Success factors in creating a nonprofit- government enterprise-The case of Youthbuild Israel
Shlomit Shulov Barkan, Ph.D, School of Management, College for Academic Studies, or Yehuda, Israe(1l
This paper attempts to determine success factors in the implementation of an international social enterprise on a national level. Youthbuild is a social initiative originated in the USA. The program operates as a partnership between the government and the nonprofit sector in more than 220 US communities as well as internationally.( Stoneham,2009) In Israel the initiative to replicate the program was born with social entrepreneurs, an outcome of the perceived acute need to promote social policy and practical solutions for at risk young adults( 18-30) residing in the social and geographical periphery. The program model is built on an intensive one year programs combing both education, vocational training, practicum, social activity and community involvement, leadership development and social personal change. In the US model participants are engaged in building and renovation in their communities as well as in other areas.. The Israeli program focuses on training and community involvement in variety of areas.
(1)This paper is based on a paper which was given in June 2011 at a social innovation conference at Tel Aviv University with Edna Bustin, Ph.D. Chairperson, YouthBuild, Israe and Haya Ytzhaki, Ph.D. Head of Ph.D. Program School of Social work, Bar Ilan University Israel
Youthbuild Israel is perceived by its originators as a "social enterprise" which aims to encourage the creation of occupational and social integration solutions in which the first sector will play a key role. This in an area where the government today is almost non- existent. . The initiative attempts to develop a model of partnership between the government and the third sector and acts as catalyst for the creation of an effective national policy which will fulfill government responsibility towards its young underprivileged citizens .The case study analyzed in this paper depicts the first stages of the initiative implementation in Israel and focuses on the complexity of cross- sector relations between the first and the third sector in the implementation process . For the purpose of our analysis inter- sectorial partnership is defined as an organizational framework in which we find continuing reciprocal and exchange relations between representatives of the two sectors or more for the purpose of achieving an outcome with an added value that cannot be achieved by one sector.( Almog- Bar and Zychlinski, 2010 )
Youthbuild Israel is an initiative which works against the current social and political processes which promotes a decrease in government role in the social arena rather than playing key part in providing social services as part of an overall national policy (Young, 2000, Gidron and Katz 1998)
Israel changing social area
. For the past twenty years, Israel has undergone significant changes which have affected its welfare state structure. There has been a constant decline in the functioning of the welfare state in line with the dominance of the neo- liberal approach and the third way concept of developing public policy( Giddens, 1998 ) This resulted in a policy of government budget reduction , shrinking role of government in providing social services, a decrease in the scope of government financial support to variety of social services, a move away from support grants to bidding contracts and the entrance of new players to the social services arena among them third sector organizations including foundations and business sector organizations (Limor, 2010)In a parallel fashion, social, political and ideological processes have brought about the strengthening Israel of civil society (Almog – Bar and Zachlinski, 2010).This resulted in the growth of the nonprofit sector as an alternative to government in providing social services and the emergence of social enterprises including social business enterprise aiming to provide innovative and sustainable solutions for services that the government does not provide. However, there are inherent obstacles for nonprofit organizations in attracting public, business and philanthropic funds as tax incentives and tax benefits to third sector is still limited. Hence we witness increasing trend among NGO's to search for viable partnerships with the business sector which also corresponds with the development of corporate social responsibility. The latter exhibits it itself among other facets in providing financial and other forms of support to the community and in particular third sector organizations or social enterprises.
Still, Israel third sector has a complex set of relationships with the public sector receiving a high percentage of its financial resources from the government. However, this is in the most part not the outcome of joint partnerships but rather the outcome of contractual relations and sourcing out of services that the government will not provide directly. (Limor, 2010). Facing numerous challenges the third sector finds it difficult to work with the government, a process which is often frustrating and cumbersome and does not encourage true partnerships. (Schmid, 2003) Moreover, nonprofits often do not want to partner with the government, as they see themselves as better alternative to the services offered by the government and ideologically interested in retaining their autonomy. Still, in recent years we also witness attempts for joint partnerships in macro social- educational initiatives between philanthropic foundations and the government (Almog – Bar and Zachlinski, 2010)
The study of successful cross sector collaboration and in particular nonprofit- government or social enterprise – government partnership requires a blend of multiple theoretical and research perspectives (Rethemeyer, 2005). We find it useful to integrate three inter-related areas of thought which together creates an interesting lens to look as the implementation of Youthbuild Israel.1. Social entrepreneurship and social enterprise as a viable mechanism for creating innovative social solutions 2.scaling social innovations as a way to influence over macro level government policy. 3. Government and third sector partnerships as a product of a comprehensive social policy.
