The promise of non-profits in Poland and Hungary: an analysis of third sector renaissance

The non-profit sector arising in Poland and Hungary bears little resemblance to its pre-war ancestors. The new non-profits are shaped by social and economic forces brought about by the state socialists. State socialist service policies have left the non-profits with substantial need for their services, but the organisations face several major constraints in meeting that demand. Current government policies towards services and non-profits are discussed. Government and foreign funders can play a significant role in fostering the new non-profits, but a careful prioritisation of objectives is necessary. The present situation shows that many theories about non-profit organisations are not internationally cross-applicable, although several hypotheses have partial relevance.The author recently submitted a longer version of this paper to the Woodrow Wilson School of Public and International Affairs at Princeton University. He is currently studying in the School of International and Public Affairs, Columbia University, New York.     

Politics and the development of the Hungarian non-profit sector

One of the important developments in post-Communist Hungary has been the growth of the voluntary or non-profit sector. Under the Communist regime, voluntary associations were controlled and independent organisations were largely suppressed. During the 1980s, advocacy groups and independent associations emerged to challenge the Communist monopoly on organisation. These challenges were instrumental in laying the foundation for the post-Communist non-profit sector, providing models of organisation and experienced activists. After the creation of a new legal framework in 1989 and 1990, the growth of the non-profit sector was dramatic. Two types of non-profit organisations have developed in democratic Hungary: associations predominate in membership activities, while foundations are active in fields requiring fund-raising. Attempts by the Hungarian Democratic Forum-led government to shape the non-profit sector to meet its goals were met with political pressure from professionals in the non-profit sector. The result was the beginnings of a contract-for-service regime and increased organisation of a contract-for-service regime and increased organisation of interests within the non-profit sector itself. This is a revised version of a paper presented at the 1994 Annual Conference of the Association for Research on Nonprofit Organizations and Voluntary Action (ARNOVA), Berkeley, California, October 1994. The author gratefully acknowledges support from the Program on Nonprofit Organizations (PONPO), Yale University. Helpful comments were provided by David Bronkema, éva Kuti, Debra Minkoff, Suzanne Morrah and members of the PONPO Colloquium.     

Overall evaluation of economic theories

This article evaluates economic theories of the non-profit sector by their ability to enlighten our understanding of the scope of inquiry, the determinants of the size and scope of the non-profit sector, and the behavioural responses of donors, volunteers, paid staff and non-profit organisations to changes in their external environment. Adherence to a non-distribution constraint has proven to be a useful way of delimiting economic analysis of non-profit organisations, but more attention should be paid to alternatives. Economists have been less successful at developing usable distinctions between voluntary action and exchange. The size and scope of the sector appear to be determined by entrepreneurial supply factors, donations (which in turn are influenced by tax policy, governmental spending, fund-raising, and the quality and mixture of organisational outputs, commercial or charitable), commercial activities, capital supply, the supply of labour (paid and volunteered), the marketability of outputs, and the distribution of consumer characteristics. Variations of James's (1983) model have proven useful to predict the reaction of non-profits to exogenous changes. I thank Symposium participants, especially Mark Schlesinger, Paul DiMaggio, Anne Preston, Avner Ben-Ner and Helmut Anheier for helpful suggestions.     

Non-profit organisations in India: historical development and common patterns

The article documents the history of the Indian voluntary or non-profit sector involved in socio-economic development of the country. Specifically, three questions are addressed. What type of voluntary organisations existed at what periods of history, and what were their primary activities? Who were the founders, and what were their motives? Can we detect common themes or underlying patterns in the way in which the Indian voluntary sector has developed? Or in other words: what is the institutional genesis of the non-profit or voluntary sector in India? The findings are based on multiple sources — literature review, interviews and observation, and information requested through the mail. The article differs from most historical studies on Indian non-profit organisations because it takes an analytical approach by drawing from contemporary literature on such organisations.     

