heading in the future in terms of its management model.

According to Anheier, organisations in need of management principles are prone to copy-cat behavior. This can be non-profits that are no longer trivial but carry political and economic weight and thus discover the need for management. Looking outside of the organisation at models they believe to be successful, non-profits mimic management practices of those successful models.

So which models do non-profits copy? Traditionally, non-profits tended to copy the model from public agencies, turning non-profit organisations into quasi-public institutions. That's in part why larger, traditional, non-profit organisations have a governance structure that mimic democratic societies: local governance, elections, representative assemblies, and so on.

In the 1990s, governments were perceived to be weak and thus non-profits took inspiration in its governance and management structures from what was then seen as successful: for-profit businesses. Anheier believes this in part is why especially US non-profits are run with largely the same management principles as for-profit businesses. But there's a problem of course: what non-profits learn from businesses is financial management, which in the business world is aimed at for-profit maximisation, not exactly compatible with non-profits ideological pursuit.

Financial management is first and foremost formal management, not management of purpose and mission, i.e., those very aspects that are the raison d’être of non-profit organisations. The copying of business models and practices into the world of non-profit management has – for better or worse – made inroads via the financial route primarily, and less so on other, equally legitimate avenues. - Helmut Anheier2

Financial management in for-profits makes perfect sense as it forms the link between several of the stakeholders involved in the transactions: between sellers and buyers (product costs), between employers and employees (wages), between shareholders and management (dividends), and between the organisation and the public (taxes). Where for-profits have a largely financial bottom line, non-profits not only has a financial bottom line, they have a multitude of other bottom lines.

A non-profit organisation has several bottom lines because no price mechanisms are in place that can aggregate the interests of clients, staff, volunteers and other stakeholders that can match costs to profits, supply to demand, and goals to actual achievements - Helmut Anheier2

Cutting through the organisation, Anheier demonstrates how this is reflected on the many layers of a non-profit. Starting with that the board of a non-profit, just as the FSFE's members, largely focus on the mission of the organisation and where the management and financial matters are vested in the executive management.

Non-profits also have a highly complex interplay between staff, volunteers and stakeholders, both in terms of their engagement and in their motivation. We can see this clearly in the FSFE as well, in that the organisational environment is complex, there are different expectations and motivations between our local supporters (largely volunteers) and our international work (largely professional staff).

Not surprisingly, these different bottom lines, are also often the ones where conflicts in non-profit organisation appear. One management style can not by itself satisfy the different bottom lines and various management styles can not only be envisioned, but are actually needed within each non-profit.

Rather than focusing on one of these bottom lines, management in non-profits become a manner of orienting and steering the organisation to position it within the management landscape, and to continuously adjust that position according to needs. Anheier has identified four dimensions relevant to consider for non-profit management:

Tent or palace?

A palace organisation values predictability over improvisation, dwells on constraints rather than opportunities, borrows solutions rather than inventing them, defends past action rather than devising new ones, favours accounting over goal flexibility.

Typical palace organisations can be service-providing non-profits, think-tanks and larger foundations. Tent organisations in contrast, are focused on creativity, immediacy, and initiative. They shy away from authority, escapes permanence, focuses on the here and now. These are typically civic action groups, citizen engagement groups, theater troops, and so on.

Technocratic culture or social culture?

The technocratic organisation "emphasise functional performance criteria, task achievement, set procedures and operate under the assumption that organisations are problem-solving machines." Social organisation emphasise "families" rather than machines. Religious and political organisation are traditionally more aligned towards social culture organisations, whereas hospitals and schools are more technocratic organisations.

Hierarchy or network?

In a hierarchy, decision making is centralised and top-down. In a network organisation, decision making is bottom-up. If talking about teams, clusters, horisontal relationships, and so on, we're often talking about different types of network organisations.

Outer-directed or inner-directed?

Inner-directed organisations tend to have a narrow view of its environment. They look inside the organisation and focus on their own objectives and world-view. Outer-directed organisations by contrast react strongly and immediately to the broader environment: they look at other organisations and the world outside of the organisation and seek solutions there.

What does this mean for us?

The challenge of non-profit management, then, is to balance the different, often contradictory elements that are the component parts of non-profit organisations. How can this be done? In a first step, management has to locate and position the organisations in the complex push-and-pull of divergent models and underlying dilemmas and choices. Following such a position analysis, management can ask: “Is this where we want to be? Are we too much like a palace, too hierarchical, too technocratic and too outer-directed? Should we be more tent-like, more organised as networks, with a socio-culture emphasises and our own resources and capabilities?” In this sense, we can easily see that non-profit management becomes more than just cost-cutting and more than just the exercise of financial control. Management becomes concerned with more than just one or two of the numerous bottom lines non-profit organisations have. In other words, management becomes not the controlling but the creative, enabling arm of non-profit organisations. - Helmut Anheier2

If looking at the FSFE today, I would argue that we are, at the moment, somewhere on the crossroads between a tent and a palace: neither here nor there, we're also somewhere in between a technocratic organisation and social organisation: perhaps somewhat more towards technocratic than social. We're also neither a network nor hierarchy. Our local groups are largely autonomous, but in terms of what's publicly communicated through our web pages and news in terms of the work we do, this feels largely driven by a hierarchical model.

And finally, we are rather inner-directed. Not strictly, but we to tend to emphasise our own objectives and world-view, and if I were to pinpoint something we'd need to change at this point, it would be to become more outer-directed. Here's what I think this chart looks like in terms of the difference between the FSFE and our sister organisation the FSF.

In my view, both organisation are rather inner-directed and technocratic but the FSFE is still more of a network than a hierarchy, and more of a tent than a palace. But more interestingly, if we look only at the FSFE, where would I want to see the FSFE placed in the future? This is what I'm aiming for at the moment:

At the moment, I'm quite comfortable with the FSFE being neither a tent nor a palace. We have both views in the organisation, and act in different ways at different times. I think that's fine. I do think however we need to develop more in an outward-direct way. To look more at the environment around us and let that be our guide to determine our actions, rather than focusing too much inward.

I also believe we can become more social, and most important, we can become more like a network and less like a hierarchy. But moving in this direction is not a straight path, and this is perhaps where I would add something to the model Anheier presents. I believe network organisations work best when there's an underlying structure which provide the foundation for the network.

But that's also why I don't see the organisation becoming much less technocratic: the functional performance, set procedures and task achievements, which are second-nature to technocratic organisations, are part of the foundation which makes a network organisation work. It's a network organisation where local and thematic groups not only have autonomy, but they know they have that autonomy because the procedures of the organisation give it to them.

  1. Salamon, L. M., Anheier, H. K., List, R., Toepler, S., Sokolowski (1999). Global Civil Society: Dimensions of the Non-profit Sector, Johns Hopkins University.

  2. Anheier, H. H. (2000) Managing non-profit organisations: Towards a new approach, Civil Society Working Paper 1.

Jonas Öberg
Author

Jonas Öberg

Jonas is a dad, husband, tinkerer, thinker and traveler. He's passionate about the future and bringing people together, from all fields of free and open.