Theoretical literature on social enterprise has been increasing dramatically in recent decade. ( Borzaga and Defouney, 2001, Nyssens, 2006, Nicolls, 2006) )We find it useful to integrate in our analysis the social enterprise literature, particularly the European one, as it analyses the growing phenomenon in Europe which is in large part centered on issues of employment and work integration of the disadvantaged and promotion of more socially inclusive and labor intensive economic development which is also at the core of Youthbuild( Evers and Shulze-Boing 1998, Borzaga and Defourney, 2001) However, when reviewing the literature, one can find different perspectives, as those that focus on the financial and business aspects of the enterprise or those that tend to focus on social value and mission, citizen involvement and participation. In this paper we adopt the perspective presented by Nyssens, which defines social enterprise as " organizations with an explicit aim to benefit the community, initiated by a group of citizens and in which the material interest of capital investors is subject to limits". (Nyssens2006). This approach emphasizes the social rather than the economic dimension of the social enterprise. The enterprise financial viability is achieved by securing a variety of resources, public and voluntary, rather than achieving economic sustainability through trading. (Nyssens, 2006 p.12) Social enterprises thus mix different logics and as such are located at the crossroads of markets, public policies and civil society, which is also an outcome of the blurring of social and economic roles that businesses, government agencies and nonprofits are playing ( wolk,2007 p.13).Thus, social enterprises do not present a conceptual break with organizations of the third sector but rather a new dynamic within it.( Nyssens, 2006).
The formation of new social policy is often seen in the literature as contingent on successful scaling of social innovations born with social enterprises. Scale drivers or "scalers" are postulated such as alliance building, resources, or lobbying. Situational contingences in which particular scaler will be more effective than another are also detailed ( Bloom and Chatteji, 2008, Dees, 2004).A common theme in the literature is that deficient areas such as unemployment or environmental pollution, will not be solved by market oriented social ventures and that the role of government is crucial in effective scaling of the innovation and creating a supporting public policy( Bronstein, 2004, Bloom and Chatteji, 2008).Youthild USA is often mentioned in the literature as an example of successful scaling resulting in relevant government policy and federal funding.(The Bridgespan group, 2005,Stoneham, 2009). Closely related to the issue of scaling and public policy is the nature of collaboration and partnerships which are created between nonprofit and government organizations. In essence, the rational for scaled social innovations which impact government policy is not very different from the rational for non-profit government partnerships. In both cases we are pointing out to market failure, government failure, voluntary failure and political failures( ( Brinerhoff and Brinkerhoff 2002,Weisbord 1975,Salamon, 1987) The emergence of public policy as a result of scaled innovations often requires some form of partnership between the social enterprise and the nonprofit organizations and government organs. This is line with the growing prominence of nonprofit sector in the public life and the richness of interactions between the public and the private spheres. Thus, the third sector arena often provides the institutional arrangements required for the partnership or collaboration to actually work. However, the nature of this partnership and the extent to which it lasts depend on a variety of economic, political and social- cultural factors. It seems that scaling social innovations and emergent partnerships is also dependent on whether government- nonprofit relations share values and beliefs pertaining to organization identity, social capital and civic engagement and participation( Brinkerhoff and Brinherhoff, 2002, Brinkerhoff 2002).
In recent decade, considerable theoretical attention have been given to the area of government- nonprofit partnerships specifically and more broadly to cross sector collaboration between business, government, nonprofits, philanthropies , communities and the public as a whole ( Bryson, Crosby and Stone ,2006Young, 2000, Young 2006, Ferguson,2008 ).These collaborations are at the core of the new models of cross sector governance such as Third party Government( Bryson, Crosby and stone 2006) New public Management (Anheier, 2003),or new Governance Model ( Gazely and Broudney, 2007).