Altruism, ideological entrepreneurs and the non-profit firm

Ideology and altruism are central to understanding the non-profit charitable sector. This paper addresses three questions. Why do people make charitable gifts? Why do they usually give to non-profit organisations? When can non-profits run by committed ideologues compete with profit-oriented entrepreneurs in the provision of services? the altruistic motives of individuals and the ideological commitments of entrepreneurs come together to support charitable organisations. The non-profit form provides a weak guarantee that gifts are not being syphoned off as profits. Furthermore, independent non-profits can often better reflect donors' desires than public agencies constrained by majoritarian claims, and ideological entrepreneurs can use the non-profit form to reify their beliefs without being accountable to profit-seeking investors. A non-profit organisation can only survive, however, if it can attract money and customers. Sometimes its ideological character will facilitate both tasks. Non-ideological customers may, nevertheless, patronise an ideological non-profit if the entrepreneur's commitment helps to guarantee high quality.     

Non-governmental organisations and philanthropy in Latin America: An overview

This article provides an overview of the emerging non-profit or voluntary sector in Latin America. Specifically, the article addresses the differences and communalities these non-profit organisations have across the region. It concludes by emphasising the huge variety of roles and functions performed by non-profit organisations within and across countries, and their often ambigious position between the private and public realms.     

Tax policy toward non-profit organisations: an eleven-country survey

The role of private non-profit organisations in modern economic systems is poorly understood. The tax and subsidy treatment of non-profits relative to private firms affects the competitive position of each, and thus their relative strength within any industry; in the United States, for example, non-profit organisations play major competitive roles in such industries as hospitals, nursing homes, day care centres, schools and arts organisations.This paper reports results from a survey of tax policies toward non-profit organisations in eleven countries. The major findings are: (1) the definition and scope of such organisations varies considerably; (2) non-profit organisations are typically regulated by the tax collection agency, but in some countries there is also involvement from the government agency responsible for the particular realm of activity, such as health or education; (3) tax subsidies to non-profits take many forms — not only exemption from corporate profits tax but, depending on the country, for land, buildings, mail and motor vehicles; (4) almost every country limits non-profit organisations' unrelated business activities; and (5) donors are generally permitted to deduct donations of money from taxable income, although there are typically both minimum and maximum limits. These findings point up the larger task of understanding why such differences exist across countries, and what are the effects.Burton Weisbrod is John Evans Professor of Economics and Director of the Center for Urban Affairs and Policy Research, Northwestern University, Evanston, Illinois.Elizabeth Mauser is a PhD candidate in Economics at the University of Wisconsin-Madison.We thank the Ford Foundation for financial support. We also thank those people who responded to the survey questionnaire: Christoph Badelt (Austria), Patrick De Bucquois (Belgium), Miklos Marschall (Hungary), Jimmy Weinblatt (Israel), Disiano Preite (Italy), Mark Robson (United Kingdom), Julia Montserrat (Spain), Ching-chang Yen (Taiwan), Somchai Richupan (Thailand), John Simon (United States) and Wolfgang Seibel (West Germany). In addition, we benefited from reading draft papers by Frits W. Hondius (Council of Europe) and Sheila Avrin McLean (McLean & Co. Ltd), both of whom have done related work on tax treatment of charities in various countries, and from comments by Christoph Franz on an earlier draft of this paper. A version of this paper will appear in a forthcoming volume published by the Center for Social Policy Studies, Jerusalem, Israel. The editors are grateful for the permission of Dr Yaakov Kop, Director of the Center, to publish this paper inVoluntas.     

Bulgaria's non-profit sector: the search for form,purpose, and legitimacy

Bulgaria, like other East European nations since the collapse of communism, has moved rapidly to form private, self-directed non-profit and voluntary organisations. Like those nations too, Bulgaria faces a number of challenges in its pursuit of forming a strong non-profit sector. Chief among those challenges are establishing a sound legal foundation, defining the social purposes and functions of the non-profit sector, and establishing the legitimacy of these organisations in the minds of the Bulgarian people. These three challenges are analysed in the essay, following an overview of the current make-up and characteristics of the emerging non-profit sector.     

