Marek Rymsza and Annette Zimmer
Embeddedness of Nonprofit Organizations:
Government - Nonprofit Relationships
1. Introduction
Similar to any other organizations, NPOs are embedded in environments.
However, as already outlined in the introduction to Part II, compared to the
two competing sectors, i.e., the market and the state, the study of the
embeddedness of the nonprofit sector constitutes a rather difficult task. First,
due to the fact that nonprofits are multi-functional organizations, they
interact with very different environments simultaneously. Second, again due
to the multi-functional character of nonprofit organizations, their managers
and board members have to deal at the same time with a variety of
stakeholders who represent the different environments in which the particular
NPO is embedded and try to influence and even to put pressure on the
respective NPO. Against this background, it becomes of utmost importance
that students of nonprofit organizations become familiar with those
approaches that analyze and discuss the embeddedness of nonprofit
organizations (for an overview see Kramer, 2000). Within nonprofit research
there are at least three distinctive perspectives from which to view the
embeddedness of nonprofit organizations: a) the legal perspective, b) the
advocacy perspective, and c) the public policy perspective.
The legal perspective (see Freise/Pajas and Simon in this volume)
focuses on the legal and organizational framework put in place by
government, including tax regulations for nonprofits and tax incentives for
donors. From the legal perspective government exercises its legislative
capacities to define the frameworks for operation of all the actors of the
public sphere, nonprofit organizations included. In this scope, the legal
regulations are of a constitutive character, with the state enjoying what is
indubitably a privileged position laying down the rules that have to be
followed by the nonprofits. The role of the state is a privileged one, yet it is
limited. A sine qua non prerequisite for democracy is the self-limitation of
the state. The democratic state acknowledges and respects human rights,
including the right to associate and to found nonprofit organizations.
Accordingly, government by law authorizes its citizens to convene
associations, to found nonprofit organizations, and to pursue charitable
170 Marek Rymsza and Annette Zimmer
activities through donations or volunteering.
Whether, how and to what extent citizens make use of the public sphere
by engaging in civic activities constitutes the focal point of interest of the
advocacy perspective, which builds heavily on the work of political
sociology (see the contribution by Mansfeldová et al. in this volume). From
this point of view democratic states legally guarantee a public sphere
populated by civil society organizations, which primarily engage in advocacy
work, grassroots campaigning, and political action. Within this line of
argumentation, democracy is embedded in an active citizenry. Accordingly
the advocacy perspective looks at the sector and its organizations from
below. Societal integration and political participation of the citizenry are the
key features of analysis. Do nonprofits indeed give citizens a voice and open
avenues for political participation? Are nonprofit or civil society
organizations indeed working as political actors, particularly in the agendasetting
stage of the policy process? Thus, the advocacy perspective perceives
the nonprofit sector and its organizations primarily as a vital part of civil
society and as such as an opportunity structure for citizens to become
engaged in politics by either criticizing or supporting government activities.
In other words, the advocacy perspective focuses on the embeddedness of the
sector exclusively from a political point of view, thus investigating whether
and how civil society organizations give citizens a voice for political
participation, provide avenues for societal integration, and work on behalf of
the common weal by enhancing pressure group politics.
Finally, how nonprofits are embedded in welfare state arrangements and
whether and to what extent governments and public administration at the
federal, regional and local level cooperate with nonprofit organizations as
producers of goods and services constitute the focal points of interest of the
public policy perspective, which builds heavily on the results of welfare state
research. This particular perspective will be highlighted in the following
article because nonprofit organizations are significantly engaged worldwide
in the production of core social services such as healthcare and care for the
elderly. Furthermore, within the welfare state context, nonprofit
organizations are of increasing importance due to the fact that the classical
welfare state has not lived up to his promises. Ironically many hopes and
expectations that decades ago were linked with the welfare state and its
achievements are by now increasingly attributed to the nonprofit sector and
to the capabilities of its organizations. According to this line of
argumentation, nonprofit organizations are, compared to government entities,
much better equipped to achieve both organizational efficiency and
grassroots service delivery. Thus, there is a close nexus between welfare state
research and the public policy strand of nonprofit research. Both share a
public good orientation; they cling to a nation-state approach of comparative
research and distinguish between different welfare state/nonprofit sector
Embeddedness of Nonprofit Organizations 171
regimes by focusing on the structure of interdependence between the state,
the market, and the community (Esping-Andersen, 1990; Salamon et al.,
1999; Salamon/Anheier, 1998).
Against this background the purpose of the following chapter is twofold:
First, it aims at introducing students of nonprofit organizations to the various
models and theoretical approaches investigating nonprofit-government
relationships. It must be kept in mind that these models constitute analytical
categories that are described in the social sciences as ideal types (Weber,
1973). They are theoretical constructs, providing points of reference to which
the “real worlds” of nonprofit sector-government relationships in particular
countries are compared. To put this in other words, none of these models will
be found in its pure form, but it will be possible to identify governmentnonprofit
sector relations in one country that bear a certain affinity to either
one or two of these models, thus constituting a new and country-specific
relationship (Rymsza, 1998). Moreover, models of embeddedness as
analytical categories do not focus on the legal environment of nonprofit
organizations (see Simon in this volume); instead, their starting point is the
democratic state acknowledging the right to associate and respecting the
nonprofit sector as the organizational infrastructure of civil society.
Second, the chapter puts a special emphasis on the analysis of the
embeddedness of nonprofit organizations in welfare state arrangements. This
particular focus is of utmost importance for the Visegrád countries because
nonprofit organizations play a key role within policies of decentralization as
well as privatization in the six countries under study in this volume. In other
words, core social services, which in the Czech Republic, Hungary, Poland,
and Slovakia under socialist rule were delivered by state entities, are
increasingly taken up by nonprofits. As outlined in a previous chapter
(Freise/Pajas in this volume), in order to restructure and decentralize the
former socialist welfare state, governments of the Visegrád countries have
introduced a special legal form that enables former government entities to
become nonprofit organizations without changing their administrative set-up
and their pure service-delivery function.
But the topic of the changing role of nonprofits within welfare state
arrangements also constitutes a key feature of political and public discourse
in Austria and Germany, where for decades nonprofits as social service
providers were protected against forprofit competitors thanks to the principle
of subsidiarity. Currently, however, welfare state arrangements in Austria
and Germany are undergoing a change of paradigm in the sense that neither
public nor nonprofit organizations are supposed to be able to deliver social
services with the efficiency and customer-orientation of commercial
enterprises.
Against this background the focal point of interest relates to the division
of labor between the market, the state and the nonprofit sector: How will
172 Marek Rymsza and Annette Zimmer
social service delivery in the future welfare state look? Does it become a
main arena for commercial enterprises, or will the nonprofit sector remain an
important actor in the social service industry? In other words: Is there
movement towards just one welfare state arrangement with respect to the
division of labor between the three sectors, or on the contrary will the
diversity of nonprofit-government relationships within welfare state
arrangements persist? These questions will be addressed in the following
chapter by referring specifically to the situation in the Visegrád countries, but
by also taking the German and Austrian welfare state arrangements into
consideration.
Although the future of the welfare state is of utmost importance for
nonprofit organizations, it must nevertheless be kept in mind that civil
society organizations offer more to their communities than just service
provision. Therefore, the following chapter first focuses on an approach that
takes the complete spectrum of nonprofit-government relationships into
account, thus analyzing modes of cooperation and confrontation with
government as well as complementarity and co-optation of nonprofit
organizations by government. Thereafter, the article discusses those
theoretical approaches that are closely linked to welfare state research and
that are primarily interested in investigating the role of nonprofit
organizations as producers of public goods. Finally, the chapter takes a closer
look at the current situation in the Visegrád countries by discussing the
pivotal question: Which role will nonprofit organizations fulfill in future
welfare state arrangements in the countries under study?