The concept of partnership itself, is value laden and often vague, and has been treated in the literature both from normative and instrumental perspectives. Brinkerhoff(2002) developed two definitional dimensions of mutuality and organizational identity emphasizing both the concepts of mutual dependence, organizational commitment to mission, core values and constituencies which fits the growing awareness among non profits and governments alike that social capital creation and civic engagement are also instrumental as a means to social political objectives as well as economic efficiency (Brinkerhoff, and Brinkerhoff, 2002, p. 10)
However, government and nonprofit partnerships are not without perils which are rooted in the strengths and weaknesses of both sectors. Thus Nonprofit theories have emphasized strength such as trustworthiness and efficiency ( Hansmann 1987)along with vulnerabilities such as institutionalization or goal deflection( Kramer, 1981).Government on the other hand are perceived as more bureaucratic and less flexible (Douglas, 1987). Thus partnerships also present risks of various kinds such as, possible loss of institutional autonomy, cooptation of actors, financial instability and expenditures of considerable institutional time and resources in supporting collaborative efforts. Those that advocate partnership and collaboration present a long list of benefits such as sharing problems more effectively, potential for cost saving, higher quality and access to new skills and markets and public accountability( Gazely and Brodney, Ferris, 2003, Gray 2003). Thus the successful design of cross sector collaborations is embedded in a complex set of variables. One such attempt of mapping a framework for understanding this complexity is proposed by Bryson et al.( Bryson, Crosby and Stone, 2006) The authors emphasize the difficulties in successful collaboration stressing the significant role of leadership which has to align a complex set of variables from those pertaining, to the nature of the environment, processes of building legitimacy or trust to governance structure , outcomes and
accountabilities. Thus it is agreed in the literature that there are several conditions which can encourage or restrict the development of cross sector partnerships. Among encouraging conditions we find definition of a clear problem, mutual understanding that one sector is not able to deal with the problem on its own, identifying the added value of the joint effort, the presence of key figures in the decision making process and the building of trust . Contingencies and constraints include structural barriers, the nature of the task and consideration of costs and benefits (Bryson et al, 2006, Almog- Bar and Zchlinski, 2010) Again, the competition between different institutional logics, and in particular logics which are derived from the bureaucratic state as oppose those that are rooted in civil society is a key challenge to overcome by shared professional norms and missions. (Bryson et al p. 50)
We find in the literature several conceptual frameworks to differentiate between cross sectoral relations and in particular government- nonprofit relations (Costone, 1998,Najam 2000,Gidron et al1992, Young, 2000, young 2006).All of these frameworks present, although from different perspectives such as economic, sociological or organizational theory , a spectrum of relationships which depicts the extent to which the sectors integrate their logics in a way which will serve the public good. Applying economic theory Young (2006) offers 3 alternative notions of the nonprofit sector relationships with the government as supplementary, complementary and adversarial.
In the supplementary model nonprofits are fulfilling the demand for public goods unmet by the government. This view in some respects "illuminates the notion that private action is often actually intended to prod government into action."(Young, 2000. P. 152).In the complementary model nonprofit is seen as either partners or in contractual relationships with the government, delivering public goods largely financed by the government. This relationship is more likely to be observed in areas such as social services.
