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The Global Economic Downturn, Philanthropy and Nonprofits:

Reflections on what it means, and what to do

By

Helmut K Anheier

Centre for Social Investment, University of Heidelberg

2009

Introduction

That the global financial crisis is already impacting philanthropy and nonprofits is clear to everyone who follows daily reports of cancellations of charity drives, closings of programs, and even bankruptcies, or learns about economic troubles at one philanthropic institutions or another.  It is also clear that the crisis’ impact is going to spread and deepen for some time to come. Less clear is for how long the crisis and its fallout will last; and especially unclear is what the crisis ultimately means for nonprofit and philanthropic policy-makers, leaders and managers. How could they respond to growing uncertainty in the sector itself as well as in the various fields in which nonprofits and philanthropies operate?

At one level, little can be done.  The current economic downturn, triggered by the financial crisis, is closely related to the inability of governments and international institutions to address what experts call the global governance problem —  the growing mismatch between the forces of globalization (largely financial), and the capacity of governments to steer and regulate. Illustrative of this problem is not only the financial crisis itself but so are the often hapless responses in political capitals around the world: no national government, including the US, China or Japan, and no international institution, including the World Bank, the IMF or the European Union, are able to deal with the scale and scope of current weaknesses in the global economy. So unless the systemic failures of governance are fixed through policies and institutions more adequate to the challenges of a globalized economy and global financial markets, much remains political impression management at worst and ‘doctoring with the syndrome’ at best.

At another level much more can be done, not in the sense of the global or macro issues mentioned above, but in terms of pro-active policy initiatives and management responses for, and on behalf of, philanthropy and nonprofits.  This level, and what it means for operating nonprofits and for grant-making foundations, is the primary focus of these Reflections.

But before delving into concrete issues, options, and courses of action, two preliminaries are worth stating.  First, why the current crisis occurred (because it originated in financial markets beyond the control of policymakers and leaders in the field) is of less interest than how to deal with its fallout in the short term, and how to develop strategies for the medium to long term.  This is the case for operating nonprofits generally, and entails a very special call for foundations, in particular those holding large portfolios in stocks and bonds. Second, it is equally important to separate what would have happened anyway and what has happened additionally, sooner, or more forcefully because of the crisis.

What would have happened anyway…

Of course, while we can never know alternative futures, we can nonetheless reasonably extrapolate from developments that have taken place over the last 10 or so years, and identify a number of patterns and trends. Among these are:  

• Greater demand for nonprofit goods and services combined with less, and more competitive, public funding
• Competition models developed elsewhere (health, social services, education) being applied to many other fields where nonprofits operate, with an emphasis on cost control rather than outcome quality
• Search for new business models for nonprofits in many fields, from health to arts and culture and from higher education to social services, to compensate for lower levels of government support
• Professionalization of finance, management and service delivery, often combined with a certain tameness even timidity in terms of advocacy
• Policy emphasis on greater civic engagement and fiscal transparency for legitimacy reasons
• Fluctuating private philanthropic support, as this source of funds is, and for good reasons, often fickle, and overly optimistic expectations about what foundations can and should do (e.g., substitute for reduced government spending).

What these developments would have meant is more than a rhetorical question, and for the simple reasons that these very trends are continuing, albeit in the context of a profound crisis. For one, substitutability processes between nonprofits and businesses would have become more frequent in regulated quasi markets (health, social services), as would have conversions of public to private institution particularly (education, culture). In other words, many organizations would have changed form, many nonprofits would have become more like businesses, many public institutions more private, and public-private partnerships more frequent and more complex.

In turn, this would have brought about fierce and long drawn-out debates: about the right revenue structure for nonprofits and the optimal mix of earned income, public funds and private donations, including foundation grants; about asset management and acquisition policies; about barriers of exit and (re)entry for donors and recipients alike; about stakeholder involvement (consumer, client, member, funder, staff, the general public etc); and, professional control over mission and operations, and the role of the board; about social entrepreneurship and nonprofit management and leadership styles; and, very prominently, about the role of foundations.