2. State of the Art: Models of Nonprofit-Government
Relations
As previously outlined, it is not an easy task to categorize the variety of
nonprofit-government relations by defining analytical model-type
arrangements. In the following, four distinct analytical approaches are
presented. The first, developed by Adil Najam (2000), proposes a so-called
“Four-C” framework of nonprofit-government relationships, which is based
on institutional interests and preferences for policy ends and means. The
“Four-C” framework is exceptional because it covers also the advocacy and
lobbying functions of nonprofit organizations. To a certain extent the same
holds true for the approach worked out by Dennis Young (2000), who,
referring specifically to economic theories of nonprofit organizations,
identified a supplementary, a complementary and an adversarial role and
function of nonprofits towards government. In contrast to Najam and Young
who developed a heuristic framework to facilitate the categorization and
Embeddedness of Nonprofit Organizations 173
analysis of current nonprofit-government relationships, the “social origins
model” by Salamon and Anheier (Salamon/Anheier, 2000) explains why the
embeddedness of nonprofit organizations in welfare state arrangements
differs from country to country by taking a neo-institutionalist approach and
thus referring to the social and political history of the specific arrangement.
This section concludes with a description of the approach based on the
famous typology of welfare state regimes by Esping-Andersen (1990) that
exclusively refers to those nonprofit organizations that are service providers
and thus represent a nonprofit alternative for either state or market social
service production.
2.1 The Four C´s of Nonprofit Sector-Government Relations
Najam’s analysis of nonprofit-government relationships is based on two
hypotheses: first, nonprofit organizations constitute “a distinct institutional
sector with particular motivations and structural preferences” (2000: 378),
and second, nonprofits have an “abiding interest in public policy” (2000:
380). As such nonprofits are similar to government organizations; however,
they are policy entrepreneurs acting outside the realm of government.
Furthermore, as widely documented by the literature, nonprofit organizations
are of increasing importance as policy actors since there is an increasing
presence of nonprofits in various policy domains, which range from
international activities to healthcare and education. Against this background
and based on the current literature on nonprofit-government relationships,
Najam developed a typology of interactions between nonprofits and
government that takes both perspectives – those of government towards the
sector and vice versa, the sector’s position facing government – into account.
For analytical purposes, Najam distinguishes between ends and means,
or to put it more specifically, between goals (ends) and strategies (means)
that are pursued by government and/or by nonprofit organizations in the
specific policy field. Therefore, his “Four-Cs Model boils down to a question
of ends and means” (Najam, 2000: 385). Within a certain policy field, each
institutional actor - governmental and nonprofit organizations - pursues
certain ends (goals) and each has a preference for certain means (strategies).
“As the organizations float within the policy stream, they bump into each
other in one of four possible combinations: (1) seeking similar ends with
similar means, (2) seeking dissimilar ends with dissimilar means, (3) seeking
similar ends but preferring dissimilar means, or (4) preferring similar means
but for dissimilar ends” (2000: 383).
174 Marek Rymsza and Annette Zimmer
Figure 1. The Four C’s of Nonprofit-Government Relations
Goals (Ends)
Similar Dissimilar
Cooperation Co-optation
Preferred
Strategies
(Means)
Similar
Dissimilar Complementarity Confrontation
Source: Najam 2000: 383
According to his analysis, a cooperative relationship is based on a
convergence of goals and strategies of government and nonprofit
organizations. Cooperative relationships are quite often to be found in the
policy arenas of human services and relief programs where government and
nonprofits not only agree upon the same goals but also have a preference for
the same strategies. Against this background Najam perceives the “growth of
NGOs (NPOs) acting as public service subcontractors for government” as the
most significant outcome of cooperative relationships, even if this
cooperation is not based on power symmetry between nonprofits and
government.
“A confrontational relationship is likely when governmental agencies
and nongovernmental organizations (nonprofits) consider each other’s goals
and strategies to be antithetical to their own - essentially, total divergence of
preferred ends as well as means” (Najam, 2000: 385). Political scientists
investigating pressure group politics and social movements tend to focus on
confrontational relationships between government and nonprofit
organizations. There is no doubt that in many situations nonprofits “emerge
precisely as forces of reaction or resistance to particular government
policies” (Najam, 2000: 386). This has been particularly the case in the
Visegrád countries where the transformation from authoritarian rule to
democracy has not been achieved without confrontational pressure politics
by nonprofit / civil society organizations.
“A complementary relationship is likely when government and
nongovernmental (nonprofit) organizations share similar goals but prefer
different strategies” (Najam, 2000: 387). According to his interpretation
complementarity between government and nonprofits is based on a mutual
agreement upon goals; both government and the nonprofit sector want to
achieve the same purpose or mission. Thus, relationships based on
complementarity are very common in the service provision arena where
government provides funding while the nonprofit sector is responsible for the
delivery of services.
“A co-optative relationship is likely when governmental and
Embeddedness of Nonprofit Organizations 175
nongovernmental (nonprofit) organizations share similar strategies but prefer
different goals” (Najam, 2000: 388). According to Najam, examples of cooptative
relationships abound in the literature of developing countries where
co-optation is generally discussed as what governments try to do to nonprofit
organizations. Although co-optation is perceived to be negative, Najam
draws attention to the fact that co-optation does not work in only one
direction, but that also nonprofits try to co-opt government by influencing the
views of the bureaucracy.
Rounding up his analysis, Najam makes very clear that he perceives
nonprofit-government relationships to be the outcome of “strategic
institutional choice(s),” which have to be explained by analyzing those
institutional interests that support a particular attitude of either government or
the nonprofit sector with respect to the choice of specific means and ends.
Najam’s Four-C’s Model covers a broad spectrum of nonprofit-government
relationships; it is applicable around the world; and finally it is an analytical
tool for analyzing nonprofit-government relationships in various policy
fields. However, the approach also has shortcomings. First and foremost, the
Four-C’s Model constitutes a very theoretical approach without, however,
being connected with any specific line of argumentation that has been
developed within nonprofit research. Therefore, it will be difficult to further
develop Najam’s model and to bring it above the level of a systematic, albeit
rather descriptive analysis. This is not the case with the approach developed
by Dennis Young who specifically referred to the so-called economic
theories (see Powell, 1987), which were worked out in order to explain why
there exist nonprofit organizations in market economies, even though from
an entrepreneurial point of view there is no incentive to start an organization
that operates under the non-distribution constraint.
2.2 Alternative Models of Government-Nonprofit Sector Relations
Young’s typology of government-nonprofit sector relations does not cover
the complete spectrum of nonprofit organizations but focuses specifically on
nonprofits as service providers. Moreover, in accordance with economic
thinking, Young’s typology is based on the underlying assumption that
output improvement, particularly of social service delivery, constitutes the
core rationale for government-nonprofit sector relations. Referring to
different strands of economic theory (see Hansmann, 1987), Young
identified three distinct models of government-nonprofit sector relations in
which he characterized nonprofit service provision as being supplementary,
complementary, or adversarial to government supply of public goods.
