Nonprofit Sector Research Handbook Forum

Political Theory and the Nonprofit Sector

Editors’ Note: Ted Lechterman and Rob Reich introduce their chapter on political theory in the third edition of The Nonprofit Sector: A Research Handbook (Stanford University Press). For other posts in HistPhil‘s forum on the Research Handbook, see here.

Many scholars study what nonprofits do, by describing, analyzing, or predicting their behavior and performance. Fewer ask what nonprofits should do. And many debates about the nonprofit sector reflect competing assumptions about its nature and purpose. What role should nonprofit organizations play in contemporary societies?

Many believe that the nonprofit sector has roots in charity and mutual aid and should be closely linked to the relief of poverty and disadvantage; others see nonprofit organizations as a site of civic education and political contestation, organized around expressive liberty and deliberation; others view the sector as an extension of or complement to the market, where values of choice and efficiency prevail. Such competing visions, and the assumptions that buttress them, are rarely spelled out, contrasted, and assessed. Each entails radically different implications for the laws and norms that structure the nonprofit sector and the opportunities available within it. As the laws and policies that structure the nonprofit sector ultimately rest on the state’s coercive power, they stand in need of clear and compelling justification to the subjects of that power. A prime task of a political theory of the nonprofit sector is to explain how the nonprofit sector might meet this demand.

Our chapter in the Research Handbook answers this call by defending an overarching ideal of liberal democracy—government for and by the people, where each is considered free and equal—and showing how different conceptions of this ideal lead to different visions of the nonprofit sector. This argument reflects a more fundamental point: that claims about the proper shape and scope of civil society, and certainly the dimensions of nonprofit organizations, are structured by larger political ideals. We cannot understand competing visions of the nonprofit sector without seeing it in relation to the political and social order in which it is supposed to rest.

This leads us to an important terminological note. Political theory has conventionally addressed nonprofits only indirectly, in the context of broader discussions of civil society and associational life. We see the nonprofit sector as that portion of associational life and of civil society that meets two additional criteria. The first is formal incorporation. Within the sector lie organizations that have official standing and political recognition. It is possible to count—at least in principle—the precise number of nonprofit organizations in every society. It is not possible to count the full number of associations in any society, for too many of them, such as book clubs or bowling leagues, are unregistered and leave no legal trace. The second criterion is a legal restriction on the distribution of profits that distinguishes nonprofits from business corporations. Nonprofit organizations are limited by law in the way they reward their stakeholders, often in return for legal privileges such as tax exemptions. While a political theory of civil society and associational life might equally address the business firm, the family, and informal associations, a political theory of the nonprofit sector adopts a more specific focus.

A political theory of the nonprofit sector, therefore, is largely a theory about the ideals behind these defining criteria of formal incorporation and nondistribution. In contemporary practice, these criteria pick out a wide array of organizations, from international NGOs to domestic public charities, social welfare organizations, charitable trusts, and philanthropic foundations. What counts as a public charity or an official charitable purpose, however, will differ across societies. These differences stem, we claim, from larger political choices that demand justification.

To illustrate the importance of political theory to inquiry concerning the nonprofit sector, our chapter’s initial aim is to bridge the divide between descriptive and normative social inquiry, demonstrating how interdisciplinary engagement on the topic of the nonprofit sector can be mutually beneficial to scholars of both traditions.

Since normative political theory is not often represented in academic discourse about the nonprofit sector, we take pains to explain and illustrate how the tools of this discipline can be helpful and in many circumstances essential. Many people now accept that political theory can be helpful for addressing recurrent policy questions, such as whether and how donations to nonprofits should be tax-deductible. This is certainly true. But it’s a mistake to presume that this is political theory’s only offering here. Much social scientific research is indirectly motivated by and dependent upon normative ideas and claims. The conviction that charitable giving is an unalloyed good might lead to international comparisons and “best practices” for boosting the rate of giving. Studies of the demographic composition of nonprofit boards might be motivated by certain understandings of what diversity means and why it is valuable. Views about the proper role of religion might color decisions about whether to include or exclude churches from a sample. Clearer articulation of how different ideals apply to the nonprofit sector can thus help anchor research agendas.