Public good theories of the non-profit sector: Weisbrod revisited

Burton Weisbrod's 1975 article, Toward a theory of the voluntary non-profit sector in a three-sector economy, models non-profit organisations as suppliers of public goods which are undersupplied by government to heterogeneous populations. This article examines the implications, extensions and empirical tests of the Weisbrod theory. It also examines the theories of pure and impure altruism, the heterogeneity hypothesis, and the various ‘publicness’ indexes of non-profit output. The commonalities between the public good model and the trustworthiness model of non-profit organisations are also explored. He is also a Research Associate of the Mandel Center for Nonprofit Organizations at Case Western Reserve University.     

Non-profit-funding environment relations: theory and application

The relationships between funding heterogeneity and organisational structure and functioning were examined for a panel of non-profit organisations. Resource dependence and institutional theory were used to derive hypotheses predicting positive associations between funding heterogeneity and non-profit boundary spanning, modelling and participation in collective efforts. For non-profits which were less vulnerable to institutional aspects of their environments, funding heterogeneity was found to have a positive effect on boundary spanning, consistent with resource dependence theory. For non-profits which were more vulnerable to institutional factors, on the other hand, funding heterogeneity was found to have positive effects on modelling and participation in collective efforts; consistent with institutional theory. These results argue that resource dependence and institutional theory need to be combined for the analysis of organisation-environment relations and suggest how this could be accomplished.The research described in this article was sponsored by grants from the National Science Foundation, the Program on Nonprofit Organizations at Yale University, and the University of Minnesota. An earlier version of this paper was presented at the 1990 Meetings of the American Sociological Association, August 11–15, Washington, D.C.     

On scale and scope and the history of the non-profit sector in the United Kingdom

This article argues that Alfred Chandler's analysis of the British firm cannot be transposed to the very different context of non-profit organisations in Britain. Both in relation to charitable non-profit organisations and mutual benefit organisations, Chandler's theory of the development of firms does not help explain organisational development. The main thrust of the argument is that the explanation for the smaller size of charitable non-profits in Britain than in America is largely institutional and partly socio-cultural; the explanation does not lie in any failure in Britain to adopt new techniques of management and organisation. With mutual benefit non-profits, a rather different account is presented. ‘Mutuals’ which had a strong fraternal element were relatively more successful in Britain than in America, although there is less difference between the two countries with regard to ‘non-fraternal’ mutuals. Once again, it is argued that institutional and socio-cultural factors—rather than the factors identified by Chandler—account for this. I wish to thank Desmond King for his helpful comments on an earlier version of this essay.     

Competition between non-profits and for-profits: entry and growth

The non-profit sector in the United States relies on fee-paying individuals for a high proportion of its revenue. Given this fact, non-profits and forprofits coexist in the same industry when each type of firm can find a stable market niche that rewards its own special strengths: ideological commitment in the non-profit sector; access to capital and the profit motive in the for-profit. Coexistence is also possible when the non-profit form is superior but there is a shortage of non-profit entrepreneurs. The paper next considers the entry of non-profits into sectors dominated by for-profits. Here one must distinguish between purely commercial activities and those designed to further the charity's basic mission. In the former, non-profits should behave no differently than their for-profit competitors unless subsidies designed for mission-related activities are diverted to these activities. In the latter, the non-profits may have an advantage which reflects not unfair competition but a judgment that their activities are worthy of subsidy. In evaluating competition between non-profits and for-profits, one must separate the issue of the appropriateness of an organisation's tax-exempt status from the impact of its actions on for-profit firms.Prepared for the Research Conference on the Commercial Activities of Non-profits, New York University, November, 1988. I wish to thank Anne Buckholtz for helpful research assistance, and Woody Powell and Brad Gray for useful comments.     

