Nonprofits play a significant public
policy role, but face new limits today
A Civic Caucus
Review of Minnesota’s Public
Interview April 29, 2016
John Adams, Janis Clay,
Paul Gilje (executive director), Randy Johnson, Dan Loritz
(chair), Paul Ostrow, Bill Rudelius, Dana Schroeder (associate
director), Melissa Stone. By phone: Steve Anderson, Dave Broden
(vice chair), Sallie Kemper (associate director).
organizations in Minnesota are involved in framing public-policy
issues, according to University of Minnesota Humphrey School of
Public Affairs Professor Melissa Stone. She says often the
articulation of an issue at the beginning of a policy initiative
is done by nonprofit organizations. This was true with the
domestic violence initiative, when Minnesota nonprofits,
especially in Duluth, led efforts to combat domestic violence by
moving to set up safe houses in the 1970s, at a time when
government was nowhere around on the issue. Nonprofit
organizations' role in public policy continues to be
significant, she believes.
But she notes several factors that
limit the ability of nonprofit organizations to play an even
stronger role in public policy: the demands of funders that
nonprofits focus on measuring results; the lack of activity by
nonprofit boards in community education or advocacy on behalf of
their beneficiaries; and the increasing belief that nonprofits
should act more like businesses. She also worries that these
trends are making small nonprofits more vulnerable than they
have to be.
Stone questions where the shared
inquiry and shared learning is among the myriad of groups trying
to address an issue like the achievement gap. She sees a
possible role for the Humphrey School in convening and staying
with people working on an issue and helping them talk to each
other about what they've learned. The School could also help
people take what they've learned collectively about an issue and
reframe the issue in terms of what that information means for
policy. But she laments that the Humphrey School has trouble
sustaining work on a single topic long enough to get any
traction on it.
She suggests that the Civic Caucus
look for places where it can intervene to facilitate the
connections between issues and public policy results, perhaps in
partnership with the Citizens League and the Humphrey School.
Melissa M. Stone is the
Gross Family Professor of Nonprofit Management and Professor of
Public Affairs and Planning at the Humphrey School of Public
Affairs at the University of Minnesota. Her teaching and
research focus on governance and strategic management of
nonprofit organizations, government-nonprofit relationships, and
collaborations as policy implementation tools. She has published
widely in scholarly journals and books in the fields of
nonprofit studies, public management, and strategic management.
Stone sits on the editorial board of the Journal of Public
Administration Research and Theory and the Advisory Board
for Nonprofit Management and Leadership.
Stone has taught at the University of
Washington's Evans School of Public Affairs, the Yale School of
Management, and Boston University's School of Management. Stone
has won numerous awards, including the University's prestigious
Award for Outstanding Contributions to Postbaccalaureate,
Graduate, and Professional Education for 2007-2008 and the 2011
RGK Center-ARNOVA President's Award for Research.
Prior to her academic career, Stone
founded and led two nonprofit organizations in the field of
youth and family social services. She holds an MBA and Ph.D. in
organizational behavior from Yale University.
Caucus is undertaking a review of
the quality of Minnesota's past,
present and future public-policy process for anticipating,
defining and resolving major public problems. The Caucus
interviewed University of Minnesota Professor Melissa Stone to
learn more about the role of nonprofit organizations in that
There are 1.5 million nonprofit organizations in the U.S. and
the number is growing.
University of Minnesota Professor Melissa Stone said that number
is actually an undercount, since it only includes organizations
that have filed for nonprofit status with the IRS. It doesn't
include many churches and many small nonprofits that don't have
There is a confluence of factors that
has increasingly articulated what we now know as the nonprofit
sector. She said we didn't talk about the nonprofit sector
in the 1970s. She referred to the book
We conceptualize the nonprofit sector
as a tax boundary. Stone said that for tax purposes, the
sector has been invented for a long time. There are 27 different
IRS categories of nonprofit organizations: from cemetery clubs
to political parties to unions to some co-ops to traditional
charities to massive foundations to Harvard University. "The
variety is enormous," she said. "So when we talk about 'the
sector,' often it makes little sense."