According to Young’s typology, “in the supplementary model,
nonprofits are seen as fulfilling the demand for public goods left unsatisfied
by government.... In the complementary view, nonprofits are seen as partners
176 Marek Rymsza and Annette Zimmer
to government, helping to carry out the delivery of public goods largely
financed by government.... In the adversarial view, nonprofits prod
government to make changes in public policy and to maintain accountability
to the public” (Young, 2000: 150f). Young also makes clear that there are
inherent shortcomings in these models. First of all, he draws attention to the
fact that these models are not mutually exclusive. With regard to a certain
policy field, the nonprofit sector in a given place might be in a
complementary relationship with government, while at the same time in a
different policy field the sector might be adversarial to government.
Furthermore, in some cases it might be very difficult to distinguish between
government and the nonprofit sector due to long-standing relationships
tailored in a complementary fashion, which translate into the emergence of
“hybrid organizations” (Young, 2000: 151). Despite these caveats Young,
nevertheless, stresses the fact that this typology might contribute to a further
understanding of government-nonprofit sector relationships.
According to his line of argumentation there is one main reason why
these models of government-nonprofit sector relations are worth further
consideration, i.e., because they are backed by economic theory. More
precisely, the rationale for nonprofits as supplements to government is
closely linked to the work of Burton Weisbrod (1977) and particularly to his
seminal work on government failure in which he outlined why nonprofit
organizations provide collective goods on a voluntary basis. In a nutshell,
Weisbrod showed that in democratic market economies with heterogeneous
societies, government generally focuses on the needs of the median voter,
thus leaving many citizens’ preferences unsatisfied. Those citizens are likely
to invest time and money in nonprofit organizations, which provide
additional or supplementary levels of public goods or more precisely social
services. In his work Weisbrod also highlighted that nonprofits are not the
only solution in situations where citizens’ preferences are heterogeneous and
not met by government. Depending on the financial capacity of the citizen
there is also the private market alternative, which translates into a situation
where commercial companies provide those goods and services which
government cannot or is not willing to produce. The supplementary model
also draws attention to the fact that there are substantial variations in
nonprofit-government relationships among fields of activity, and moreover,
that there is an interesting dynamic when citizens’ preferences change over
time. In particular, the role of the nonprofit sector might be reduced when
government decides to enlarge its engagement in certain policy fields; or on
the contrary there might be more room for the nonprofit but also for the
commercial sector in areas where government decides to reduce its
engagement.
The model that sees nonprofits and government as complements is,
according to Young, primarily backed by the work of Lester Salamon (1995)
Embeddedness of Nonprofit Organizations 177
who “has been the principal advocate for the view that nonprofits and
government are engaged in a partnership or contractual relationship in which
government finances public services and nonprofits deliver them” (Young,
2000: 153). Voluntary failure, the fact that nonprofit organizations are not
able to ensure a widespread provision of services, and the free-rider
phenomenon, which boils down to the situation that government but not
nonprofits are able to force every citizen to contribute to the provision of
public goods, constitute the economic rationale behind this model. Again,
government is not necessarily forced to contract nonprofits for
complementary service provision. However, economic theory comes up with
two reasons why governments prefer nonprofits to commercial providers of
social services. First, nonprofits that are embedded in their communities
might know better than forprofits what kind of product serves their
community best. Second, “nonprofit organizations deserve some preferences
in bidding because they provide benefits to the government (reduced
opportunistic behavior and reduced transaction costs of negotiating,
monitoring and enforcing a contract) that cannot be enforceably written into
a contract with forprofits” (Steinberg, 1997: 176, quoted by Young, 2000:
154). Against this background it also becomes clear why governments try to
keep nonprofits under control in situations in which nonprofits act as
complements or even as substitutes of government action.
In order to explain the model that sees nonprofits and government as
adversaries, Young refers again to the work of Burton Weisbrod. According
to Young, nonprofit advocacy and government pressure can be understood
through the complementary lens of nonprofit-government relations because
very often nonprofits and government are collaborators in passing legislation
or changing public attitudes. There are also cases when government supports
and stimulates nonprofits working in favor of specific social goals. Against
this background, Weisbrod’s analysis of government failure is to a certain
extent helpful for understanding how new public services come into being
through advocacy. As Young outlines in detail, “in heterogeneous
communities, where minority views are not well reflected in public policy”
(Young, 2000: 155), nonprofits working as advocacy organizations press
government to better serve the interests of their constituencies. “A minority
of voters may promote the idea through advocacy and demonstrate its
efficacy with voluntary contributions... Eventually the concept may be
proven and receive the support of the majority, at which point government
may undertake full-scale provision” (Young, 2000: 156).
From a historical point of view, by taking a power approach that focuses
on societal forces pressing for change and government action, the
development of the welfare state might be explained by referring to this
particular model. Salamon and Anheier take up this line of argumentation in
their Social Origins Model of nonprofit sector-government relations.
178 Marek Rymsza and Annette Zimmer
2.3 The Social Origins Model by Salamon and Anheier
An influential and innovative approach explaining differences in the
embeddedness of nonprofit organizations has recently been worked out by
Lester Salamon and Helmut Anheier (1998) whose Social Origins Theory is
a classical outcome of comparative social science research trying to explain
features of diversity. Besides the fact that the nonprofit sector represents a
major economic force in every country under study, the results of the Johns
Hopkins Comparative Nonprofit Sector Project brought to the fore that sizewise
and with respect to its internal composition the nonprofit sector varies
significantly from country to country (Salamon et al., 1999). How can these
variations be explained? Why does the sector play a significant role in social
service and healthcare provision in Germany, whereas this is not the case in
Sweden? And why is the nonprofit sector of the United States significantly
larger than the sector in Germany?
The answer that Salamon and Anheier gave to these questions is closely
related to the concept of organizational embeddedness focusing explicitly on
broader social and political relationships. According to their interpretation,
differences in size as well as composition of the sector can be explained by
referring to the social and political development of the sector over time. In
other words, differences of size and composition are explained by different
social origins of the sector. According to the interpretation of Salamon and
Anheier, what is seen as today’s embeddedness of the sector in a particular
country is the outcome of social and political forces that link or embed the
sector in between market, state and society. Drawing on the work of
Barrington Moore (1967) and Gosta Esping-Andersen (1990), Salamon and
Anheier identified four distinct “routes” of third-sector development, which
they titled the liberal, the social democratic, the corporatist, and the statist
route of third-sector development.
The embeddedness of the nonprofit sector, which is the result of these
four identified routes, differs in terms of two key dimensions: a) the extent of
government social welfare spending and b) the scale of the nonprofit sector.
Figure 2. Models of Third-Sector Regime
Nonprofit ScaleGovernment Social
Welfare Spending Low High
Low Statist Liberal
High Social Democratic Corporatist
Source: Salamon/Anheier 1998: 228
Embeddedness of Nonprofit Organizations 179
What Salamon and Anheier identified as the liberal model characterizes an
embeddedness of the sector where low government social welfare spending
is associated with a relatively large nonprofit sector. To put it differently, this
type of embeddedness leaves plenty of room for nonprofit social service
delivery. In contrast, the social democratic regime is the outcome of statesponsored
and state-delivered welfare services leaving relatively little room
for nonprofit service-providing activity. A sizable nonprofit sector going
along with extensive government welfare spending characterizes the
corporatist regime. In the statist model government maintains the tradition of
having a say in social welfare issues, albeit not heavily investing in this
particular field, and therefore leaving very little room for the nonprofit
sector. By using data of the Johns Hopkins Comparative Nonprofit Sector
Project, Salamon and Anheier proved that those identified regimes exist in
the real world.
