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1998

Boundaries of Sustainability in Community-Oriented Organizations

Dilemmas for non-profit, non-monetarized and relief organizations

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Introduction
Challenges
Membrane of sustainability around a community-oriented organization
Practical dilemmas in managing the membrane
Towards resolution of these dilemmas: the vital exchange
Transactions supportive of sustainability
Assessing transaction validity
LETS transactions: a possible way forward
Related papers

Introduction

This is an effort to reflect on the strategies and policies appropriate to "non-profit" organizations (including NGOs) in a turbulent socio-economic environment under a variety of fairly well-known pressures. The assumption is made that, to some degree, such organizations are -- or could be -- "islands of sustainability". In some cases their appropriateness might well be of extremely limited duration -- for which "sun set clauses" would be desirable.

.However it is assumed that there are other circumstances for which the creation of more enduring initiatives is appropriate. It is questionable whether quality of life should be tied to an obligation to leave a community in response to economic pressures. It is the sustainability of these enduring initiatives under difficult circumstances that is the focus of this reflection.

In a turbulent socio-economic environment -- in which social safety nets are either non-existent, inadequate, or in process of being eroded -- these reflections are also considered relevant to community structures needed to ensure the long-term sustainability of that community. Such structures may be partially or completely non-monetarized. This would notably apply in the event of economic or financial collapse in the wider community when some form of "relief" organization is required. In such a context it is assumed that short-term policies, maximizing response to immediate needs, are not necessarily sufficient to ensure such sustainability.

Defining "sustainability" has become a fashionable game for many -- if one cannot do it, then define it? An early business definition of sustainable development was "sustainable competitive advantage". The sense that sustainability might necessarily have some kind of enduring quality to it is now also subject to challenge. Whether it will come to be reframed as equivalent to "planned obsolescence", or simply "profitability", remains to be seen.

In what follows, the emphasis is placed on not-for-profit organizations that exhibit a measure of significant continuity in roles designed to enhance quality of life in the larger community. The challenge of predatory and parasitical "non-profit" groups, that are also characteristic of a turbulent environment and "un-civil" society, has been considered elsewhere (https://www.laetusinpraesens.org/docs/bank.php).

Challenges

Some of the obvious pressures on non-profit organizations include:

Risk of over-dependence on ad hoc funding: Typically this would be funding received for specific projects (with short-term objectives) without any guarantee of further funding from the same source or for the same purpose. Typically also, such project funding may represent a significant proportion of an organization's budget (even up to 85%). When this becomes a major source of funding, the organization may then have to commit itself to some form of long-term fund-raising, whether through soliciting sponsors or through seeking grants, subsidies or the like. This may become an inappropriate use of the time of people with project-related skills. The professionalism required of the fund-raising / project-management approach may alienate valuable people ethically committed to the organizations objectives and attract those less committed. Such funds may also be relatively inaccessible to smaller organizations that are unable to allocate resources to fund-raising. Core funding for long-term objectives may itself come from sources that are themselves vulnerable to changes of policy as a result of budget reviews (or changes of government). Organizations may have to adapt to the questionable assumption that alternative sources of funding will be found in time to maintain staff capacity

Dependence on personnel on short-term contracts: The unpredictability of short-term funding forces an organization into a short-term contract mode in dealing with personnel resources. A significant proportion of the personnel is then loyal to the project, for its duration only, rather than to the organization as a long-term operation providing a context for many such initiatives. Such personnel turnover may be seen as healthy and contributing to a wider stimulus to people to be more active in seeking employment. It may also be seen as preventing the accumulation of less effective people in the organization. In this sense the organization becomes an island of effectiveness from which any social problems and inefficiencies are exported into the wider community. Although there may be no reluctance to set up short-term projects, whether to meet a particular need or as an action research process, the challenge of the "exit strategy" is to ensure that personnel have a route forward at the end of their engagement in the project and are not set adrift in a sea of unemployment. There is also the concern that the wider community not suffer from any dependence on the project once it ceases. Project personnel may actually seek to undermine the parent body in order to maintain the project and their employment. Short-term personnel may lead to conflicts of interest and issues of confidentiality

Statutory requirement for re-election of policy-makers: Many organizations require, as part of their statutes, that the principal policy positions be occupied for fixed terms -- especially in an effort to respond to democratic pressures for policy alternation. Mandates may well not be renewable. Whilst this can be a stimulant to the development and renewal of the organization, it can also serve to undermine any sense of continuity. The process can also lead to jealousies and actively destructive behaviours from past position-holders to present holders of those positions.