There are several ways in which we
collectively conceive of the role of nonprofits. Stone
outlined three approaches:
As a gap filler
. Nonprofit organizations arise under
conditions of market failure. They fill a gap left by
for-profit organizations for services and programs that can't
turn a profit, because fees can't reasonably be assessed to
meet costs. They also fill a gap left by government failure at
the kinds of programs that nonprofits design, for which voters
won't approve public funding. "The nonprofits are a gap filler
between what government cannot provide and what the market
cannot provide," she said.
As filling the space between the individual and the state
This goes back to Tocqueville and his mid-19th century concept
of nonprofits as schools for democracy. Nonprofits fill the
space between the individual and the state with the concept of
free association. As these entities develop, they provide
opportunities for citizens to exercise their democratic
skills: to organize and to participate. Now there is a lot of
concern around the extent to which nonprofit boards and staff
represent the beneficiaries and constituents they serve. "They
do not, especially the boards," Stone said. "So, there's great
concern about the failure of nonprofits as schools of
democracy. Plus, there's a lot of concern that nonprofits
internally themselves don't operate very democratically."
As increasingly complementary to government
. Over the
last 30 to 40 years, nonprofit organizations work increasingly
as implementers of public policy in a way that government used
to do and no longer is able to do. They also act as
adversaries to government, as advocates and provocateurs. "The
role of nonprofits as adversary and sometimes standing in lieu
of government is very dominant outside of the U.S.,
particularly in developing countries," she said.
A lot of nonprofits are involved in
framing public-policy issues. Stone pointed to the history
of the domestic violence movement. "Nonprofits were the first
in," she said, "establishing safe houses in the 1970s, after
doing consciousness raising in the 1960s. Minnesota nonprofits
led on this issue, especially in Duluth. Government was nowhere
around. Domestic violence increasingly got to the public agenda
as an issue to be taken seriously and was translated by the
1990s into legislation."
Stone said often you can trace the
beginnings of public policy in the articulation of an issue by
nonprofit organizations. "There is also recently something
happening here around sex trafficking and human trafficking,"
she said. "In this case, it's not just singular nonprofits, but
a constellation of concerns that was picked up by Minnesota
Girls Are Not for Sale, the Women's Foundation and others. It
became a systemic issue very quickly."
"The role of nonprofits in public
policy has been significant," she said, noting that the
Minnesota Council of Nonprofits is very involved in
But several factors limit the ability
of nonprofits to play an even stronger role in public policy.
Stone mentioned three:
A real limitation is all the attention from multiple
places to measuring results
. There's a huge concern about
what the social return on investment is. How do we measure
impact? How do we know you're doing anything worth our money
or our public support, unless you give us the results?
Measurement is extremely needed in the nonprofit sector to
satisfy the public's demand to see that the nonprofit is
actually doing something.
"But some of this attention is misguided," Stone said,
"because, as a result, many nonprofits increasingly are
focusing on what can get measured, rather than what can get
done. If you're focused on measurement, you're not learning
anything about working on complex problems like poverty. The
things you're learning aren't getting articulated. Instead,
there's a lot of focus on upward accountability or compliance:
'We're measuring this because we're required to do so. That
way, we keep our funders happy.'"
Stone said it's not clear what the funders do with this
information. "It's compliance-oriented behavior, not learning
behavior," she asserted. "If it's not learning behavior for
the nonprofits, then their ability to try to formulate and
reframe policy issues is really diminished. It's upward
accountability to authorizing agents and funders and not
outward accountability to the beneficiaries."
That has led, she said, to an overreliance by the nonprofits
on issues concerning their own institutional survival.
"Foundations play a role in that dynamic."