In the adversary model nonprofits call upon governments to make changes in public policy and to maintain accountability to the public .In this model nonprofits can advocate on different levels, such as for more efficient government or new programs and policies that will increase government activity. (Young, 200 p. 151).Based on Weisbord (1977) Young argues that these type of relationships can explain how new services and policies come into being through advocacy in a process of demonstration projects and initial voluntary contributions." Eventually, the concept may be proven and receive the support of a majority, at which point government may undertake full – scale provision."This brings us back to our earlier discussion of the rational for scaling of social enterprises which results in overall government policies and financial support. In other work, Coston (1998) describes relationship types on one end such as repression or rivalry, and on the other end cooperation, complementary and collaboration. Similarly, Najam (2002) in his four C's model describes 4 types: cooperation, confrontation, complementarily and cooperation. Gidron et al (1992) offer another model of nonprofit- government which distinguishes relationships types according to the level of dominancy of each of sector in the relationships. Similarly Brinkerhoff discussion of partnership views this concept on a relative scale distinguishing between other types of relationships such as contracting, extension, cooptation and gradual absorption. A recent typology offered by Person et al. (2009) of relationships between government and Philanthropic foundations, also offers a continuum in which only three situations-communication, coordination and collaboration represent a true partnership. However, as mentioned earlier the growing blurring of borders between the various sectors also creates situations where simultaneous processes that reflect different and often opposing dimensions of the spectrum live side by side. Thus," Nonprofits may simultaneously finance and deliver services where government does not, deliver services that are financed or otherwise assisted by the government, advocate for changes in government policies and practices and be affected by governmental pressure and oversight (Young, 2000 p. 151)
A qualitative case study approach is implemented conducting non structured interviews and analysis of documentation. As the writers themselves take active part as Youthbuild Israel board members their input is an integral part of this qualitative analysis
The Rational for implementation of Youth build Israel
Youthbuild Israel mission is to develop a national plan which answers the needs of youth at risk (18+) which will be part of an over-all government policy aiming to fulfill the government obligation to its young adults. This social enterprise is focused on bringing a social change and a change in public policy toward youth which will result in specific services in vocational training and self- empowerment needed by thousands of young people. Youthbuild Israel goal is to create a social enterprise- government partnership in which the government will act as the leading partner. This is derived from the entrepreneur's belief in the legal and moral obligation of the state to fulfill its commitment to its young population. Thus, success has been defined as the adoption of the social enterprise by the government system and the extent to which the government will see the enterprise as its own. From early stages of the initiative the entrepreneur has attempted to bring about a "Deciders Proposal" in which the government takes upon itself to provide legitimacy and resources by targeting a dedicated ministry whose responsibility is to build coalitions on both national and local levels. Unlike the development process of YouthbuildUSA, YouthBuild Israel entrepreneurs were initially determined, to achieve in a short period a stage similar to that which was achieved by Youthbuilld USA but in process of almost 10 years. Youthbuild USA has begun as a local project in East Harlem in 1978. Only after several years of knowledge building and demonstration sites it was able to secure federal authorization and appropriation initially from the Department of Housing and later from the Department of Labor under the federal YouthBuild program, which makes grants directly to local sponsors of YouthBuild programs on a competitive basis.
From early on Youthbuild USA leadership strived to scale the social innovation and replicate the enterprise in belief that true scaling will be impossible without government funding. Thus, Youthbuild USA took upon itself to build sufficient political awareness and support (youth build official site) among stake holders on both federal and local governments. Scaling of the social enterprise is also a central component of Youthbuild Israel and is behind the he urgency in which its entrepreneures are attempting to bring a "Deciders proposal".
Youthbuild Israel entrepreneurial strategy
Youth build Israel was incorporated in 2009 as an NGO after almost two years in which initial working relationships have produced government stake holder's forum and a single demonstration site. The driving force behind it was a single entrepreneur, whose vision was to adopt the US program and was looking for working models in Israel as well as to bring a change in the current policy in areas relating to in risk young adults.
The strategy devised by the social entrepreneur was to build a partnership with the government, where the NGO plays only a secondary role and conceived as a support vehicle for the replication of the US model. The rational for its establishment was initially focused on having an organ for attracting non- governmental funds. From early on most efforts were towards the formation of a government and semi- government forum. . (I.e. Ministry of industry and commerce, Ministry of Welfare, the National Social Insurance Institute, the Ministry of Housing). The forum initial successful efforts eventually secured additional government funds for several demonstration sites. The NGO financial support to th e enterprise was almost minimal. In fact more than two thirds of the project budget in its initial stages was funded by the government. Moreover, there was almost minimal involvement of the NGO board leadership in the actual implementation process. Only the entrepreneur took part in the forum. Youth build Israel thus positioned itself not as an alternative to the government but as a facilitator of the initiative implementation
Applying Young's theoretical model (2006), one can conclude that the initial strategy attempted to integrate simultaneously, supplementary, complementary and adversary models. Thus the strategy called for the creation of supplementary services, which the government does not provide, and at the same time create a commitment of the government system for their funding as well as partial provision. In this way, turning these relationships into complimentary ones where the government funds and the third sector share the responsibility in actually executing the program. However, unlike other complimentary relations, the social entrepreneurship initiative was born in the third sector and not in the public system. Moreover, as creating social initiatives and advocating for new social policies was seen as a natural process, the strategy also included an adversary component advocating for a "Government Deciders Decision". The main thrust was a demand that the government will fulfill its commitment, in the words of the entrepreneur: " You come from the outside, The Third sector, you are there for advocacy on behalf of your target population that the ministries should be committed to , and demand to actualize this commitment, it is not simple"
The strategy chosen targeted a- priory the government as a key player, and did not choose to fund or take responsibility for a demonstration site without government support in funding and actual services. It actually chose to "skip" the stage where the nonprofit sector funds and operates the initiative until the government takes upon itself financial and partial operating responsibility. As in Youthbuild USA the strategy called for a process which went against the social and political climate which emphasizes market orientation and minimization of government involvement in the provision of social services.