Figure 3. Test of Social Origins Model of Nonprofit Sector
Nonprofit ScaleGovernment Social
Welfare Spending Low High
Low
Statist
Japan
Liberal
United States
High
Social Democratic
Sweden
Corporatist
Germany
Source: Salamon/Anheier 1998: 240
Whereas the nonprofit sector of the United States is of respectable size even
though government social welfare spending is comparatively low, the
Swedish government invests heavily in social welfare, thus leaving little
room for a flourishing service-providing third sector. Whereas Germany’s
nonprofit sector enjoys a respectable size despite the fact that government
social welfare spending is relatively high, Japan’s nonprofit sector is of
limited scale and government is not very actively engaged in social welfare
spending. The question that immediately arises is why does high government
social spending go along with a sizeable nonprofit sector in Germany, but in
Sweden the service-providing part of the sector is crowded out by
government? And why does low government spending in the United States
give way to a flourishing nonprofit sector of respectable size, while this is
not the case in Japan?
The answer the two authors gave to this problem comes down to the
180 Marek Rymsza and Annette Zimmer
point that history has to be factored in. They perceive today’s embeddedness
of the sector as the outcome of societal struggles between the modernizing
state and the traditional elite, such as the Church and the Crown, as well as
between different social classes, which are primarily represented by their
political outposts, namely the parties. To put it differently, Salamon and
Anheier see the embeddedness of the nonprofit sector as the outcome of
rather complex interrelationships among social classes and social institutions.
This particular approach, which is called neo-institutionalism in social
science research, constitutes the linkage between the Social Origins Theory
of third sector research and the work of Barrington Moore and Gøsta Esping-
Andersen.
These latter two are interested in the institutional outcome of power
relationships between state and society as well as between social classes.
According to Barrington Moore, societal and political modernization took
very different routes around the world. Depending on the specific
compromise between state and society and among the various classes,
modernization resulted either in democracy or in fascism or communism.
According to his interpretation, the institutional outcome of democracy is
primarily based on a strong urban middle class that became the leading force
of economic modernization and political democratization. While a “weak
state” with almost no say in political and societal development was the
bedrock of the route to democracy, the route both to fascism as well as to
communism was paved by a strong state that was not restricted by urban and
powerful entrepreneurs. Gøsta Esping-Andersen (1990) also used a neoinstitutional
approach in order to identify different welfare state regimes,
which he characterized as variations of “welfare capitalism.” Again EspingAndersen
perceived the development of a welfare regime as being the
outcome of the balance of power or, to put it differently, as the
institutionalized result of state-society relations and particularly class
struggle. Similar to Barrington Moore, Esping-Andersen analyzed the power
play between the new class of the entrepreneurial elite and the landed interest
of the traditional elite, and the developing power of the working class
movement.
Building on the results of the work of Esping-Andersen and Moore,
Salamon and Anheier define the liberal model of third-sector embeddedness
as being the result of a strong entrepreneurial middle class, which did not
face opposition from traditional landed elite or from a forceful working class
movement, and which fostered an anti-etatist mood. This situation has been
strongly in place in the United States, where a successful middle class set the
tone of politics, keeping the costs of welfare spending low, while
simultaneously upholding a spirit of altruism that is very much in line with
Protestantism.
The underpinning of the social democratic model consists, according to
Embeddedness of Nonprofit Organizations 181
Salamon and Anheier, of a strong working class being able to exert effective
political power, albeit in alliance with other social classes. While social
welfare delivery falls under the realm of the state leaving little space for
nonprofit activity, the third sector nevertheless plays a significant role in
society, not as a service provider, however, but as a vehicle for the
expression of political, social and recreational interest. Thus the social
democratic model translates into a sector characterized primarily by club life
and voluntary engagement. Sweden is a textbook example for the social
democratic model where the sector ranks at the low end of the European
countries with respect to nonprofit employment, but first regarding civic
engagement and membership affiliation of citizens. The driving force behind
this model is a strong labor movement and a social democratic party in
power, which, however, is not in favor of a patriarchal state but on the
contrary fosters civic activity and an egalitarian approach of citizenship.
The rationale of the corporatist model is the struggle of the traditional
elite to stay in power and not lose its societal status. According to Salamon
and Anheier, a central characteristic of the corporatist model consists of the
use of nonprofit organizations by government to calm demands of the
working class. The embeddedness of the nonprofit sector in Germany
provides a textbook example for the corporatist model. In Germany, the state,
backed by a powerful landed elite who was afraid of losing political power
and societal influence and who managed to cooperate with a relatively weak
urban middle class, responded to the threat of the developing social
democratic workers movement by forging an agreement with the major
churches in the late 19th century to create a state-dominated social welfare
system that, nevertheless, maintained a sizable religious, and hence nonprofit
presence. This agreement was ultimately embodied in the concept of
“subsidiarity” as the guiding principle of German social policy
(Salamon/Anheier, 1998: 242).
Finally the social and political bedrock of the statist model of
embeddedness consists of an obedient society and a powerful state, which
works in close cooperation with the new entrepreneurial elite, thus leaving
almost no societal space for nonprofit activity. Salamon and Anheier identify
Japan as being the prime example for the statist model of nonprofit
embeddedness. A comparatively small third sector and low government
welfare spending reflects the tradition of state dominance originating in the
19th century, and which up until now has not been put into question either by
a self-assured entrepreneurial class or by a powerful working class
movement.
Without any doubt, there are lessons to learn from the Social Origins
Theory developed by Salamon and Anheier. First of all, the Social Origins
Theory clearly shows that the embeddedness of the sector depends on more
than just one factor. The interrelationship between the state and the sector is
182 Marek Rymsza and Annette Zimmer
the result of historical developments and particularly class struggles along the
process of modernization. However, this particular approach also has
shortcomings. Salamon and Anheier are primarily looking backward while
identifying the different models. Therefore, those models are not very helpful
for today’s nonprofit managers trying to work out arrangements with
government. By referring to the four models it is possible to answer the
question: why do the nonprofit sectors in various countries differ in size and
composition? However, the models as such do not answer the question: what
are the shortcomings of a respective model? Finally, although the Social
Origins Theory claims to cover the full branch of nonprofit activities, what is
indeed taken into consideration, at least when testing the theory, is very
closely connected to the welfare state and more precisely to social policy.
Because is it very difficult to capture the entire world of nonprofit
activity, some concepts focus exclusively on the social policy dimension,
thus asking how nonprofit organizations are embedded in a particular welfare
state regime, why this is the case, and moreover who benefits from this
particular institutional arrangement. The social policy-related concepts by
and large refer to the Three Worlds of Welfare Capitalism elaborated by
Esping-Andersen, as described in the next section.
2.4 Esping-Andersen’s Three Worlds of Welfare Capitalism and
Nonprofit Organizations
In his seminal work Three Worlds of Welfare Capitalism, Esping-Andersen
identified three welfare regimes, which he characterized as: a) the liberal
regime, b) the social democratic regime, and c) the conservative regime
(Esping-Andersen, 1990; Goodin et al., 2001).1
While these regime models are primarily worked out to explain the nexus
between the market and the state, which is achieved by welfare state
regulations, Esping-Andersen’s “ideal types” are also increasingly used in
order to point out differences of nonprofit embeddedness, specifically in the
areas of social policy, healthcare and personal social services
(Freise/Zimmer, 2004; Janoski, 1998; Rymsza, 1998). Following EspingAndersen’s
argumentation, the regime approach, which takes into
consideration only nonprofits active in social policy-related fields,
distinguishes the level of embeddedness with respect to the following key
dimensions: “government social welfare spending,” “position and market
1 Esping-Andersen’s regime approach built on the work of among others Titmuss (1974). The
regimes that he identified are in line with other welfare state typologies such as the
classification of the marginal, the institutional-redistributive and the performanceachievement
model constituting equivalents of the liberal, the social-democratic and the
conservative regime.
