Term Paper on "Efficiency of Nonprofit Versus Government Agencies"

Term Paper 15 pages (4548 words) Sources: 5 Style: APA

[EXCERPT] . . . .

Efficiency of nonprofit vs. government agencies

As individuals, we often feel the need to know we are being protected, we need safety and security. As children, these roles are taken on by our parents, but simultaneously, they are being protected by the federal institutions. These normally ensure the equality and freedom of all citizens and regulate multiple sectors, such as education, politics or the environment. More recently however, other institutions have begun to emerge and their purpose is also to support the freedom and development of several members of the society. These are called nonprofit organizations, and however they generically serve the same clients as the government, they do share some differences.

Nonprofit Organizations

The nonprofit organization is a legal entity constituted with the special purpose of engaging in social actions destined for the benefit of public or private individuals or groups of individuals. It could be defined as "a trust, company or other association of persons: (a) established for a public purpose, and (b) the income and property of which are not distributable to its members or office bearers except as reasonable compensation for services rendered" (Department of Social Development, 2005)

In a first instance, the question that's being raised refers to a potential difference between the concepts of nonprofit and not-for-profit organization. From this particular instance, most replies state that the two refer to one and the same idea, sharing no differences; the thought is supported by the legal statuses, which present the two as synonyms. But this is only in theory; in practice however, the IRS has divided the two entities. According to their understanding, the idea of not-for-profit refers to an activity, a hobby, such as going to the movies; whereas the concept of nonprofit reveals a particular organization, established not for the objective of registering profit. A specification must be made here in the meaning that the definition does not state that the aim of the nonprofit organization is to engage in charitable events (Alvarado, 1998). However, these are generally the primary types of activities conducted by the nonprofit organizations. The charity efforts generically include "relieving the poor or distressed or the underprivileged; advancing religion, education or science; lessening the burdens of government; beautifying and maintaining a community; preserving natural beauty; promoting health, social welfare, environmental conservancy, arts or patriotism; caring for orphans or animals; promoting, advancing and sponsoring amateur sports; and maintaining public confidence in the legal system" (Hopkins, 2005)

And despite the general belief that unlike for-profit organizations, NPOs do not make a profit, they in fact do. The simplest explanation for this is that they need to operate, cover their expenses, and that no organization can function without a profit. The distinction between NPO and for-profit entities is then given by the destination of the registered income. In this particular instance, nonprofits use their incomes to further advance, develop and implement their social programs, whereas for-profits distribute it to their shareholders.

Once the distinction between NPO and other organization types has been made, it can be stated that the nonprofit organizations are highly different amongst themselves. Generally, there is an increased competition between them, as all try to raise as many funds as possible, but do it in different manners, using various peoples with similar and different skills. "Not only are there good and bad, ethical and unethical fundraisers, there are good ones with important subspecialties" (Hopkins, 2005)

Another issues related to NPOs is their registration. No tax is perceived for the registration of a nonprofit organization and the entity representatives must go to the NPO Directorate with a Complete Application Form and two copies of the entity's founding document. The registration of a NPO is not compulsory but it is generally done as it presents several benefits. For instance, since the NPO will account to a public office, its credibility will be increased. Then, the appurtenance to a legal organization will allow it to get tax benefits, access to funding resources and other incentives. Finally, the registration helps better organize the sector (Department of Social Development, 2005).

All in all, the nonprofit organization is an entity established with the purpose of social support, generally materialized in charitable events, but also in other activities that support the social and professional development of communities and their members. It is generally different from not-for-profit and for-profit organizations, due to the type of activity conducted and the distribution of the income realized.

3. Governmental Institutions

The United States is by far the undisputed leader, if one may say so, in the sector of nonprofit organizations. And the state officials support their operations and often grant them subsidies and tax exemptions, without which the NPOs would find it difficult to operate. The reason why this is relevant in the section for governmental institutions is given by the fact that, due to the impressive importance and role played by the nonprofit organization, they often seem to interfere with the operations implemented by the American government. "The U.S. national and state governments are often limited by the activities of nonprofit organizations, but that is a prime mark of a free and otherwise democratic society" (Hopkins, 2005). But as it will later on be revealed, there exists a direct relationship between the governmental institutions and the nonprofit organizations; foremost, it would be in the best interest of the U.S. citizen for the state agency to support the growth and development of the NPOs.

However the concept of government institution may seem quite formal and with tremendous implications, it basically refers to the state agencies which offer support to the population. The most relevant examples could include housing agencies, hospitals, schools or roads and bridges organizations. They generally offer public goods to all legal inhabitants of a country who pay their taxes, but they also spend impressive amounts of money offering support to the illegal immigrants and their children. The primary services available to the illegals and their children are education, emergency healthcare and imprisonment. The legal citizens have access to all services offered by the federal powers.

The primary characteristic of the governmental institutions refers to the criticism they often receive from the U.S. citizens, which find the services insufficient. This is the most common complaint and it is generally due to insufficient funds. Taking one step back, the funds have never been sufficient to completely satisfy the needs of the population, but the problem seems to be deepening today, as the federal deficit increases to record high values (it would take about three generations of income payers to pay the entire national debt, mostly so high to due to impressive security and military expenses) and the economic stability is being threatened by the weakening of the dollar against the strengthening of the euro. Also, the growing practices of outsourcing and immigration within the United States of unskilled and cheap working individuals, materialized in increasing unemployment rates, alongside with the international oil crisis and the continually increasing price of oil, have only further jeopardized the American economy. All these then culminate with fewer funds to be distributed to the institutions supporting the population; ergo the general dissatisfaction with governmental agencies.

A satisfaction felt however by the American citizens is given by the increased access to the government aid and services. In this order of ideas, the state officials have made significant efforts not only to improve the quality of the services delivered, but also to include more individuals within their programs as to ensure an easier access. A most relevant and modern example in this sense is the constant maintenance and improvement of governmental websites (such as (www.usa.gov),as to reduce the efforts of individuals. "As the U.S. government's official web portal, USA.gov makes it easy for the public to get U.S. government information and services on the web. USA.gov also serves as the catalyst for a growing electronic government" (Official Website of the U.S.A. Government, 2008). With the aid of modern technology, the U.S. citizens are now able to go online and find out any information they need.

In all, the governmental organizations are state owned entities which function for the benefit of all individuals within the United States (including aliens, but also Americans living abroad); they operate on various levels, such as education, religion, culture, roads, healthcare, economy and finance, family and communities, human rights and so on.

4. NPOs vs. Governmental Organizations

Until the recent past, a clear distinction between governmental institutions and nonprofit organization was barely perceptible to the general public. This was basically because the two offer similar services, all for the support of the population. "Like government agencies, nonprofit organizations exist to market failures that result in under provision or nonprovision of services by the private sector or seek to achieve distributive goals neglected in a private market. Governments and nonprofits rely on different mechanisms to ways to address these objectives" (Feiock and Andrew).

But despite this, the two are highly different. In this order of ideas, a specification is made with the establishment… READ MORE

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