The Dean’s Discussions, focused this semester on “How Civil Society Can Address Public Challenges,” wrapped up with a discussion on organizing, social innovation, and nonprofits. Sarah Wald, chief of staff to Dean Douglas Elmendorf and adjunct lecturer in public policy, moderated the event, which featured some of Harvard Kennedy School’s (and the country’s) leading scholars in the field: Julie Battilana, the Alan L. Gleitsman Professor of Social Innovation at HKS and the Joseph C. Wilson Professor of Business Administration at Harvard Business School; Marshall Ganz, the Rita E. Hauser Senior Lecturer in Leadership, Organizing, and Civil Society; Matthew Lee, associate professor of public policy and management; and Herman “Dutch” Leonard, the George F. Baker, Jr. Professor of Public Management at HKS, and the Eliot I. Snider and Family Professor of Business Administration at HBS. Wald opened the discussion by asking the panelists about the ideal role of philanthropy and the social sector in a democracy. Here are excerpts from the conversation that followed, edited for length and clarity:
I’ve been doing some research on the MacKenzie Scott donations. But beyond the social science part, these gifts are interesting because it's just about the fastest that anyone has given away such a large amount of money in history. She's given away about $14 billion in the last three years.
Scott’s giving is remarkable not only because of the amount of money that she's given away, but also because of the way that she's done it. Everyone's talking about strategic philanthropy and the different ways to approach it. As an outsider looking at Scott’s giving, it seems like she tried to find the consensus best nonprofit organizations in the United States and around the world and give her money to all of those in the fastest, most unrestricted way possible.
Connecting this to the question about what's the proper role of philanthropy in a democracy, I've always thought about the role of philanthropy as being to invest in innovative practices to solve public problems. This is relatively unique in our system because philanthropy isn't subject to the same constraints that public money is. MacKenzie Scott has invested in some innovation-first organizations. But some of her gifts are also unrestricted capacity-building grants to more traditional nonprofit organizations, and there’s a strong case to be made for that as well. Seeing how she has approached this is already creating generative conversations about the right balance for philanthropists going forward.
The social sector is vast and varied, including not-for-profits as well as cooperatives, unions, social enterprises, and social movement organizations among others. And we have to acknowledge that diversity as we talk about the social sector today.
If you think about the role of the social sector in general, I would say it has been innovative on two critical dimensions. The first relates to the social sector’s efforts to find solutions to complex problems, especially in situations when public organizations and the so-called market economy have either neglected those issues or have not been able to address them. But I think that innovation in the social sector has not only been about finding solutions and then trying to scale them. The second dimension of innovation worth highlighting has been about the different kinds of organizing and organizations nurtured in the social sector that are alternatives to the typical, hierarchical, and profit-maximizing approach that has been dominant in the market economy over the past decades.
That being said, the social sector faces several challenges. One of the main ones relates to the power imbalance between funders and grantees. Power resides in control over access to valued resources, and funders control access to financial resources. As a result, they can use their power to decide which social problems are worthy of attention, and also how we should go about addressing them. The reality is that when there is a significant power imbalance between two groups, those with greater control over access to valued resources are able to set the rules of the game.
Now I don't want to give the impression that all funders actually abuse their power: the reality is that some of them do and others do not. I have been working to help facilitate power sharing in the philanthropic sector through my research and teaching, but there's a lot more we need to do to achieve genuine power sharing. How not-for-profit organizations organize themselves is also a critical issue worthy of consideration. How do they incorporate the voices of the people they're trying to serve? And what about the voices of the experts in these organizations? How has commercialization changed how social sector organizations operate? Unfortunately, it seems to be the case today that, despite efforts to get organizations in the for-profit sector to adopt social and environmental principles in the way social sector organizations do, influence between the for-profit and social sectors has primarily tended to flow from the for-profit sector into the social sector and not in the opposite direction.
So, what can we do about these challenges? At their heart, these challenges are fundamentally tied to how power is inequitably distributed. We can fight back against power concentration in two ways: power-sharing and holding those in power accountable. Sharing power means redistributing access to valued resources. Adopting more democratic governance in organizations is a key step in this process. And the good news is that alternative models to the dominant form of hierarchical organizing already exist, including cooperatives, where all employees also own their organizations, and codetermination, where employees are guaranteed representation in board-level organizational bodies. Democratic decision-making in the social sector should also involve the people on the ground, and consider the proximity of leadership to these people’s voices, far more than we do at the moment.