Embeddedness of Nonprofit Organizations 183
share of nonprofits within social policy,” and “impact of side-effect of the
model-specific embeddedness structure on NPOs.”
Figure 5. Nonprofit Organizations and Social Service Production
Liberal
Regime
Social democratic
Regime
Conservative
Regime
Government Social
Welfare Spending
low high
medium or high
Position of NPOs
within Social Policy
Competing with
Forprofit Enterprises
not relevant
Privileged
Position/Protected
Against Commercial
Competition
Major Supplier of
Social Services
Nonprofit Sector on
par with the Market
Government Nonprofit Sector
Impact and SideEffects
on NPOs
Professionalization
and Marketization of
NPOs
Marginalization of
NPOs in the Field of
Social Services
Development of
Nonprofit Cartels
within the Field of
Social Services
Source: Freise/Zimmer (2004)
The Liberal Regime
The liberal regime stands out for its limited government social welfare
spending, thus marginalizing the intervention of the state in social policy.
Accordingly state interference is permissible only in those cases in which the
natural channels of goods distribution, viz the market and the family, fail.
Under this regime, nonprofit organizations are treated on a par with the
market. However, at the same time, the nonprofit sector remains slightly
dominated by the market sector, because nonprofits are fiercely competing
for resources, including government contracts, private donations and
foundation grants. The role ascribed to the state is limited, a “minimum
state,” which is clearly separated from the nonprofit sector. In the field of
social services there are many possibilities for nonprofit activity. Nonprofits
are even allowed to engage in business activities as long as earnings are
reinvested in the organization and not distributed among the members,
shareholders, or owners of the organization. Cooperation with government is
highly formalized and organized in a businesslike way. A widely accepted
contract culture as well as competitive tendering, forcing nonprofits to
compete for government contracts with other nonprofit and commercial
organizations, is a fairly common feature of the liberal regime. Market
competition provides the clue for the understanding of the liberal regime of
nonprofit embeddedness. The state does not harbor any a priori preferences
for nonprofit organizations as opposed to commercial enterprises; nor does it
184 Marek Rymsza and Annette Zimmer
extend any special privileges to selected nonprofit organizations such as the
Red Cross or organizations that are affiliated with one of the religions.
Having to cope with a highly competitive environment, in which
contracts constitute the prime source of nonprofit revenue, nonprofits tend to
become “businesslike” organizations, which are characterized by efficiency,
professionalization and a strong orientation towards the market. The
strongholds of the liberal regime are the Anglo-Saxon countries, the British
Commonwealth, and particularly the United States. Over the 1980s and
1990s, certain elements of this model – especially the contract culture –
became very popular among public policy advisors in Europe, and
particularly in Eastern Europe.
The Social Democratic Regime
The social democratic regime, representing in many aspects the antithesis of
the liberal regime, stands out for its generous government social welfare
spending and a broad spectrum of social services offered by state institutions.
This translates into a situation where there is little room for nonprofit activity
in welfare service provision. The role nonprofits play in social policy is
rather limited because the majority of services are state financed and
delivered.
However, the social democratic regime of social policy need not be
confused with state socialism of the former Soviet bloc countries. In sharp
contrast to state socialism, service provision is highly decentralized and taken
over by the local communities in the social democratic regime. Nevertheless,
due to the fact that the state assumes responsibility for the fulfillment of
citizens’ basic needs, nonprofit organizations are put to the margins in the
area of social service delivery. Since the 1930s the social democratic regime
has been strongly in place in the Nordic countries. Most recently, however,
connected to the so-called crises of the welfare state, even in the Nordic
countries politicians and policy experts alike started to recognize the
potentials of nonprofit organizations as grassroots providers of social
services (Wijkström, 2004). The concept of the Third Way (Giddens, 1994),
in particular, provided a platform for integrating nonprofits into social
democratic policy planning. In the meantime, modern social democrats as
well as the European Union increasingly acknowledge the superiority of
nonprofit organizations in the delivery of social services given their capacity
to reach minority groups and counteract social exclusion.
The Conservative Regime
The conservative regime has to be put in between the other two. With respect
Embeddedness of Nonprofit Organizations 185
to government social welfare spending, it comes close to the social
democratic regime, whereas regarding the market share and importance of
nonprofit organizations as social service providers, it has more in common
with the liberal regime. The hallmark of the conservative regime is the
subordination of nonprofit organizations under state authority; or to put it
differently, the state serves a subsidiary function vis a vis selected nonprofit
organizations. Thus, in the conservative model the “principle of
subsidiarity”2
rooted in the social teaching of the Catholic Church plays a
very significant role.
There are two practical dimensions to the principle of subsidiarity: First,
social policy planning and social service delivery are decentralized with local
governments constituting the most important level of policy implementation.
Second, specific nonprofit organizations enjoy a privileged position in the
market for social service delivery, being by law protected against the
competition of forprofit as well as public providers. To put it differently,
backed by the principle of subsidiarity, some nonprofit organizations, in
particular those that are affiliated with the churches, are more equal than
others are. This translates into a public policy situation in which government
works closely together with a limited number of nonprofits that are selected
by government and endorsed with privileges in terms of financial support,
access to information and acceptance within the policy process.
Under the conservative regime, state and public insurance funds are the
prime financier of social services. Very common is the use of earmarked
government grants, awarded without any competition for specific public
utility activities, which are specified in the charters of the nonprofit
organization. Without any doubt, under this regime the nonprofit sector is
closely connected with the state. That nonprofit organizations are an active
part of civil society and therefore should enjoy independence from
government is not regarded as a policy value worth cultivating. On the
contrary, the state and not civil society determines the common good, which
according to political rhetoric is of overarching importance in conservative
welfare regimes, thus demanding the subordination of any interest, including
those of nonprofit organizations and civil society. Accordingly, nonprofit
organizations in conservative welfare regimes tend to copy government
entities with respect to their management procedures. Excessive
bureaucratization of nonprofits is just one pitfall of the conservative regime
in which NGOs financially tend to become client organizations of public
administration. Furthermore, nonprofit organizations tend to forget about
their advocacy functions because lobbying seems to counteract smooth
2 This concept essentially holds that principal responsibility for dealing with any social
problem lies first with the social unit closest to the problem and that state involvement
should operate with and through such local institutions of neighborhood, church, and social
group (see Salamon/Anheier, 1998: 242, Footnote 17).
186 Marek Rymsza and Annette Zimmer
cooperation with government. Finally, those selected nonprofits that work
closely together with government tend to form cartel-like arrangements in
order to protect their privileged position and to keep out newcomers
effectively. Being members of a so-called “social policy welfare cartel,”
nonprofit organizations avoid transparency with the effect that they gradually
distance themselves even further from civil society. Against this very critical
assessment it has to be mentioned that, on the other hand, under the
conservative regime nonprofits are keeping apart from the market because
there is no need for them to become businesslike.
Of the countries under study, Germany and Austria come very close to
the conservative model of nonprofit-government relations. In the two
countries, church-affiliated nonprofit organizations, in particular the welfare
associations Caritas and Diakonie, play a very significant role in the
provision of social services and healthcare (see Country Profiles Austria and
Germany in this volume). The conservative regime originated in Germany
towards the end of the 19th century. Since then it has spread across Western
and Central Europe. Between the World Wars it also was very popular in
Poland, Hungary, and in Czechoslovakia. In this way, the conservative
regime, which is sometimes also termed the “continental model” (Jordan,
1996), serves as a term of reference for the Visegrád countries. However, the
same holds true for the liberal regime due to the fact that after the breakdown
of the authoritarian regimes, policy advisers with a U.S. background were
very influential in the countries under study in Central and Eastern Europe.