What is new now…  

What the economic crisis adds now is a potent mix of new challenges to what was an already complex set of issues:

• At the societal level, there is a loss of trust in the ‘system‘, a general sense of insecurity among populations, and opportunism both among some political actors, on the left and on the right;
• European governments, many fiscally sounder than the United States and with more room to maneuver, rediscover Keynesianism and interpret it to their own political advantage that typically result in some massive public spending program or another (of which only a rather small portion is likely to reach nonprofits). Increases in public investments are combined with reductions in current budgets, and create shortfalls, of which some, often indirectly, are passed on to nonprofits.
• Businesses engage in short-termism in trying to calm shareholders; they are cutting corporate social responsibility and giving programmes, including funding aimed at nonprofits; they are looking for government handouts and subsidies in return for some guarantees, typically employment and performance related.
• Philanthropic foundations have seen drops in asset values of scales not seen in decades, and continue to expect more losses, especially in the book value of stocks; they anticipate reductions in grant payouts, amidst concerns about the sustainability of current programmes and commitments, and put growing emphasis on asset protection.
• Many households have been and are facing both greater financial uncertainty and declining net worth, which could lead to drops in donations, even a break up of donor pools, and a decline in volunteering.

For nonprofits, the current crisis means fewer resources in terms of current expenditures for ongoing and planned programs; however, depending on public spending priorities, it may also yield some additional funding for investment programmes; but first and foremost, it means greater financial instability, more uncertainty for management and staff, possibilities of unfulfilled contracts and obligations, and unmet demand.  For foundations and philanthropies generally, the crisis means balancing increased demand for support on the one hand with reduced assets and current as well as projected grant disbursements on the other.  

What to do?

The reaction of boards and management could easily fall victim to common extremes in how organizations under threat react to unknown levels of uncertainty: on the one hand, to a ‘do nothing approach,’ either because of denial or fatalism; and on the other, to different forms of over-reaction and blind activism.  Both extremes lead to high failure rates. There are, however, other options that reveal themselves only when appreciating what sets nonprofits and philanthropic institutions apart from other forms. Three characteristics are central:

• The presence of deeply embedded values (religious, political, humanitarian, moral, artistic) is a distinct feature of many nonprofits and foundations.  How far they influence organizational behavior varies, but the significant presence of values implies at the very least a more complex means-goal relationship between operational and ultimate objectives. These values can be enabling or restraining; protecting or stifling; leading or misleading; invigorating or distracting.
• The presence of multiple stakeholders (trustees, staff, volunteers, users / clients, state agencies, grantees etc) makes nonprofits and foundations inherently political organizations, and turns managing them into a complex task of creating and coordinating coalitions around a common purpose.
• The presence of multiple revenue sources (market, quasi-markets, membership, various forms of transfers from government, various forms of donations and sponsorship, contracts, etc) sets nonprofits apart from both business firms and government agencies; while foundations do not have multiple revenue streams, as primarily endowment-supported organizations, they require nonetheless significant public legitimacy and political/cultural capital to justify the tax privileges granted and the far-reaching autonomy allotted.

Thus, foundations and nonprofits are value-based, multi-stakeholder and multi-support organizations.  By implication, if they are not rooted in values, if they have a dominant or single stakeholder, and if they are single-support organizations, the more similar they become to either market forms or public agencies. 