The dynamics of partnership building
As success was defined by the entrepreneur in governmental adoption of the initiative, the enterprise accepted the state bureaucratic model and worked with it to expand the number of demonstration sites. The first stage was approach by the entrepreneur to the government system to establish an initial informal agreement for the joint partnership which included the government assignment of its own representative and later the establishment of inter- governmental ministries forum. Following the vision there was no attempt on behalf of the enterprise to create a new shared governance model. There was no emphasis on securing the autonomy of the entrepreneur or the NGO on whose behalf the entrepreneur was working and no wish to ownership of success. The entrepreneur "danced" a very delicate dance between all government agencies. She perceived herself as facilitator within the public system, mediating between various governmental agencies and building national and local level coalitions. In fact by doing so the entrepreneur actually became an integral part of the forum in a way which softened the NGO identity to a point where one could argue that it could be gradually absorbed by the public system. (Brinkerhod 2002)The emphasis was on executing the specific features of the social enterprise itself, and less attention was given to maintaining the third sector organizational identity as such. The success of this partnership building process and effectiveness in attaining its goals was also backed by high degree of mutuality (Brinkerhoff, 2002) which is based on strong mutual commitment to the partnership goals and objectives. Thus we found among all partners shared values and commitment to the enterprise mission. However, the actual building process of the partnership and its maintenance was challenging. In practice, not all partners often cooperated, not always enabling and facilitating the process within their ministries, often afraid of competition with similar programs, different expectations among partners as to the structure or timeline of the project and even some suspicion of the international umbrella organization.
Moreover, government representative's commitment and cooperation does not ensure that the bureaucratic system itself will facilitate the process of implementation. Procedures and regulations were often found as serious obstacles often hampering the process. In the words of the entrepreneur
"Government procedures state that students are entitled for reimbursement of travel expenses. However, this means that the participants will pay out of their pockets and it will take month before they will get their money back. This is a procedure that our students cannot live with. It took us 3 month to convince those in charge to provide organized transportation, meanwhile some of the candidates have left,"
Hence in spite of the fact that the government partners were trying to adopt the program model and even to scale it, it could not provide the optimal conditions for the project implementation. This is also an outcome of the incompatibility between several project components and the bureaucratic norms and procedures which are specific to each of the ministries that partner in the project. Hence the enterprise was constantly searching for one government address, which intensified the advocacy efforts on behalf of a "Deciders proposal."
Discussion of Success factors
Analyzing the process of partnership building in the first few years we can point out to several factors which contributed to the initial success of the initiative which exhibits itself in the establishment of several demonstration sites and initial understanding that a "Deciders proposal" will indeed be taken by the government.
1. Determining a leading partner- The enterprise, accepts the notion that the government is the key player, as it has a basic obligation to its young citizens. Thus, the NGO and the social enterprise which exists at its core work within the bureaucratic system. This naturally reduced tensions, helped to bridge different expectations and assisted in building shared common mission among all partners. In this way the enterprise accepted the seniority as well as the constraints of the public system and was looking for innovative ways to deal with it.
2.The entrepreneur professional and social world view-The entrepreneur world view corresponds with that which appears in the literature such as distinctive approach towards innovation, opportunity creation, urging systematic social change in order to ensure sustainability of innovative intervention and searching for better ways to deliver social values and social impact ( Nicolas, 2006, Dees ,Battle and Andersen 2002)) Specifically, in this case, the entrepreneur sees social responsibility as resting within civil society and the public system. Hence the enterprise is not seen as a challenging alternative to the public system but rather a complimentary entity which acts as a social change agent and a as a catalyst for the fulfillment of government obligations.
