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Why the Community Sector is Different from the Rest

12 December 2011 at 10:12 am
Staff Reporter
What distinguishes the community sector from business, asks Macquarie Group Foundation Professor at the Centre for Social Impact, Peter Shergold. This article is taken from the CSI Blog.

Staff Reporter | 12 December 2011 at 10:12 am


Why the Community Sector is Different from the Rest
12 December 2011 at 10:12 am

The community sector is a different place. They do things differently there.

It’s not that its leadership lacks entrepreneurial spirit: without enterprising endeavour the vast majority of organisations – structured around hobby, interest or locality – would simply not survive. It is emotional commitment and voluntary endeavour, not capital, which sustains them.

Nor is the sector short of commercial acumen. Those nonprofits that have become economically significant (about one in every ten) have done so by their capacity to raise funds, earn revenue, build reserves and make the best use of every scarce dollar. They seek to allocate resources effectively and, increasingly, to measure the impact of their mission. A growing number now operate as social enterprises, seeking to achieve surplus through trading.

In general nonprofits deliver services for governments in a cost-effective manner, in part to because they are rarely paid the full (unsubsidised) value of their business operations. When solvency is an abiding concern, and sustainability a bold aspiration, it is imperative to focus on the bottom-line.

The fact that so many nonprofits operate in the sector is often criticised. I find that somewhat curious. After all small business is always portrayed by governments as the engine-room of the private sector and, indeed, extolled as proof-positive of grass-roots entrepreneurialism. Small-scale is characteristic of both the private and the community sectors.

What does distinguish the community from the private sector is the wariness, even hostility, it exhibits with respect to merger and acquisition. Takeovers, hostile or friendly, are rare. It’s even a challenge in Australia to create a strong national body. Federalism prevails. Indeed the National headquarters of old-established charities frequently wield limited authority over State offices and attempts to increase central power often meet with fierce resistance. Even during the continuing economic uncertainty associated with the Global Financial Crisis most nonprofits surveyed indicate that they are unattracted by organisational rationalisation.

I think that one reason for this is that the community sector has a natural inclination to collaborate rather than to consolidate, to work together informally in consortia rather than to merge. Don’t get me wrong: the sector is not a love-in. There is competition for donors or investors and, most fiercely, for government contracts or grants. Small organisations often gripe quietly about the undue power and influence they see the large nonprofits exert. Larger, more established charities will bemoan the low entry requirements in the sector, viewing the emergence of smaller and newer organisations as undermining economic stability in the sector.

Yet the challenge that the sector faces in building a strong advocacy voice reflects more the extraordinary diversity of the community sector rather than competitive ruthlessness. There is, between those bodies which share a similar purpose, a willingness to cooperate and share good practice. Let’s remember that most powerful social movements of the last century have been driven by loose partnerships between larger numbers of community service or advocacy organisations, some international in orientation, others embedded in local neighbourhood.

There exists, in short, a desire for connectedness.

That is why the launch of the Connecting Up Directory represents an important step forward in providing an on-line comprehensive listing of nonprofits. It will make consultation, communication, and cooperation much easier. It will connect nonprofits and those that support or fund them. It will be equally valuable to those who wish to regulate charities or those who seek to advocate on their behalf.

The Directory will, as it develops, provide a means by which to portray the growing significance of the raucous cacophony of interests that is the community sector.

Connectedness is a source of strength for the community sector. This Directory, which already lists 60,000 Australian nonprofits, represents a bold initiative in seeking to achieve that goal.

Check out if your organisation is already in it – if not, go online and add the details. It’s never been so easy to get connected. You can help ensure that Connecting Up becomes, as it intends, ‘the definitive directory of Australian nonprofits and charities’.

The Centre for Social Impact (CSI) at the University of New South Wales brings together the business, government, philanthropic and third (Not for Profit) sectors, in a collaborative effort to build community capacity and facilitate social innovation.

The CSI blog aims to provide a forum for discussion and debate on topics related to social impact. The blog features regular posts by CSI staff, as well as pieces by guest bloggers. Selected blog posts are re-published by Pro Bono Australia News – to visit the CSI blog visit

Tags : Opinion,


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