What is more, price mechanisms, the best indicators of performance, are frequently absent in areas and fields where nonprofits and foundations are operating.  This means that nonprofit and philanthropic leaders manage value-based organizations with multiple support streams under performance uncertainty — a challenging task in the best of times. But does this mean in the current crisis? What can be done? Quite a lot, it turns out. Here are short term options for nonprofits:

• Begin with values and mission, and revisit the value base of the organization. If values are the foundation of the organization’s mission, reinvigorate their meaning and make them relevant by basing all major decisions on values rather than economic rationality alone; if values are less central, make economic sustainability a priority. 
• Consolidate resources around programs that are mission critical and resource attractive; conversely, prune activities that are less mission-critical and less resource attractive. Align stakeholders accordingly and build appropriate coalitions, and invest and divest accordingly.
• Cooperate only around mission central programmes, and consider merger and franchise models.
• Cross subsidize only if less mission critical programmes have a proven and significant capacity to generate revenue. Rededicate assets and reserves accordingly, and divest other cross subsidizing programmes.
• Spread risk in revenue and support streams by avoiding dependencies on government, donors etc., and by diversifying earned income options (sliding fees, charging above marginal costs, using assets, cross subsidizing etc).
• Run an active information campaign about what your plans are and how you seek to achieve them.  Transparency and public awareness across stakeholders is important for any short term reorganizations to find legitimacy and success. 

These options all start with the same hard question: What is more important, our values or the organization created for them? For many, the result will be a smaller and leaner nonprofit, one shaped by short term reactions to a crisis to sustain operations. It may not yet be a nonprofit forged as a strategic response to a changed environment, and with long term sustainability in mind. Therefore, nonprofits can engage in strategic planning and visioning by asking tough questions about their very existence, functioning and impact.  Options include:

• Specialization versus generalization of programmes, target groups, fields etc
• Considering achieving a scale of operations adequate to both mission and resources
• Building partnerships and networks along economies of scope
• Exploring multisite and franchise models for scale economies
• Engaging members and users more by activating value commitments to reduce costs and create buy-in
• Reinvigorate lobbying and advocacy; be heard and voice concerns, and demand government funding when appropriate.

Many other options are feasible as well.  The main point is that nonprofits have to be pro-active and inventive in responding in the medium term to the fallout of the current crises.  Yet what can be done to prepare for future one?  Such measures include:

• Exploring institutional innovations for the nonprofit field as a whole: e.g., dedicated financial institutions for nonprofits including insurance funds, forms of capital markets for social investment etc, including smart public private partnerships with profit-making functions and reserve options.
• Establishing a Public Trust Fund for nonprofits to smooth eligible organizations over fiscal uncertainties, budget shortfalls etc.  Of course, there are different ways of how such a trust fund could be built (tax-based, community foundation model) and run.
• Developing membership bases that can be mobilized politically for advocacy purposes and economically for resource generation.
• Seeking nonprofit liaison or focal points in key government areas for philanthropy and nonprofits, and create ‘philanthropic listening posts’ as early warning system nationally and internationally.
• Investing in more and more effective nonprofit advocacy, and strengthened the watch-dog function of nonprofits.

What could foundations do in the medium to long term?  To some extent, their options and actions are addressed somewhat implicitly in the above recommendations.  Like nonprofits, they need to ask hard questions that go beyond asset protection and servicing current obligations.  Unlike nonprofits, which have to deal with many pressing questions around their very own sustainability, foundations face a different set of challenges. These are less obvious and linked to their special role in today’s society. 

Foundations have significant comparative advantages over other institutions.  The signature characteristic of the modern foundation, its independence both from market considerations and election politics, means that it is among the most autonomous institutions of modern societies. They can take the long term view, and are less beholden to short-term economic and political expectations. As a result, foundations might well be better positioned than other institutions to contribute to society in four distinct ways: they can be

§  Social Entrepreneurs, identifying and responding to needs or problems that for whatever reason are beyond the reach or interest of market firms, government agencies, and existing nonprofits. Foundations can strategically intervene and provide support that would otherwise not be available at the right time, in the amount needed, and with conditions tailored to the need. 

§  Institution Builders, identifying coalitions of individuals and organizations capable of implementing a program or course of action across sectors, regions, and borders; mediating conflicts, convening, and in general assuming the role of ‘honest broker’ among parties; offering financial resources as well as knowledge and insights to help new entities become self-sustaining.