Maintaining organizational coherence and continuity: In contrast to short-term initiatives, continuing community-oriented organizations sustain a different quality through this sense of continuity and associated organizational memory. Such institutional memory is a source of creativity and experience in times of crisis. It provides a context through which crises can be managed and reduces dependence on a "fire-fighting" policy style. Continuity of this kind is difficult to maintain when both personnel and policy-makers have essentially short-term associations with the organization.

Income differentials in comparison with other bodies: Whilst income differentials are a fact of life and can be justified through a variety of arguments, they are especially challenging in the case of non-profit organizations. Typically non-profit organizations are faced with significant differences in salary scale in comparison with other types of organization, notably in the case of commercial (particularly multinational) corporations, academic, and governmental (particularly intergovernmental) organizations. Such organizations may well have benefit schemes and perks unavailable to non-profit bodies. This can be a continuing source of dissatisfaction to personnel who may then be encouraged to treat the non-profit environment purely as a stepping stone to better opportunities. Moving on to a more lucrative position requires no justification in a society essentially biased against sustainable community. The role of "psychic income" in compensating for salary inequities is poorly understood

Income differentials within non-profit bodies: As with many organizations, remuneration may well be significantly different according to task performed, seniority and other factors. Given the differences in salary scale compared to other kinds of organization, it can be extremely difficult to determine an appropriate salary for the task that is then perceived as fair by all parties. This is especially the case where the task performed is entirely comparable, and possibly more challenging, than an equivalent task in another style of organization. The dissatisfaction associated with these perceived differences can be exacerbated by use of personnel under short-term contracts negotiated in conformity with wider "market" rates. A project leader under short-term contract may typically earn a much higher salary than a department header paid through core funding at "normal" rates. Again the role of "psychic income" is poorly understood, but the professionalization of non-profit bodies (and the projects funds available) may attract a different kind of person for whom the ethical considerations are more incidental. The very process of creating a more equitable salary scale means that different people are attracted to, or alienated from, the organization.

Problematic social security provisions: The social security provisions within non-profit organizations are necessarily somewhat different from those made available to employees of other kinds of organizations. Whilst this may not be a major issue for short-term employees, it undermines the ability to attract and retain qualified long-term employees. This is especially the case in international non-profit bodies which in no way benefit from the generous social security (and related) privileges accorded to employees of intergovernmental organizations. Pension schemes, other than those of the state, may be a major issue -- especially for employees from distant countries.

Dependence on buying in services: Where a non-profit organization has to make use of services provided by commercial organizations (for example computer consultants), these must usually be paid at rates applicable to commercial organizations. Inequities in relation to internal pay-scales may then become especially obvious. The cost of maintaining high tech services may well be challenging for non-profit bodies. Where sponsors are available, the financial pressures may lead to inappropriate sponsorship arrangements that undermine the credibility of the organization. Sponsorship models explored by academic organizations may not be readily applied to non-profit bodies although criticism of such models may be equally relevant to the case of non-profit bodies.