The politics of NGO development in China

Since the beginning of reform in the late 1970s, the non-governmental sector in China has burgeoned. This paper analyses its development. It begins by examining competing theories regarding the political impact of the NGO sector. Political scientists employing pluralist or civil society approaches suggest that the development of NGOs is an important force in creating pressures for democratisation. In contrast, those employing a corporatist framework seek to illuminate the mechanisms which the state can use to limit and control the political impact of NGOs. The paper also examines the advantages and disadvantages of close state involvement for the impact of NGOs on socio-economic development. It explicates the legal and regulatory framework for NGOs in China in order to illustrate the ways in which the state seeks to preempt and coopt the formation of autonomous organisations, lending support to the corporatist interpretation. The paper includes case studies of NGOs based on interviews with representatives of NGOs and regulatory organs, published documents and press reports. It places China's contemporary experience with non-governmental organisations in context by comparing it with associational life in traditional China, in developing countries in general, and in communist countries in particular. Finally, the paper analyses the significance of the economic reforms and the impending political succession for NGO development.The author is a graduate student in the Department of Political Science at the University of Michigan. This article was first drafted while she was an intern with the Ford Foundation in Beijing. Peter Geithner, Michel Oksenberg, Craig O'Neill and an anonymous reviewer made helpful comments on earlier drafts. The views expressed in the article are the author's and do not necessarily reflect those of the Ford Foundation.     

Tax-based research and data on non-profit organisations

Tax-exempt, non-profit organisations represent a significant and growing sector within the US economy. Between 1975 and 1990, assets of tax-exempt organisations increased in real terms by over 150 per cent while the revenue increased by over 227 per cent. This compares to a growth in real GDP of 52 per cent over the same period. A variety of tax policy issues on tax-exempt organisations and the non-profit sector can be addressed using several sources of data collected by the IRS from federal information and tax returns of exempt organisations. The Statistics of Income (SOI) Division, using sample data, conducts studies of many of the different components of the tax-exempt sector, including non-profit charitable organisations, organisations exempt under sections 501(c)(4)-(c)(9), private foundations and 4947(a) charitable trusts, and the unrelated business income of tax-exempt organisations. Income statement, balance sheet and other financial data, as well as a great amount of non-financial information, are collected in these SOI studies. The primary purposes of this article are: first, to document the role of the non-profit sector in the US economy and the evolving growth and change within the sector from the mid-1970s through to the present; and, second, to describe the ongoing SOI studies of tax-exempt organisations, the products and services available through SOI, and the future statistical plans at SOI for data collection and analysis of tax-exempt organisations and the non-profit sector.     

Mapping the non-profit sector in the United States: implications for research

The need for a national typology of the US non-profit sector has long been recognised. A typology which could better define and describe the variety and diversity of non-profit organisations by type or major function will serve numerous research and public policy uses. This article describes the essential elements of the National Taxonomy of Exempt Entities (NTEE), developed over almost a decade after extensive consultation with agencies in the non-profit sector and the United States government. The article reports an initial analysis of the classification of nearly one million non-profit organisations in the US, and comparisons are made with earlier estimates inDimensions of the Independent Sector. Based on these findings, changes are proposed to this biennial statistical profile of the US non-profit sector. The importance of developing national typologies of non-profit organisations is discussed as a basis for comparative international research.     

Entrepreneurship theories of the non-profit sector

This article summarises the main results of entrepreneurship theories of the non-profit sector and discusses the impact they may have on theory development and on the real world non-profit sector. It is pointed out that the entrepreneurship approach advances our knowledge of the non-profit sector, especially by stressing the supply-side aspect and by focusing on the preferences individuals must have in order to engage in non-profit activities. There is empirical evidence consistent with entrepreneurship theories. Yet most observations do not exclusively support entrepreneurship theories but also provide evidence consistent with other economic theories of the non-profit sector. This illustrates that the various economic theories of the non-profit sector are more complements than substitutes. Furthermore, entrepreneurship theories indirectly help to improve the image non-profit organisations have in the real world; therefore they play a prominent role in teaching programmes which have been established to train non-profit managers. The author gratefully acknowledges the comments of the participants of theVoluntas Symposium at Yale University, especially the comments made by Estelle James, James Ferris and Dennis Young.     