§  Risk-Absorbers, investing where there is great uncertainty that an investment will yield a return and that actions will bring about intended benefits; foundations can be especially well-placed to invest in untried initiatives (medical, educational, social . . .), in basic research, scholarship, writing, and artistic production, and in politically sensitive and unpopular causes. 

§  Value-Conservers, supporting practices, virtues and cultural patterns that cannot easily be supported via markets or win funding from governments that must answer to bare majorities.

Financial means are only one of the resources employed by foundations in playing out these advantages.  Knowledge, legitimacy and autonomy are others.  These qualities and resources of foundations are well suited to help nonprofits and the constituencies and interests they serve to deal with are central element of the current crisis and the global governance problem that is at the core of it.  That element is risk, and the contribution foundations can make is best summarized by what could be called the pro-active precautionary principle.  To appreciate the import of both, it is useful to take a closer look and to keep in mind that the current crisis is linked to globalization.

Climate change, the 2008 financial meltdown, the 2009 economic downturn, terrorist threats or fluctuating food or oil prices have in common that they involve unknown risks and latent risk communities that can neither easily be calculated nor managed.  However, the calculation and management of risk was part of the ‘master narrative’ of modernity: the state was designed to protect and insure citizens against risk - the dangers posed by nature, personal risks of ill health and unemployment, as well as threats posed by foreign enemies. That concept of risk assumed its most developed expression in what has become known as the precautionary principle of policy-making. It states that threats of serious or irreversible damage and lack of full understanding are no reason for abandoning or postponing preventive measures.  The principle originated in environmental planning and has expanded to other fields such as the chemical industry, climate change, and even the threat of terrorism.

However, whereas the principle sought to establish an explicit link between cause and effect, the risks of today’s globalized world are of a qualitative different nature. Risks cross borders, often in unpredictable ways; they may be far into the future, and with uncertain timelines; and they are increasingly the cumulative outcome of the actions of many individuals and organisations. Sometimes, these risk communities are latent and defined by the possibility of some highly unlikely event, such as the citizens of Iceland, the bank managers of Lehman Brothers, home owners in California’s Inland Empire, laborers in Shanghai, and house servants in Dubai.  Risk communities, framed largely in national and regional policy contexts, are becoming increasingly linked, in ways that are frequently unknown and ill-understood. In other words, risk communities and the global governance problem are closely linked.  Risks have become unbound.

What institution can help rebound risks in a globalized world? Foundations, endowed with their four comparative advantages, can step forward and help face this challenge.  They can make sure that risks are better understood and attributable in terms of benefits and costs, even across boundaries, time and social class; that the regulatory framework for policy action have capacity regulating in the first place, and with effective enforcement mechanisms ready for action. Foundations can create arenas where risks are enunciated, exaggerated, discounted, debunked, assessed and debated. They can build arenas that encompass information, expert knowledge and reasoned deduction as well as fears and prejudice, but above they can help provide forums for expressing and communicating differential knowledge about risk, be it in the field of finance, health care, the environment, communication or housing. 

Thanks to the financial crisis of 2008, broad ranges of fields and institutions suffer from a lack of trust and increased uncertainty. They are riddled with externalities and ripe with opportunism; yet at the same time, the fields and institutions present many opportunities for creating public benefit.  Here, in this quintessential ‘problematique’ of a globalized world, foundations could find a strong calling and purpose.  Foundations could help indentify latent communities of risk (and benefit!), and encourage adequate monitoring and enforcement mechanisms in fields where national and international governments, due to the global governance problem, cannot implement the precautionary principle.  In other words, the financial crisis has opened up a new raison d’être, a new role for foundations: identifying, managing risk and building appropriate institutions and coalitions for and among risk communities – in other worlds help rebuild institutional trust, not in an narrow economic sense but much broader in terms of a social and cultural confidence that globalization world for and not against people.

