Institutional Order and Change - The Task and Role of the Enterprise Philanthropist

Institutional Order and Change
The Task and Role of the Enterprise Philanthropist

Not-for-profit organizations in the 20^th century typically sought to imitate machine-age corporations in their hierarchical, command-and-control, management by "professionals." This tended to yield a mechanical approach to producing and delivering services that required identifying the problem to be solved, proposing a logical technique for solving the problem, running a demonstration program to prove the usefulness of the technique, and finally securing funding and bureaucratic oversight, often through government, to take programs to scale.

Today, governments are devolving service provision to more local entities, and commercial and not-for-profit corporations alike are undergoing significant "de-management." It is increasingly feasible to believe that the principles of spontaneous order apply not only in the spheres of the market and social order but even within the walls of firms.

Even Peter Drucker, the acknowledged dean of management sciences, observes that management of firms in the knowledge age looks very different from management during the industrial age. Indeed, Drucker observes that the distinction between management and entrepreneurship is increasingly incomprehensible. He writes: "an enterprise, whether a business or any other institution, that does not innovate and does not engage in entrepreneurship will not survive long."¹

We will consider how the changing climate for institutional innovation and management affects donors and the not-for-profit organizations they support. Research may include:

Testing the application of Lionel Robbins' phrase to philanthropic theory-that it deals with the rational allocation (and continuous re-allocation) of scarce non-commercial and non-governmental means (time and money) that have alternative uses. In which activities does it apply, in which not?
Considering how entrepreneurs can operate optimally in not-for-profit social organizations without the guidance of prices and profit and loss.
Exploring how innovation and discovery can be fostered in social enterprises.
Comparing (and interpreting) the failure rates of businesses to those of non-profit and governmental entities.
Examining in which activities outcomes can be measured exactly, in which approximately, and in which activities are they virtually unmeasurable? Can these unmeasurable outcomes be assessed in other ways?
What methods (like cost accounting) do businesses use to assign "prices" to things which have no price because they are not traded? How might these be applied to measure the outcomes of (some) non-profit activities?
How might the distinction in building codes between "specifications" codes (which petrify current practices) and "performance" codes (which encourage innovation) be used to measure outcomes of non-profit initiatives?

¹ Drucker continues: "Management must focus on results and performance of the organization. Indeed, the first task of management is to define what the results and performance are in a given organization-and this, as anyone who has worked on it can testify, is in itself one of the most difficult, one of the most controversial, but also one of the most important tasks. It is therefore the specific function of management to organize the resources of the organization for results outside the organization." Peter F. Drucker, Management Challenges for the 21st Century (New York: HarperBusiness, 1999), 37, 39.