Exploitation of "voluntary" status by external bodies: In an environment in which both government and commercial organizations are under increasing financial pressure (reduction of budgets, downsizing, etc), use of "voluntary" organizations is increasingly seen as a way of reducing costs of community services. Thus although a non-profit organization may propose a fully qualified person for a task, there is a marked tendency for government bodies requesting a service to cost this work at a significantly lower rate than if it was offered by a commercial organization using a person with equivalent (or lesser) qualifications. Clearly non-profit bodies have a competitive advantage but this is complicated by the salary issues indicated above. Part of the exploitation lies in the tendency to claim that the non-profit body can draw upon non-economic resources to ensure its survival -- notably skilled people who to some degree "volunteer" their services. In a more fundamental sense it raises the issue as to whether the non-profits are under-charging or the profit sector is over-charging. The situation is however evolving in that, with the increasing call upon non-profit bodies, they are having to develop their infrastructures with consequent increases to their costs. This can lead to situations in which they lose any competitive advantage because of economies of scale available to larger for-profit organizations that are as yet unavailable to a multiplicity of smaller non-profits.

Exploitation of personnel by non-profit bodies: Given the conditions under which people work for non-profit organizations on a longer-term basis, there is necessarily always some degree to which they may be described as "volunteering" part of their services. Of course use may also be made of "volunteers". It can be a challenge to reconcile policies regarding regular and voluntary workers -- especially when they perform equivalent tasks. It can be difficult to determine at what point the goodwill and commitment of an employee is being exploited in some way by the non-profit organization. Personnel may effectively "subsidize" the organization voluntarily, ore be expected to do so, such as through use of their own computer equipment, through accepting delays in payment of expenses (because of organizational cash flow problems), or by not claiming the totality of their expenses through some form of loyalty. In smaller organizations a lot more may be asked of staff and volunteers, placing stresses on their allegiance. It can lead to volunteer burnout, to tensions within families, and ultimately to disillusionment with the very cause to which they were initially committed.

Exploitation of non-profit bodies by personnel: Some community-oriented bodies are characterized by having a proportion of personnel who effectively "exploit" the supportive context offered by a non-profit environment because they could not obtain or hold a job in another kind of organization. This may be especially the case with organizations who are dependent on "volunteers". Such "exploitation" by "passengers" may be acceptable if it is explicit and part of a form of staff development to assist people to move on to more appropriate positions elsewhere -- which is generally not the case in smaller organizations. An organization can then function with a certain proportion of such "passengers", provided there is a strong group of peers supporting development -- possibly as part of the stated aims of the body.

Exploitation of non-profit status by vested interests: Where there are legal or other advantages to non-profit status, this form may be adopted for public relations and fund-raising purposes by groups solely motivated by improving their financial advantage. This strategy is skillfully adopted by commercial cartels and price-fixing rings, closed-shop professional groups, organized crime rings seeking to launder funds, fronts for dubious fund-raising initiatives (exploiting the social conscience of the gullible), fronts for apparently well-meaning sects (with concealed manipulative agendas), and fronts for political and government interests. All these tendencies are a challenge to the credibility of a sustainable community-oriented organization -- especially when its ability to act is undermined by efforts to constrain abuse by apparently similar "non-profit" bodies. There can be structural flaws (eg in voting procedures) in non-profit bodies that render them vulnerable to takeover of the management or decision-making capacity, notably at statutory meetings. This may be not so much for financial gain as for status or power in a community.

Value competitiveness: Amongst community-oriented initiatives there are competitive tendencies to occupy a higher moral ground. Thus some organizations perceive themselves to be significantly more appropriate or sustainable than others. Humanitarian and relief organizations are noteworthy in this respect because of the life and death situations on which they seek to focus. Those sensitive to spiritual, ecological, health, rights, democratic, gender or non-violent criteria may also have strongly divisive views on their respective relevance. Such divisiveness and ethical prioritizing may severely undermine the credibility of any community-oriented initiative -- as well as decisions concerning the appropriate allocation of scarce resources. It may contribute to framing some organizations as more "worthy" than others in the eyes of those from whom resources might be received. A sense of occupying the moral high ground may confirm (inappropriately) any assumption of priority right of access to resources.

Membrane of sustainability around a community-oriented organization

The above points indicate the challenge to ensuring the sustainability and survival of a non-profit organization. They help to focus on the nature of the "membrane" that is the boundary between the organization and its turbulent environment. The principles involved apply -- even more dramatically -- to situations more typical of emergencies when access to facilities may well be subject to triage. It is also worth considering them in relation to the classic "north-south" gap.