Boards of nonprofits are complicit in this
. The Urban
Institute conducted a large national study of governance in
nonprofits in the mid-2000s. Stone said the data from the
study clearly show that most boards are very active in
financial oversight, which is necessary, but is
compliance-oriented behavior. Boards are not active in
community education or advocacy on behalf of their
beneficiaries. They're inwardly focused on meeting the demands
of their upward accountability.
Also, the boards are not representative of the communities
they serve. They are older, white males, who are wealthy or
upper middle-income. That has changed in pockets, she said,
but not overall.
There is an increasing belief now that nonprofits should
act more like businesses
. "It comes from many corners,"
Stone said. "There is an upside to that push. The downside is
commercialization and marketization within the sector that
focuses on results and institutional sustainability, likely at
the diminution of the mission-based focus on their
beneficiaries. The push to brand themselves is overwhelming.
When training nonprofit
executives, Stone said she wants them to be "multilingual,"
that is, familiar with both the concepts of business and the
concepts related to the public-policy process, so they know
how to influence it and how to give voice to their
beneficiaries. "They must understand both worlds," she said.
These trends are making small
nonprofits more vulnerable. Stone noted that she is
particularly concerned about the influence of these trends on
small nonprofit organizations. "The bigger and the wealthier are
getting bigger and bigger and the smaller are getting smaller
and smaller and much more vulnerable. The small nonprofits are
often entrepreneurial and have the real on-the-ground experience
and perspectives that are so needed if you're talking about
framing policy issues."
"I'm a pluralist," she continued. "Let
a thousand flowers bloom when it comes to nonprofits. It
enriches our society in general. I wouldn't expect them all to
survive. But I see too many trends that are making the small
nonprofits more vulnerable than they have to be."
There is concern over a technology
divide in the nonprofit world, with haves and have-nots.
Stone said this is another pressure making small nonprofits even
more vulnerable. "I'm not sure a lot of nonprofits see getting
something on the public-policy agenda using traditional
communication channels. Instead, they use blogs or Twitter. In
the nongovernment organization (NGO) community outside the U.S.,
the blog world is far more active than here."
Given political gridlock, how do we
strengthen nonprofits as petri dishes of ideas? An
interviewer asked how we can translate ideas from nonprofits
into the political system and into solutions. He said it's
becoming more and more difficult for these groups to be more and
more innovative. He mentioned the Neighborhood Revitalization
Program (NRP) in Minneapolis, which gave pots of money to
neighborhood councils to distribute. Its founding idea was
Tocquevillian: for citizens to find unique ways to deliver
services in their neighborhoods. People lost that and the
program eventually evolved into a fight about money.
Stone replied that when she moved here
in 1997, she thought the idea of NRP was amazing, as was the
Neighborhood Association program in St. Paul. But her impression
changed to thinking governance of those entities was
consistently a problem. "It seemed as if they were often
controlled by special interests at a very local level, such as
owners versus renters," she said. "Their sustainability was
really a question. Once sustainability becomes a question, then
a lot of attention and energy gets directed internally, so they
either eat themselves alive or some other dysfunction takes the
place of actually living up to the grand ideal. It was very
sobering for me. Nitty-gritty, sustaining support around
governance of the councils and basic organizational things would
go a long way. The idea is fantastic, but there needed to be
governance and operational support over a long period of time."
What are the obstacles that prevent
foundations from having more impact? An interviewer asked
that question, stating that foundations have so much potential.
He said foundations often try to get the Humphrey School to
endorse what they want to do rather than ask what they should do
and inquiring about what actually will work. "We should expect
them to help us learn more," the interviewer said. "I don't see
that in foundation behaviors."
Stone said she has had similar
conversations with some foundation people. "What continues to
come up in those conversations," she said, "is the role of their
boards. Where that comes up the strongest is for family
foundations. The foundation world is so varied that there are
different ways foundations would think about the inquiry
question. And in family foundations, there is a whole different
"This country has a longstanding,
paradoxical relationship with public use of private pools of
money," she continued. "At the board level for some foundations,
you have to consider whether board members are acting on their
personal, individual goals and their beliefs about what the
important issues are and how to make an impact on those issues.