Comment on Stephen M. Wunker, ‘the promise of non-profits in Poland and Hungary: an analysis of third sector renaissance’

The pre-war Hungarian voluntary sector was relatively weak as a service-provider, but played major social and political roles, and was an important vehicle of the self-organisation of society. That is why state socialist governments could develop the nationalised system of social services quite easily, but could not completely destroy citizens' autonomy, solidarity and private initiatives. Both the pre-war traditions and the social and economic forces brought about by state socialism are of crucial importance in shaping the newly emerging Hungarian non-profit sector. The traditional government/non-profit partnership may be the basis for contracting out state-financed public services. At the same time, voluntary organisations are expected to plug the gaps present in the state socialist service system. Large government-funded non-profit organisations may play an important role in the denationalisation process, some of them can be appropriate means of assuring that the grant making procedure remain free from politicisation.     

Women and philanthropy

Although women often played a central role in the creation of non-profit organisations through their donations of time, money and material possessions, their efforts have received little systematic attention from students of the non-profit sector, particularly outside the United States. This special issue ofVoluntas traces the ties between philanthropy and women's social, economic and political roles in Argentina, Ireland, the Netherlands, Germany, Russia, India and Australia. Written as part of an international collaborative study co-ordinated by the Center for the Study of Philanthropy at the Graduate School of the City University of New York, these essays test a variety of theoretical models for assessing the significance of philanthropic activities in empowering disadvantaged groups and fostering the growth of civil society.     

Organising principles for international advocacy associations

Recent decades have witnessed a significant increase in the number of voluntary non-profit associations established to address solutions to major international social problems. Many of these associations concentrate on advocacy work, as opposed to service delivery, and are international in scope rather than based in a single country. This paper is concerned with the challenges to organising this particular type of voluntary association.While rapid progress in communications and transportation technology has undoubtedly facilitated the development of these associations, such organisations still face formidable problems. The paper argues that international advocacy associations are successful when they adopt particular organisational structures and strategies to accommodate these problems. In particular, decentralised and federated structures appear to be more viable for the international advocacy arena.This paper reviews relevant literature and elaborates on the theoretical expectations for successful structuring of international associations devoted to advocacy on global issues. Hypotheses are set forth and investigated in a preliminary way through the examination of case studies of three associations.This paper was originally prepared for the Annual Conference of the Association of Voluntary Action Scholars, London, July 1990. The author wishes to thank David Cooperrider and Bill Pasmore for their encouragement to undertake this work, the team of the Social Innovations Project in the Department of Organizational Behavior of the Weatherhead School of Management for allowing him the benefits of their field studies, and David Mason and Herman Stein for their helpful suggestions and useful insights.     

A profile of the non-profit sector in Romania

With the revolution of December 1989, citizens of Romania gained the right to form non-profit organisations for the first time in 40 years. Since then, Romania has begun to explore the frontiers of private initiative through the introduction of non-profit, non-governmental organisations as well as profit-making businesses. In this article we review the historical development and legal framework of Romania's emerging non-profit sector. We also provide the first empirical snapshot of that sector by applying the International Classification of Nonprofit Organizations (ICNPO) developed by Salamon and Anheier to 499 organisations identified in theSoros Catalogue of Nongovernmental Organizations in Romania: 1991–92. Finally, we speculate on the future development of the Romanian non-profit sector by considering alternative scenarios involving the relationships between indigenous nonprofits, international NGOs and the Romanian government.