Disadvantages of a Voluntary Sector
Brand X Pictures/Brand X Pictures/Getty Images
The voluntary sector symbolises important human values of independence, personal initiative and pluralism, according to the Johns Hopkins International Statement of Principles on the voluntary sector.
From raising funds for cancer research to caring for the homeless living on the street, volunteers make a difference in their communities. Voluntary organisations are a vehicle for citizen participation and are, therefore, an important part of democracy. However, the voluntary sector faces certain challenges and disadvantages, including financial and human resource constraints.
Voluntary sector organisations are under constant fundraising pressures. They compete with dozens of causes and charities for funds and volunteers. Harvard University professor V. Kasturi Rangan and his colleagues suggest in a 2008 working paper that this competition could lead to a shakeout in the sector as multiple organisations combine to reduce costs and increase fundraising effectiveness. They suggest organisations will have to demonstrate performance and find innovative ways to attract new and sustainable funding sources. Non-profit often have to invest in professional fundraising consultants and other salaried staff to raise money, which increases administrative costs and reduces the amount of funds available for development and social assistance projects.
- Voluntary sector organisations are under constant fundraising pressures.
- Harvard University professor V. Kasturi Rangan and his colleagues suggest in a 2008 working paper that this competition could lead to a shakeout in the sector as multiple organisations combine to reduce costs and increase fundraising effectiveness.
One of the Johns Hopkins principles is that voluntarism and private giving are not substitutes for paid staff and government resources. This means donors and employees alike should regard themselves as partners and enablers of other public and private sector organisations. Voluntary organisations are usually resource-constrained because they have to compete with the private sector for talent but cannot afford to pay the same salaries. The requirements for disclosure and governance are just as onerous in the non-profit sector as in the private sector. This means board members, managers and employees require ongoing education and training to perform their roles effectively.
- One of the Johns Hopkins principles is that voluntarism and private giving are not substitutes for paid staff and government resources.
Undue influence is another potential disadvantage in the voluntary sector. Donors and governments cannot exert undue influence even if they are providing direct or indirect financial support. One of the Johns Hopkins principles states that private donors should refrain from exerting undue influence on the independence of voluntary organisations. In other words, the support should come with no strings attached. The same principle applies to government interference. Voluntary organisations often function in conflict zones by providing humanitarian relief assistance and may find themselves in the middle of competing political interests. Governments can demand accountability and transparency, but they should not try to control the role and mission of non-profit organisations.
- Undue influence is another potential disadvantage in the voluntary sector.
- One of the Johns Hopkins principles states that private donors should refrain from exerting undue influence on the independence of voluntary organisations.
Voluntary organisations should disclose their activities and finances. Harvard University professor Alnoor S. Ebrahim wrote in a 2010 working paper that non-profit executives tend to pay attention to accountability and governance issues only after there is a major scandal or when citizens and donors want answers on how an organisation is spending the donations. Leaders should be proactive in their disclosure policy, but should prioritise their disclosure responsibilities because they cannot be accountable to everyone for everything.
- Johns Hopkins Center for Civil Society Studies -- Statement of the Johns Hopkins International Philanthropy Fellows; Toward a Vital Voluntary Sector: An International Statement of Principles; 1991-1993
- Harvard Business School: The Future of Social Enterprise; V. Kasturi Rangan, et al.; 2008
- Harvard Business School: The Many Faces of Nonprofit Accountability; Alnoor S. Ebrahim; 2010
Based in Ottawa, Canada, Chirantan Basu has been writing since 1995. His work has appeared in various publications and he has performed financial editing at a Wall Street firm. Basu holds a Bachelor of Engineering from Memorial University of Newfoundland, a Master of Business Administration from the University of Ottawa and holds the Canadian Investment Manager designation from the Canadian Securities Institute.