There are personal pressures and personal goals, particularly in
The Humphrey School has been working
with the Minnesota Council of Foundations to try to develop an
executive leadership program for foundation staff to introduce
them to the policy world that they need to understand. Now the
Council has decided they'd like to do that, Stone said, so the
Humphrey School is about to embark on a program of professional
development activities with foundation staff. "Foundation staff
members are in the position to look across grantees, compile
lots of information, learn from it and translate it up to the
Where is shared learning taking place
locally? An interviewer said he has two theories about why
Minnesota isn't making progress on some of the knotty issues
facing the state:
We have a horribly partisan, polarized political
structure, where people are on the far left or the far right
and they're not moving; or
The Legislature is not receiving enough quality policy
proposals from volunteer organizations around the state that
would serve to promote action.
He asked which theory Stone would
choose as the more important one.
Stone responded using the example of
the achievement gap. She said the issue of the achievement gap
has not been framed very well. There are a proliferation of
single organizations and large coalitions trying to address this
issue, such as Minnesota Comeback, Generation Next, the
Neighborhood Achievement Zone (NAZ) in North Minneapolis and the
St. Paul Promise Neighborhood. "But the achievement gap isn't a
single issue," she said. "It's a whole bucket of issues, a whole
set of extremely complicated issues that get thrown into a
bucket called 'the achievement gap.'"
"It's not for a lack of organizations
or even a lack of resources," she said. "But where is the shared
inquiry and the shared learning taking place just on the
achievement gap locally? The ecosystem is populated with groups
addressing that. But if you can't frame the issue, than how can
you frame success? I would agree that organizations are not
framing the issues well, but I wouldn't let polarization off the
hook, because the polarization will reframe an issue so that it
satisfies a particular ideology. That doesn't help."
It would be enormously helpful if the
Humphrey School were to pick one of the top issues facing the
state and convene people who are working on that issue.
Stone said if the Humphrey School convened and stayed with the
people working on an issue like the achievement gap, the School
could help them talk to each other about what they've learned.
It could also help people take what they've collectively learned
and reframe the issue in terms of what that information means
for policy. "That could be enormously helpful," she said. "But
the Humphrey School has trouble sustaining work on a single
topic long enough to get any traction on it."
The Humphrey School has a good track
record on implementing projects, going beyond the research.
Stone noted several examples of issues in which Humphrey faculty
have established deeper and more sustained long-term
relationships with projects: wind energy, alternative
transportation taxes, highway safety and native tribes. "We do
emphasize publishing research in top-tier journals," she said.
"That's necessary, but it's not sufficient. We have a good track
record of implementation."
The Civic Caucus should look for
places where it can intervene to facilitate the connections
between issues and public-policy results. Stone suggested
that the Civic Caucus consider partnering with the Citizens
League and the Humphrey School. "I'm yearning for someplace to
bring people together to talk about what they're learning," she
said. She spoke about the heyday of the Citizens League, when
its reports had real impact and when there was a direct line
connecting the reports to actual public-policy results. Today's
different political ecology is no excuse for not continuing to
try to connect the dots, she said.
The Civic Caucus
is a non-partisan,
tax-exempt educational organization. The Interview Group
includes persons of varying political persuasions,
reflecting years of leadership in politics and
business. Click here
to see a short personal background of each.
S. Adams, David Broden, Audrey Clay, Janis Clay, Pat Davies, Bill
Frenzel, Paul Gilje (executive director), Dwight Johnson, Randy Johnson, Sallie
Kemper, Ted Kolderie,
Dan Loritz (chair), Tim McDonald, Bruce Mooty, Jim Olson, Paul Ostrow, Wayne
Popham, Dana Schroeder, Clarence Shallbetter, and Fred Zimmermany,