We also aim to convince philosophers to engage more often and more seriously with nonprofit studies. The nonprofit sector provides a fertile ground for identifying understudied normative questions, exploring applications of existing theories, and testing assumptions within prominent views. For instance, it’s common for philosophers to criticize the nonprofit sector for being insufficiently concerned with poverty and inequality. We argue that much of this criticism is rooted in ignorance of history and social science. It seems attached to a popular myth that the primary purpose of the nonprofit sector is the redress of social and economic disadvantage, a shadow mechanism for the pursuit of justice in circumstances when the state cannot or will not achieve it alone. But in most modern societies, the nonprofit sector is, and for much of the modern era has been, a diverse and multifaceted environment that houses all sorts of valuable activities, from research to sport to arts to religious practice. It also plays an essential role in democratic politics, by providing opportunities for political expression, affiliation, deliberation, and contestation. We argue that one can be a radical egalitarian and simultaneously believe that distributional equality is not the nonprofit sector’s primary responsibility. In making this claim, we also open up a new horizon for political theorists. Much research in political philosophy over the last few decades has been concerned with articulating what distributive justice requires in the abstract. Much less has been concerned with questions of application, questions about how and where the demands of justice apply. The indeterminacy about how ideals of equality apply to the nonprofit sector illustrates why these questions are worth exploring further.

The remainder of our chapter foregrounds the ideal of liberal democracy and shows how different conceptions of this ideal lead to different prescriptions for the nonprofit sector. The focus on liberal democracy may seem obsolete, chauvinistic, or both. Liberal democracy is under threat in many countries today from rising populism and declining trust in democratic institutions, and the nonprofit sector exists in many illiberal and undemocratic societies. We don’t dispute these facts. But we argue that even if liberal democracy is under threat in practice, its appeal as a normative ideal remains untarnished. There is no alternative ideal that offers a more compelling answer to the central problems of political life. Though there is plenty of room for disagreement on the best specification of liberal democracy, its core commitments to the freedom and equality of individual persons are almost impossible to reject. We also argue that the nonprofit sector is only fully compatible with liberal democratic ideals. Nonprofit sectors in illiberal or undemocratic contexts occupy a precarious and unstable position. Either they create a bridge toward liberal democracy, or they represent instruments of authoritarian control.

Any conception of liberal democracy involves a particular way of configuring a set of competing values, including liberty, equality, autonomy, pluralism, and prosperity. The chapter examines how different specifications of these ingredients lead to different visions of the nonprofit sector. Resolving normative questions about the nonprofit sector depends to a large extent on where people come down on the interpretation and ranking of these values. For instance, a libertarian conception of liberty as a natural right to self-ownership entails a radically independent realm of free association—but also one in which inequalities proliferate. An egalitarian position focused on the fair enjoyment of certain basic liberties invites far more regulation of the terms of interaction within the nonprofit sector.

We address three areas of emerging controversy that would benefit from future research. These include persistent inequality, blurring sectoral boundaries, and globalization. We show how our second Gilded Age of rising economic inequality affects the operation of the nonprofit sector, and we consider a few ways of addressing this through policy and practice. We consider what the blurring of sectoral boundaries means from a normative standpoint. For instance, when nonprofits serve as agents of the state, should they be held to same standards as government bodies, or to the standards of private associations? And is social enterprise—which blends commercial and nonprofit elements—a phenomenon to be encouraged or curbed? We also consider controversies about global civil society, such the legitimacy of NGO advocacy and NGO aid.

The chapter concludes by reflecting on the role of the nonprofit sector under the inhospitable conditions that characterize contemporary history. Although we defend a liberal-democratic theory of the nonprofit sector, the world is increasingly hostile to these principles. And the global response to the coronavirus pandemic is highlighting the appeal of an authoritarian China and the weakness of many, though not all, democracies when it comes to protecting public health. Of what help are liberal-democratic principles in a world that appears to reject them? We respond with optimism about the prospects of liberal democracy, and with advice on how nonprofits both can and must champion principles of justice and democracy in the face of unfavorable conditions.

-Ted Lechterman and Robert Reich

Ted Lechterman is a postdoctoral fellow at the Hertie School of Governance in Berlin. His research concerns the justification and application of the value of democracy, and he is completing a book on the role of philanthropy in democratic theory. His work has appeared in Polity, the Journal of Practical Ethics, and Raisons Politiques. Rob Reich is Professor of Political Science and co-director of the Center on Philanthropy and Civil Society at Stanford University. He is the author of Just Giving: Why Philanthropy is Failing Democracy and How It Can Do Better (2018).

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