How does a non-profit organization survive, especially in relation to modern pressures? It may have some form of guaranteed income. It may have considerable competitive advantages in terms of free (or below cost) facilities and services. It may benefit from extremely dedicated people -- or simply people who find it convenient to continue to work within that environment. It may not even need to depend on monetarized resources and transactions for its survival.

How does the organization preserve this "membrane" as the key to its sustainability? Clearly the membrane is subject to differential pressures. The membrane is vulnerable. It can be damaged or ripped away -- "rip off" then acquires a particular significance. In which case the organization may rapidly cease to exist. For organizations focused on short-term objectives this may not be a matter of regret -- and possibly even an expected natural outcome. In terms of the challenge of developing sustainable community, this perspective may be short-sighted in the extreme. In a local government context, for example, the motivation may primarily be to retain power bases rather than considering instead the sustainability of the community as a whole.

How are processes crossing through the membrane "managed"? How is sufficient continuity maintained to develop expertise in this? How do bodies (with projects) supportive of sustainability avoid simply becoming dependent on unsustainable processes to which their objectives are apparently opposed?

Practical dilemmas in managing the membrane

In considering the following cross-membrane processes, the principles are most dramatically illustrated in relief situations, although they are most familiar in very mundane situations:

  1. Request for free services by "outsiders": Non-profit bodies are naturally the focus of requests for free services. Because they have a non-lucrative objective, there tends to be confusion regarding the manner in which their resources are managed. This is particularly obvious where the organization has products or services which it produces or makes available at some cost for the benefit of the community. How should a request be handled for a free publication, if that publication is produced at a cost? How about free food or shelter in an emergency? To whom should it then be given freely, at a discount, or refused? The decision may be complicated where there is no cost to the organization to give it away, but a significant "delivery" cost is incurred if it has to be transported to a distant location. This may be most obvious in the case of a weighty book whose value has already been "written off". Even if the organization wants to ensure the distribution of the book, at what point does it need to say "no" to a legitimate request, because of the manner in which honouring the request will contribute to the erosion of the membrane? When should the organization be "mean spirited"?
  2. Request for free services by "insiders": The above dilemma is both simplified and complexified in the case of "insiders" -- namely members of the organization, its personnel, or its policy-makers. It is simplified, because there are fewer of them and they can be seen to have a legitimate claim on subsidized services -- especially when this is framed as an initiative to advance the organization's cause or as a way of honouring their support. It is complexified when "insiders" act as intermediaries for redistributing the products to "outsiders". When is it appropriate for "insiders" to act in this way? What constraints are appropriate in managing this process? How are such decisions to be made? Under what conditions should this be done by bending any restrictive rules and avoiding any accounting trace? A mundane example is the use of photocopy facilities. More dramatic examples are characteristic of relief situations where resources are extremely low and people are dying -- the question is which people should be "unfairly" assisted? At what point are such facilities to be considered abused?
  3. Requests for assets: Some organizations develop materials or processes that they consider to be "assets" vital to their survival. Their long-term sustainability may depend on how those assets are managed. A conventional protection may in some cases be to copyright the assets. This approach may be however be both notional and/or unimplementable as a form of protection -- as the Internet is dramatizing with respect to information and know-how. Such defensive procedures may effectively be in direct contradiction with objectives of the organization -- such as to ensure the dissemination of some information, as explored above. More challenging is the case where the asset requested is not so much a product but rather the process through which that product continues to be produced. This is most clearly seen in the case of specially adapted computer programs or logical schemes (maps, thesauri, etc). Pharmaceutical manufacturing know-how might be another example. Another would be a learning package, especially one which requires a particular style of mentoring that may be franchised. In an emergency situation, a "request" for vital cooking equipment by a local warlord might be another example.
  4. Requests by the organization for unpaid services: Many non-profit organizations frame their relationship to their members and supporters such that certain services are expected of them without any form of recompense. This can take the form of emotional or ethical "blackmail". The organization may be affronted by any suggestion that such services should be honoured in monetary terms. In some cases careful attention is given to recognizing such services through honours, perks, certificates and other devices. These may not correspond to the recipient's real need.
Part of the difficulty in even discussing these issues is that raising them effectively questions the nature of the relationship between the parties involved. Whose motives are being questioned, by whom, when, and why? This could be seen to be at the core of the question of what is to be meant by "sustainability" in a community-oriented context. What practices place the sustainability of an organization at risk? How is a non-profit organization to acknowledge the network of "favours" and "obligations" which may be called in to enable it to survive in periods of crisis?