Against the background that due to the current crisis of public funding
the conservative regime – not unlike the social democratic regime – has come
under financial as well as political pressure, it is an open question which
regime type will indeed survive. In Germany and Austria, government has
started to modify the environment for nonprofit organizations that are
engaged in service provision by introducing elements of competition, in
particular for government grants. Thus, in these countries preferential
treatment of the “social policy welfare cartel” is being gradually replaced by
contract management, which puts commercial enterprises providing social
services as well as nonprofits that were until now outside the realm of the
“social policy welfare cartel,” such as self-help groups, mutual aid
organizations and cooperatives, on equal footing with the welfare
associations. In Austria as well as in Germany, specific tools of new public
management such as competitive tendering and contracting out have become
accepted mechanisms of public policy in the field of social services and
healthcare. This situation leads to the question whether the conservative
model of nonprofit-government relations with its focus on subsidiarity and
non-market regulation has indeed a chance to survive. Without any doubt in
Germany and Austria there are tendencies of convergence, with the
conservative regime increasingly moving towards a regime type that shows
Embeddedness of Nonprofit Organizations 187
elements of the liberal regime. By taking a closer look at the Visegrád
countries, the following section examines whether this is also the case in
Central and Eastern Europe.
3. Government-Nonprofit Sector Relations in Central and
Eastern Europe
Although decades of authoritarian rule have put the countries under study in
Central and Eastern Europe behind the “iron curtain” that separated them
from the societal developments in Western Europe, they share a common
heritage. In fact, tradition matters particularly with respect to governmentnonprofit
sector relations, as the following section will outline. However,
these countries also have to undergo numerous processes of modernization.
While they are in the process of building new political structures, they have
to integrate their formerly planned and centralized economies into the
competitive marketplace of a globalized economy. Since societal and
political changes are encompassing, civil society and its nonprofit
organizations thoroughly benefit from the current situation, although the
changing environment simultaneously poses a threat to the further
development of the sector and its organizations.
Referring specifically to government-nonprofit sector relations, the
following section will take a closer look at the historical heritage of the
Visegrád countries. Subsequently, against the background of the political
developments underway since 1989, the role and function of nonprofit
organizations specifically in the area of social services will be discussed.
3.1 Traditions of Government-Nonprofit Sector Relations
The common trait of the nonprofit sector in the countries under study,
particularly the sector in Poland, Hungary, the Czech Republic, and Slovakia,
lies in the similar history of its development. In the first place, charitable
activity in all these countries somehow referred to the charity work of church
institutions, be they monastic orders, brotherhoods, or the local parish. Such
activity on the part of ecclesiastic bodies predated the appearance of secular
charities as well as the involvement of the state in assisting the needy (see
Kuti on CD). What is more, the role played by the church and its social
organizations - i.e., the various church-affiliated associations and foundations
- in the provision of social services continues to be quite significant,
particularly in the areas of education and social care. This is particularly the
case in Poland, where nonprofit organizations affiliated with the Catholic
188 Marek Rymsza and Annette Zimmer
Church and other churches account for roughly half of the infrastructure of
the nonprofit sector in the above-mentioned areas.
In the second place, the societies of Poland, Hungary, the Czech
Republic, and Slovakia have spent long years under conditions of outright
colonization or of limited statehood; as a consequence, charitable activity
was often fused together with the pro-independence struggle. This
phenomenon was particularly manifest during the second half of the 19th
century. In the twenty years intervening between the World Wars, the social
policies of these countries remained strongly influenced by the ideology of
the former Habsburg Empire, and thus under the sway of the conservative
model of government-nonprofit relations. Not unexpectedly, the conservative
approach was reflected in the ways in which NPO activities were regulated.
Therefore, still upholding certain aspects of post-colonial heritage, the
influence of the conservative model on the shape, image and mission of the
nonprofit sector in the countries under study has been quite substantial.
Third, the four Central and Eastern European countries of the focs
project have passed through a period of socialism and of quasi-independence
within the Soviet sphere of influence. This resulted in the virtual
marginalization, if not liquidation, of the nonprofit sector. Finally, these
countries regained their independence by the early 1990s and embarked on a
course of political, economic, and societal transformation. With respect to
societal transformation, the reconstruction of civil society ranks prominently
among its goals. Restructuring, deepening and further development of the
nonprofit sector were given high priority by politicians and policy experts
alike during the historical period in which the transformation from postcommunism
to democracy took place (Arato, 1992; Deakin, 2001).
The same holds true for the embeddedness of the sector and for
government-nonprofit relationships, particularly in the field of social policy
and social services. Shared history has a marked influence on governmentnonprofit
relationships in each of the countries, no matter whether the focus
is on Poland and Hungary or on the Czech Republic and Slovakia. Thus, the
development of civil society in the Visegrád countries seems to proceed
along two tracks: first, by reference to the democratic roots of the country
concerned and, second, by implementation of solutions, models, and
institutions that are employed in the democratic countries of the Western
Hemisphere. Without doubt, the Central and Eastern European countries
under analysis are turning away from the model of the socialist welfare state,
as described in the social democratic model of social policy. In this way, the
“away from” vector has been defined; the direction of “to where,” however,
has yet to be elaborated or, at any rate, defined in greater detail.
Embeddedness of Nonprofit Organizations 189
3.2 Clash of Paradigms?
Without being too provocative, there are many reasons to recognize a clash
of paradigms concerning relations between government and the nascent
nonprofit sectors in the Central and Eastern European countries. To a certain
extent, government-nonprofit relations in the countries under study currently
are at a crossroads. On the one hand, there are forces tending toward a social
policy approach that is very much in line with the conservative model and
that is legitimized by politicians by referring to the “back to our roots”
persuasion, with the decades of the 1920s and 1930s adopted as a point of
reference. On the other hand, corresponding with the current zeitgeist of
neoliberal economic reforms, consultants and think tanks as well as
politicians are very much in favor of a social policy approach that is on par
with the liberal model, which supports new public management techniques
such as contract management, thus putting a high emphasis on contracting
out public duties to nonprofit organizations. Until now, political and public
discourse has not yet achieved agreement on the final approach towards
social policy or on the role and function of the nonprofit sector within the
growing market for social services. With respect to social policy, the
countries in Central and Eastern Europe are still in a situation that Deacon
characterized as the “interim” model (Deacon, 1992).
In the early 1990s at the beginning of the reforms in Central and Eastern
Europe, the liberal model was the prevailing one, given both the appeal of
neoliberal reform in Europe and the tack favored by Western advisors. Since
the mid-1990s, however, a renaissance of the continental or conservative
model of social policy has been observed in the countries concerned as well
as in selected Western European countries. In Western European countries,
particularly in France, Spain and Italy, due to policy recommendations of the
European Union, the potentials of the nonprofit sector and its organizations
are utilized specifically to address problems of social exclusion and
unemployment, thus putting a high emphasis on the “social economy”
(CIRIEC, 2000; Borzaga/Defourny, 2001). However, these two topics are not
on the agenda of government-nonprofit relations in Central and Eastern
Europe. Instead the priority of public policy towards the sector in the
Visegrád countries lies in transferring public duties to nonprofit
organizations, thus using the sector and its potentials as a tool to privatize
and decentralize the former socialist welfare state, which was marked by its
hierarchical organization and public financing.
