In recent decades, non-profit organizations have been going through a transformation: they have more and more business characteristics. According to Lester Salamon, of the Center for Civil Society Studies of the John Hopkins University, this change is global and has been more vigorous in developed countries, where the sector of the Civil Society has a greater participation in the economy. In this sense, it is not uncommon for a CSO to sell products or services to raise funds.
This trend seems to go hand in hand with the change in government funding, which since the 1980s has been financing the Third Sector, increasingly, through contracts. According to the National Council for Voluntary Organizations (NCVO), the percentage of this type of funding by the UK government went from 49% to 81%. This caused many CSOs to seek to stabilize their income, now less predictable, through the sale of goods and services, for example Sue Ryder, an organization that helps fund their hospices with thrift stores.
This business-like professionalization of the CSOs began to attract more young people, who began to look for qualifications tailored to the new organizations. Universities started to make available more courses and careers related to philanthropy and CSO management (in the United States, the number of university careers related to the civil society sector grew from 284 in 1986 to 651 in 2016), and work in the sector became more attractive to graduates of other careers. In the same way, the sector began to attract donors and financiers who wanted to be more involved and to be part of the boards.
Professionalization is also seen in the demand for experienced fundraisers, which according to Michael Nilsen, of the Association of Fundraising Professionals, has grown rapidly. This has resulted in a greater number of studies and fundraising techniques, from the effect that different marketing materials have on donor satisfaction and future giving, to better ways of attracting large donors.
One of the biggest differences that still persists between companies and civil society organizations is access to capital. Unlike companies, a CSO cannot sell shares, as it cannot generate profits to pay its shareholders. But new types of practices are trying to fill the gap left by that impossibility. One is the “impact investment”, which has been growing in recent years, in which a philanthropic return is expected instead of, or in addition to, a financial one. Another is the possibility of a third party (a foundation or government) being a guarantor of loans to civil society organizations, so that it takes the risk if the CSO cannot pay it back.
But of course, the transformation towards organizations with business characteristics also has its critics. Fund-raising practices, specifically the exchange of data between collectors, were called into question in the United Kingdom in 2015, when the bombardment of letters begging for donations to a donor could have played some role in her suicide. Some organizations also received criticism regarding the increasing salaries that CSO executives have, which are already close to those paid to business executives.
Some fear that if the line separating companies and CSOs continues to be erased, donors and volunteers will have less incentive to donate their time and money. On the other hand, there are also those who think that CSOs with business characteristics would be better equipped to survive and grow, and therefore to have a greater capacity to impact.