Towards resolution of these dilemmas: the vital exchange

A significant feature that is characteristically absent from the dynamic through which "free" services are requested is the notion of exchange. Granted that it is proposed that a transaction be evaluated on a non-monetary basis, who is getting what in exchange for what? Why should those in need be confronted with this question when an apparently "unilateral" transaction is proposed?

Clearly in some settings a non-profit organization has a commitment to provide at minimum or zero monetary cost. In many such cases no difficulties may arise. A concrete example might be a soup kitchen in an industrialized country in winter. If there is an excess of soup, or if the facility is only provided over the festival season or until there is no soup left, then there are fewer challenges. The delivering organization has defined the challenge in a soluble fashion. However, if there is insufficient soup or helpers, or the need extends beyond the festival season, then other issues arise. Such situations obviously exist in much more dramatic form in developing countries or in emergency situations in refugee camps.

One approach is to respond to needs discretely so that the availability of the assistance does not evoke a multitude of requests that cannot be satisfied. The ethical dilemma is then reduced to that of responding to the particular case. Since a single case is unlikely to be threat to the sustainability of the operation, it can be argued that the need can be easily met. This case-by-case policy does however raise the issue of the ethics of discretion under the circumstances. Responding to a single beggar is the most familiar illustration. Difficulties arise when that transaction leads to confrontation with a multiplicity of similar requests, as is typically the case in developing countries. Decisions on giving or withholding then become a challenge which may be made simple (however arbitrary) or complex. When does multiplicity become a legitimate excuse for withholding? What issues should be considered when the receiver is effectively converted into a regular client -- as is characteristic of a beggar regularly encountered? Non-profits are often seen as "beggars" by other bodies.

Another approach is the purely sacrificial one whereby resources are simply disbursed to the limit of the ability of the organization and its personnel to do so. Beyond this point, following the collapse of the operation, the continuing challenge can be left in the hands of others, if and when they emerge. The focus here is on contributing maximally in the moment for the period during which this is possible. It can appear to be the most honourable response to the circumstances and the ethical dilemmas involved. This extreme example can be used to obscure the ethical dilemmas of modest philanthropy.

However, when the need is greater than can be met by an organization without depleting itself to the point of collapse, policy needs to be influenced by the degree to which any given exchange across the membrane ensures the sustainability of the operation.

Transactions supportive of sustainability

How are the transactions or exchanges across the membrane to be understood? There are many approaches to this.

One approach is to assume that whatever the organization and its personnel chooses to offer to the wider community it is appropriately rewarded (possibly "in heaven") by the satisfaction of having done so. This might be relevant to the charitable initiative of the festival season soup kitchen example.

To support sustainability, when it is threatened by lack of resources as in a refugee soup kitchen, the organization must evoke non-monetary transactions from the community. Privileging those who provide assistance to the operation could then be a sensible policy -- if someone offered physical help, or provided foodstuffs to add to the soup, for example. This policy does however call for vigilance because those providing assistance in the form of foodstuffs may be extracting them from others without the organization being aware of the abuse that it is provoking. Those from whom the foodstuffs are extracted may then be amongst those excluded from access to the soup. A less dramatic example is when an organization is asked for free (or discounted) information that it then proceeds to sell on at significant profit or to use to generate such profit in some way. This erodes any mutual trust so that an inappropriate interaction takes place it may simply ensure that no further interactions take place.