The Visegrád countries, however, are not resorting to a straightforward
adoption and propagation of the liberal model with its contract management
culture. There is a unique characteristic of policy followed in Central and
Eastern Europe that translates into preferential treatment of selected
organizations to which government provides access to state-owned
190 Marek Rymsza and Annette Zimmer
infrastructure that had been nationalized after World War II. These
organizations enjoy preferential treatment and working conditions because
they carry out public service activities. Government affords these
organizations special treatment, most frequently enabling them to secure the
legal status of a public benefit organization (see Freise/Pajas in this volume).
These public benefit organizations are nonprofits that enjoy a privileged
status within the country’s nonprofit community because the infrastructure
extended to them makes them prime partners of public authorities. By virtue
of their access to the infrastructure, they are very well equipped to meet the
standards that are laid down in the contracts issued by public authorities.
Public benefit organizations also enjoy preferential treatment with respect to
tax law. Hungary and Slovakia have enacted tax laws enabling citizens to
assign 1% of their income tax to public benefit organizations; Poland has
drafted similar legislation.3
Very much in accordance with Young’s analysis of nonprofits being
complementary to government, thus helping to carry out the delivery of
public goods largely financed by government, the privileged position of
nonprofits chartered as public benefit organizations (PBOs) is accompanied
by increased government supervision. Therefore, there are good reasons to
put into question whether these nonprofits designated as public benefit
organizations and enjoying the aforementioned privileges are still NPOs, or
whether they have already become quasi-nongovernmental-organizations
(Quangos)? It is also questionable whether such public policy towards the
nonprofit sector is reconcilable with the liberal model and its normative
underpinning, which puts a high emphasis on competition.
3.3 Policy Development: Ebb and Flow in Government-Nonprofit
Sector Relations
Analysis of the development of policy towards the nonprofit sector in the
Visegrád countries since the early 1990s, taking into account the so-called
clash of paradigms described above, reveals a certain logic or rationale
underpinning the strong ebb and flow in government-nonprofit sector
relations.
At the very beginning of the transition period from authoritarian rule to
democracy, public policy towards the nonprofit sector and its organizations
primarily aimed at making room for civic and nonprofit activity. Certain
3 This solution is a fairly unique one, not encountered beyond the region. In Western Europe,
for instance, NPOs engaging in public benefit activities receive only a double tax
exemption on the funds solicited by them with the exemption extending to the benefactor
and to the NPO receiving the gift. Tax breaks of this sort are also offered to the public
benefit organizations of Central Europe, without prejudice to the 1% rule just discussed.
Embeddedness of Nonprofit Organizations 191
forms of controlled civic activity were already tolerated in the waning days
of communism. There were several reasons why even before the breakdown
of the regimes governments in the former Eastern bloc countries started to
become more liberal towards civic engagement and nonprofit activity. More
precisely, the change of attitude towards the sector was the result of: (i) the
state’s weakening grip over societal life, (ii) economic difficulties and
attempts by the state to ameliorate the situation by referring to social and
self-help potentials, and (iii) government trying to control incoming foreign
financial support by legalizing the structures for its distribution. This was
especially the case in Poland.
After transformation, membership in nonprofit organizations as well as
affiliation with social movements flourished in the Central and Eastern
European countries. In a way the floodgates were opened, with social activity
becoming a free-for-all. The number of registered nonprofit organizations in
the Visegrád countries increased significantly. In accordance with the
entities’ continental tradition, associations and foundations became the most
frequently used organizational form. Indeed, registration of associations and
foundations skyrocketed in those early years. During this first stage,
government was very much in favor of this development, thus securing tax
benefits and facilitating the work of nonprofit organizations in many ways.
At that time, government was not yet interested in establishing a
complementary policy arrangement with the nonprofit sector, particularly in
the area of social services. Referring to the terminology of Young (2000),
nonprofits were perceived as supplementary to government immediately after
the transition.
Around the mid-1990s, governments of the post-communist countries
began a policy of decentralization of their public administrations. By law
local governments were entrusted with a whole range of public duties and
were given relatively large leeway in how to go about tackling these
responsibilities. The policy of pronounced decentralization was put into
practice by referring to the principle of subsidiarity according to which the
smallest unit of state administration should be responsible and take over
those duties and responsibilities that are closest to it. However, the principle
of subsidiarity was not at all applied to the nonprofit sector and its
organizations. On the contrary, the policy of decentralization was
accompanied by a hardening of the line adopted by government vis a vis the
sector. Beneficial treatment of nonprofit organizations, discussed earlier, was
either curtailed or abolished. To a large extent, this was the result of
increasing problems of public financing, with the state nervously seeking
new ways to obtain revenues. However, representatives of public institutions
also criticized nonprofit organizations for what they saw as bad management
and for misappropriation of funds. In sum, the public mood that had been
very much in favor of the nonprofit sector right after 1989 started to shift
192 Marek Rymsza and Annette Zimmer
towards the opposite, thus harshly criticizing the sector and its organizations.
It should be noted that specific examples of mismanagement and other issues
that were cited in support of allegations of corruption were limited to isolated
cases that had been covered in the mass media rather than being derived from
any kind of systematic monitoring of nonprofit organizations.
The aforementioned period has been followed by one characterized by a
policy approach that increasingly acknowledges nonprofit organizations as
partners of government in social policy implementation. In accordance with
this new governmental approach towards the sector and its organizations,
legislatures have issued a new set of privileges for nonprofits. However, as
already mentioned, these privileges are no longer addressed to all nonprofit
organizations alike. On the contrary, they are specifically directed towards
public benefit organizations, which by now enjoy a quasi-governmental
status providing social services on par with government institutions.
Politicians and policy experts alike again refer to the principle of
subsidiarity when explaining the rationale behind this policy towards the
sector. According to this line of argumentation, the principle is
operationalized in the following two ways. First, it refers to policies of
decentralization of the public administration and thus enforces local selfgovernment.
Second, it is linked to the introduction of the complementary
model of government-nonprofit sector relations. However, as already
mentioned, the way that the complementary model is put into practice
translates into a situation in the Visegrád countries where nonprofit
organizations become mere extensions of the public administration
apparatus. In the long run, this development may lead to excessive
bureaucratization of the nonprofit sector.4
Finally, although there are still
significant differences among the Visegrád countries with respect to how
government policy addresses the nonprofit sector and its organizations,
nevertheless there is at least one common trend regarding governmentnonprofit
sector relations in the countries under study: Contract management
gives preference to nonprofit organizations granting them priority over
commercial enterprises.
4. Conclusion
The purpose of this chapter was twofold: first, to provide an overview of the
latest models and theoretical approaches relating to nonprofit-government
4 This comment does not apply to Poland as much as it may to other countries given the
relatively low employment in the nonprofit sector – as compared with the three other
countries discussed.
Embeddedness of Nonprofit Organizations 193
relationships, and second, to address the embeddedness of nonprofit
organizations in welfare state arrangements by specifically referring to the
current situation in the Visegrád countries. The overview presented four
distinctive models conceptualizing nonprofit government relations: the FourC’s
framework developed by Adil Najam; Dennis Young’s categorization of
nonprofits as supplementary, complementary, or adversarial to government in
the supply of public goods; the Social Origins Theory of Lester Salamon and
Helmut Anheier; and finally the regime approach which, based on EspingAndersen’s
seminal work Three Worlds of Welfare Capitalism, highlights the
importance on nonprofit organizations in social service production.