Accountability means not just financial accountability, but also being accountable for social and environmental impact in both the social and for-profit sectors. Public policy has a crucial role to play in ensuring that organizations in both sectors operate responsibly. Some social sector organizations are also working together to drive change. The Catalyst 2030 movement, for example, is a group of leaders from cooperatives, unions, social enterprises, and not-for-profits all organizing together to address key issues in the sector. We need to find ways to better support these self-organized groups while simultaneously encouraging action in the public policy realm.
The existing, unequal structures of power in our societies, including those facing the social sector, are deeply entrenched, but we have learned through history, experience, and research that when we unite forces as part of collective movements for change, we are then able to change existing power structures. We all have a role to play to help address these power imbalances and to contribute to power sharing in the social sector and beyond.
The role of an autonomous civil society in democracy is that its members can organize venues in which individuals can discern, articulate, debate, decide and act on shared values and interests. As such, their self-governing associations could become critical sources of the deliberation, advocacy, and accountability a democracy needs vis-à-vis dominant political, economic, and cultural holders of power.
It is no more: self-governing membership associations funded by their membership and accountable to them have become scarce as hen’s teeth. They have largely been replaced by nonprofits neither financially nor politically accountable to members who don’t exist. They are, rather, accountable to the wealthy who fund them—their donors.
This ‘donor-ocracy,’ has flourished in the last 40 years. It's been a radical transformation. It sustains organizations which claim to represent a community not because the community elected them, not because the community pays for them, but because a donor likes them. As such, a whole system of ersatz representation has been constructed.
Nonprofits are also removed from the domain of politics so they can provide tax benefits to their donors. In this way thousands of the most caring people in our society are excluded from the partisan political world in which the decisions about their concerns are largely being made. So, we're depoliticizing this sector at the same time that we're transforming it.
What's shifted fundamentally is power—and along with that our capacity as a society for self-governance. When de Tocqueville was writing about the power of civic associations, he was not talking about nonprofits. He was talking about membership associations in which people choose their own leader, they engage in deliberation, and exercise authoritative voice.
And I think the real challenge here is how to free civil society from its subordination to this philanthropic domination that runs everything. It’s a major challenge and one reason we need to support the development of strong self-governing associations. Democracy is not something you have but something you do. In today’s America most of us spend most of our waking hours in for-profit or nonprofit “firms” in which authority is rooted in ownership—direct or indirect—rather than citizenship.
I think the social sector does actually pretty good work, so that's an important thing to start with. But I think of the challenge that all of us are talking about is a challenge of accountability. I think the social sector’s institutional structure is an imperfectly designed mechanism to produce social value, because it has no strong instruments for holding organizations accountable for producing public value as defined by democratic processes or the views of the citizenry at large. Whose voice gets elevated? Who do we listen to? Who gets to decide what problems we are going to work on? Whose idiosyncratic view of the solution gets to be the one that we pursue?
The people who bring the resources get a very big say in that, and we don't have any very strong mechanism for either accountability for purpose—how did you decide that this is what you thought was important to do?—or for accountability for performance—how do we know whether you're actually making progress on that at all? That means that the social sector as currently configured is something of an unguided social missile. And that's a worry.
And I think in spite of that, we actually get very good work out of this sector. And so I often ask why. This is the sector that has the hardest problems (it has the problems no one else wants to deal with), and it has the least resources (because it has to get them voluntarily from third parties). It can't get them directly either through taxation nor, for the most part, through exchange transactions. So it has the hardest problems, the least resources, and no mechanism for accountability. And yet it does good work. How does that happen? It happens because of the individual leadership of the people in the sector whose intentions are good. They're trying to figure out what the actual problems are and are trying to find ways of being oriented towards the voices of the people they're helping. In short the good performance is in spite of the imperfections in the structure—and is a result of the good leadership of people in the sector.
Banner photograph by Spencer Platt/Getty Images; Headshots by Martha Stewart