Sustainability may however be supported by transactions in a manner which is much more difficult to evaluate. Clearly in a community environment, the actions of a single organization may have both multiple effects and chains of consequences that are difficult to comprehend or predict when decisions have to be taken. As a result an unmatched "gift" transaction may enable actions that feedback indirectly to sustain the organization that made the gift. The organization might, at some future date, become the recipient of unsolicited assistance. Ideally it is on this process that non-profit organizations would be dependent. The organization is then placed in the position of being able to give "freely" on the assumption that unforeseeable consequences will ensure its sustainability. Organizations are then understood to be sustained in a safety-net that they themselves help to sustain. Many groups endeavor to operate "on faith" along these lines. The question is how should those responsible for the membrane attend to this process? What actions undermine it and call for vigilance?

A key factor for an organization in making such decisions would be some sense of an acceptable range of responses, rather than hard and fast rules. To exaggerate, when might it be appropriate to accept a flower in exchange for some flour -- and when not? What population of "passengers" should be tolerable? How are such matters of proportion to be handled in the moment?

Assessing transaction validity

There are no easy answers to many of the questions raised above.

A determining factor in engaging in an apparently asymmetric transaction could well be whether the recipient exhibits awareness of the challenge of sustainability. Is the request accompanied by the question "how can I reciprocate"?

However this question also has its challenges. There may be a sense in which fulfillment of the request effectively completes an earlier transaction in which the organization was itself the recipient. In this sense recipients of the organization's largesse may be considered to be "owed" whatever they receive -- perhaps in compensation for past exploitation. There may be hidden assumptions about debtors and creditors that would challenge easy evaluations of abuse.

There is also the possibility that the recipient is already engaged in a pattern of activity in indirect support of the organization. Any focus on the legitimacy of a single direct transaction may call into question the organization's appreciation of that activity.

LETS transactions: a possible way forward

One of the merits of monetarization is the manner in which it clarifies problems of exchange. The discussion above focuses on de-monetarized situations. Many communities are now experimenting with LETS systems to handle some of the transactions identified above. In particular, LETS would require recognition of the value of the goods or services transacted or quantified in some alternative system of tokens.

It would be relatively easy for a given organization to develop a system of tokens or points through which services to it could be acknowledged. These could then be exchanged for services or products that it provided. More challenging would be a situation where such tokens were honoured by several organizations in a community, although this is a typical aim of many LETS systems. The possibility of adapting LETS to refugee camps is currently being explored. In some measure this then corresponds to wartime use of ration coupons -- some of which were tradeable.

A fundamental issue is whether all non-monetary transactions can be handled through a single LETS-type alternative system of tokens. Just as some transactions cannot be effectively honoured through monetary systems, it is possible that two or more alternative systems might be necessary for different types of transaction contributing to quality of life in a sustainable community. All such systems would then be understood as complementary.

With the increasing interest in non-monetarized exchanges, government is becoming concerned at potential loss of tax revenue. Difficulties may then arise in the use of any tokens. Small businesses making a room available at zero cost to a non-profit may find themselves subject to tax. Legislation tends to inhibit non-profit action rather than catalyze it -- at a time when the role of voluntary organizations in responding to policy inadequacies is increasingly recognized.

Reflection on these possibilities can be provoked by consideration of how the following are handled: patterns of obligation (notably within Japanese culture); mutual assistance (good neighbourliness); friendliness, courtesies and greetings (shops, queues and waiting rooms); exchange of gifts; rumour and gossip; exchange of jokes. Simple though they appear, many of these are fundamental to the experience of quality of life in a community. Although they have not been "tokenized", these transactions are part of the real experience of the life of a community. Although some can be "purchased" with more tangible goods (a glass of beer, "singing for one's supper"), how others "work" is part of the mystery of community life.

The most fundamental issue is whether putting any system of tokens in place actually erodes and undermines that pattern of transactions.


The above text has benefitted considerably from comments by Ruth Anderson (Rural Forum, Scotland).

References

Anthony Judge:

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