Najam’s Four-C’s framework distinguishes between cooperative,
confrontational, complementary, and co-optative nonprofit-government
relations. According to his analysis, in a cooperative relationship government
and nonprofits agree upon goals and strategies, while in a confrontational
relationship they disagree on both the goals they try to attain and the
strategies by which they want to reach their goals. In a complementary
relationship government and nonprofits share similar goals but prefer
different means to reach those goals. Finally, in a co-optative strategy
government and nonprofits share similar strategies but pursue dissimilar
goals. Covering a broad spectrum of nonprofit activities, Najam’s Four-C’s
framework constitutes a very abstract, highly theoretical approach without,
however, referring to any specific strand of nonprofit theory.
Dennis Young, on the contrary, links his categorization of nonprofitgovernment
relationships specifically to economic theories developed within
nonprofit research. Furthermore, Young exclusively looks at nonprofits
providing social services. He identifies three models of nonprofitgovernment
relationships. From the point of view of the nonprofit sector, he
characterizes the function of nonprofits within these relationships as being
supplementary, complementary, or adversarial to government in the supply
of public goods. While in the supplementary model, nonprofits fulfill the
demand for public goods left unsatisfied by government, in the
complementary model they are partners to government, thus helping to carry
out the delivery of public goods largely financed by government, and in the
adversarial model, nonprofits lobby government to change public policy.
Young’s framework is very helpful for conceptualizing nonprofitgovernment
relationships in different policy fields as well as for analyzing
changes in nonprofit-government relations over time.
The Social Origins Theory of Lester Salamon and Helmut Anheier is
thoroughly integrated into social sciences theory, drawing equally on the
work of the political sociologists Barrington Moore and Gosta EspingAndersen.
The theory puts forward an explanation why the nonprofit sector
differs from country to country with respect to size and composition.
According to this theoretical approach, the size, internal structure and
194 Marek Rymsza and Annette Zimmer
embeddedness of the nonprofit sector in a particular country today is the
outcome of social and political forces, which link or embed the sector
between the market, the state and the society in the respective country. In
their analysis Salamon and Anheier identified four distinct “routes” of
nonprofit sector development resulting in four models of nonprofit sector
embeddedness: the liberal, the social democratic, the corporatist and the
statist route. The outcome of the liberal route is an embeddedness of the
sector where low government social welfare spending is associated with a
relatively large nonprofit sector; the social democratic model is the outcome
of state-sponsored and state-delivered welfare services leaving relatively
little room for nonprofit service activity; a sizable nonprofit sector going
along with extensive government welfare spending characterizes the
corporatist regime; and in the statist model government continues being the
dominant actor, albeit neither heavily investing in social services nor leaving
societal space for nonprofit activity. The Social Origins Theory draws
attention to the fact that the embeddedness of today’s nonprofit sector is the
outcome of historical developments along processes of societal and political
modernization. Thus, Salamon and Anheier were looking backward while
developing this theoretical approach of government-nonprofit relations. It
explains the current state of affairs but keeps silent with respect to the further
development of government-nonprofit relations.
This shortcoming is taken up by the regime approach of nonprofit
research, which builds exclusively on the work of Esping-Andersen and
particularly on his categorization of the liberal, the social democratic, and the
conservative welfare state regime. Referring to three key dimensions government
social welfare spending, position and market share of nonprofits
within social policy, and impact and side-effects of the model-specific
embeddedness structure on NPOs - the regime approach provides an analysis
of the current embeddedness of the sector in a respective country, and at the
same time draws attention to the fact that each regime entails advantages as
well as drawbacks for nonprofits. According to this analysis, the liberal
regime stands out for a market-like embeddedness of the nonprofit sector.
Due to limited government social welfare spending, the regime provides
many possibilities for nonprofit activity. However, having to cope with a
highly competitive environment, nonprofits tend to become “businesslike”
organizations, characterized by efficiency, professionalization and a strong
orientation towards the market. The social democratic regime is characterized
by generous government social welfare spending and a broad spectrum of
social services offered by state institutions, leaving very little room for
nonprofit activity. In the conservative regime, high government social
welfare spending goes along with a sizable nonprofit sector. The hallmark of
the conservative regime is the subordination of nonprofit organizations under
state authority, which is encapsulated in the principle of subsidiarity that
Embeddedness of Nonprofit Organizations 195
translates into a situation where social service delivery is highly
decentralized, with local governments constituting the most important level
of policy implementation. Furthermore, specific nonprofit organizations
enjoy a privileged position in the market for social service delivery, being by
law protected against the competition of forprofit as well as public providers.
There are no doubts that in the conservative regime nonprofits enjoy a
favorable situation as accepted partners of service delivery. However, the
drawback of this specific embeddedness is that nonprofit organizations tend
to lose their grassroots orientation by becoming government-like and thus
highly bureaucratized institutions.
Against this background, government-nonprofit sector relations in
Central and Eastern Europe were discussed with the aim of determining
which of the aforementioned models best suits the situation in the Visegrád
countries. As an introductory note to the discussion, the section briefly
summarized the historical development of government-nonprofit relations
specifically in the field of social service delivery. Here again, it became clear
that the Visegrád countries build on a common historical heritage that
thoroughly integrates them into the community of European countries.
After the breakdown of the socialist regimes, the development of civil
society and nonprofit social service delivery seems to proceed along two
tracks: by reference to the former roots and embeddedness of the sector and
by implementation of solutions and models that are employed in the Western
Hemisphere, particularly in the United States. As a result, there exists a
current clash of paradigms concerning relations between government and the
nascent nonprofit sectors in the Central and Eastern European countries.
Government-nonprofit relations in the countries under study are at a
crossroads between a social policy approach that is very much in line with
the conservative model and one that corresponds with the zeitgeist of
neoliberal economic reforms, i.e., the liberal model. Political and public
discourse has not yet achieved agreement upon the ultimate approach
towards social policy or the role and function of the nonprofit sector within
the growing market for social services. Furthermore, the authors draw
attention to the fact that, although social policy in the Visegrád countries
refers indeed to models and paradigms applied in other European countries
and in the U.S., there is no one-to-one transfer of these approaches. Whereas
in selected Western European countries potentials of the nonprofit sector are
specifically utilized to cope with problems of unemployment and social
exclusion, in the Visegrád countries the sector and its organizations are
heavily used for policies of privatization and decentralization.
The same holds true for the adaptation of government-nonprofit
relationships. Neither the liberal nor the conservative model is thoroughly put
into practice in the Visegrád countries. Although government finally embarks
on a policy of partnership with nonprofit organizations, thus providing them
196 Marek Rymsza and Annette Zimmer
with a complementary function, relations are organized in accordance with
businesslike techniques that characterize the liberal model of embeddedness.
At the same time, however, government launches a policy, which is very
much in accordance with the conservative model, and grants preferential
treatment to nonprofits, more specifically, by providing them access to
infrastructure and financial resources. There are good reasons for providing
special treatment because government heavily uses those nonprofits
organized as public benefit organizations for policies of decentralization and
privatization. By now it is questionable whether public benefit organizations
have already developed into quasi-governmental organizations or whether
they still have at least some features in common with nonprofits. The authors
conclude that despite the heterogeneity of the current developments, there is
one common trait: the Visegrád countries do not move straight ahead in the
direction of adapting the liberal model in its pure culture.
Suggested Readings
Young, D.R. (2000): Alternative Models of Government - Nonprofit Sector Relations:
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Confrontation, Complementary, and Co-optation. In: Nonprofit Management and
Leadership, Vol. 10, Nr. 4, pp. 375-396
Kramer, R. (2000): A Third Sector in the Third Millenium? In: Voluntas, Vol. 11/1,
pp.1-23
Esping-Andersen, G. (1990): The Three Worlds of Welfare Capitalism. Princeton
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