3.Entrepreneur traits– There are several personal and professional traits of the entrepreneur which contributed dramatically to success of the process – professional ones, such creative network building for project success ( Nicolas, 2006) This is based on existing personal network of agents and individuals in broad contexts ,primarily, the public system who trust the entrepreneur and admires her professionalism, previous work experience as a community social worker whose expertise is in forming partnerships, positive previous experience of working relations with the public system and knowledge how to work within it ( Bryson, Crosby and Stone 2006) .Personal characteristics include primarily, lack of personal and ego interests, personal commitment to the vision and tremendous passion , persistence and patience which is essential in building coalitions led by individuals from different agencies with different expectations , varied personal and professional interests ,initial suspicions and inherent desire to secure their personal and professional place in the enterprise.
3. Nonprofit organizational role perception -The NGO platform was established in order to facilitate bureaucratic processes and as an agent for attracting business, foundation and private support. Its initial goal was to close the gaps that the public system could not provide. It was perceived as a support organ and not as an independent civil society organization. In its initial stages it is largely associated with the entrepreneur. Board members are following the entrepreneur and do not propose to lead the organization in ways which do not complement the entrepreneur view. This naturally led to minimal levels of conflict or disagreements between the government forum and the NGO itself, and eased the way for the project implementation although on a limited scale.
5. Replication of successful international enterprise
The proven success of Youthbuild USA and Youthbuild International have certainly contributed to the legitimacy of the enterprise and the willingness of prospective partners including government ones to partner with the project .
- · A social enterprise in transition- Looking at the future of Youthbuild Israel
Our analysis of Youthbuild Israel early stages highlights several key issues: Firstly, successful implementation is to a large degree the success of the founding entrepreneur leadership. This is line with the literature which points to the significant place of leadership in building social enterprises and cross sector collaborations (Bryson, Crosby and Stone 2006 ) Secondly, There is a gradual realization among Youth build Israel leaders that a strong and independent organization is an essential part of the partnership. The NGO initial rational for establishment, was gradually seen as too narrow. It seems that the entrepreneurs themselves have understood that the 21st century complex puzzle of relationships between government, private and third sector requires a strong civil society organization that partners both with government and the private sector even in those cases where the government is the senior partner. This is line with other work which has illuminated the significance of maintaining each sector identity in the partnership, thus tapping the advantages of each of the organizations (Brinkerhoff, 2002).
The realization of the need in an independently strong NGO brings the organization close to the Youth build USA model in which, there is a clear distinction between hundred of youth build programs and the national NGO which complements the government programs and acts as a professional training support system, a knowledge base, an advocacy agent and a "guardian" of the youth build brand. We found a growing realization that the NGO itself needs a certain degree of institutionalization as well as a certain distinction that did not exist before, between Youthbuild Israel brand and the local and national coalitions that carry out the social enterprise. Hence initial steps were taken in the following areas: (A) Layleadership and executive staff development- whereby in the early stages the board of the NGO was minimally active we detect a growing need in developing distinctive and committed leadership body that will lead the organization by setting its strategic goals, attract private funds and additional supporters. Moreover, as initial stages were characterized by volunteer leadership, we see a gradual realization that the NGO should also strengthen its professional staff.
B. Building partnerships with the business sector- Initial stages of the enterprise brought the realization that "putting all the eggs in the government basket" will not be effective and that Youthbuild Israel as Youthbuild USA has to develop other sources of support primarily from the business sector. Thus, gradual attempts were made toward the business sector as potential resources for leadership, financial support and legitimacy.
Our analysis has shown that the current dynamics between the private, public and the civil arena mold social initiatives in a way which is compatible with different identities structures, governance and desired outcomes Thus, in spite of the fact that Youthbuild Israel initial success was an outcome of the successful working relations that were formed with the government while accepting its seniority, in practice, it also came to the realization that full scaling of the social enterprise will not be successful without a new form of shared governance between the government and a strong civil society organization with a developed network of relations with business, philanthropy and other third s sector organizations. Thus, looking ahead Youtbuid Israel will have to adjust to the competing logics among its partners, not without retaining its own logic and organizational identity to the benefit of maintaining a large scale social enterprise and a real change in government policy towards youth at risk. In a way, YouthBuild Israel has learned from its practical experience that government can no longer be a single actor in the social arena. It may take upon itself to implement a large scale social policy but it needs other partners for resources and legitimacy.
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