Conclusion

Sociologists and economists have long argued that crises are the necessary correctives of capitalism, part of an ongoing process of the ‘creative destruction’ that has shaped much of the modern world, with globalization as the latest, current development.  If this is the case, the crisis offers perhaps as much in terms of opportunities as it contains challenges.  It will lead to the demise of some nonprofits and the rise of others, some will flourish and others become less relevant, moribund, and defunct and may even disappear altogether. Some foundations will rise to become icons of 21^st century philanthropy; others will struggle to meet increased demand for grant support and become defensive and reluctant donor institutions. Leadership and elites in nonprofits and philanthropy will be replaced, at least partially. New funding patterns, business models and ways of organizing are likely to emerge. 

Responding to a crisis then means both: reducing uncertainties and capitalizing on opportunities. Yet above all, mastering the crisis requires a pro-active stance on behalf of philanthropic and nonprofit leadership – not by asking for old wine to be served in new bottles (as the American car giants or many have been doing), but by embracing what philanthropy stands for:  making space for creativity and innovation and preserving past achievements for the benefit of all.      

The Nobel Prize in economics winner, Ellinor Ostrom, has a message in her research that is very relevant to the NGOforum09.

She says that her findings support that it is economically efficient for societies to arrange production in nor “private or state ownership”, rather that different forms of organisation that focus on local development, value based institutions. This is one way to describe cooperative societies, especially those that are not too big and still local.

See an extended commentary on the Ostrom research in The Economist

These issues will be discussed in workshop nr. 11 and 12 at the conference. Nr. 11 will discuss how social enterprising can be made accessible to more actors than today. Nr. will discuss how the financing can be arranged, that will allow more social enterprising.

The new Code of Good Practice for Civil Participation in the Political Decision-Making Process has just been adopted by the INGO-Conference within the Council of Europe. On 21 October, the Code of Good Practice will be on the agenda of the Committee of Ministers with a view to getting their endorsement for the Code.

The Code will be one topic in workshop nr. 4. Both representatives for The INGO-Conference and some of the actual editors of the Code will participate.

 Well-being – a new compass

By Saamah Abdallah, nef (the new economics foundation)

Lost at sea

Until a year ago, Europe and the Western World had enjoyed a steady period of economic growth and apparent prosperity. The total economy of current EU members, measured in terms of gross domestic product, more than doubled between 1994 and 2007. And yet, we have done little to address our social ills, including child poverty, mental health problems and inequality. No surprise then, that the 2006 European Social Survey found that 61 per cent of European citizens believed that life was getting worse for most people in their country. As for our environmental ills, things are only getting worse, with the suggestion that we have as little as seven more years before runaway climate change becomes irreversible. 

All these problems had already gathered before the economic crisis that rocked the world just over a year ago, in no small part attributable to an economic system that has hit the limits of what it can reap from the planet’s finite natural resources and has turned to unstable assets such as housing to continue with its insistent growth model.

These are troubled times, and talk of economic recovery may be an illusion, given that, in many countries, unemployment continues to rise. Furthermore, our response to this debt-fuelled crisis appears to have been to build ever-greater debt, meaning that both the public and third sectors risk serious cuts over the coming years, and we may simply be creating another ‘bubble economy’.

The pursuit of never-ending economic growth has lead us astray, and continues to do so. We clearly need a new compass to help us get our bearings straight. But what might that be?

A new narrative of progress

Around the world, there is a growing realisation that GDP alone cannot define a nation’s success. Two key conferences took place in 2007 which have shaped a new agenda. Firstly, in Istanbul, the OECD hosted a conference on Measuring the Progress of Societies, launching their global programme on the matter. The conference lead to the signing of the Istanbul Declaration by several key inter-governmental bodies, including the United Nations, the European Commission and the World Bank, which calls for a commitment ‘to measuring and fostering the progress of societies in all their dimensions’. Shortly afterwards, the European Commission hosted its own conference in Brussels, entitled Beyond GDP which has recently lead to a communication calling for broader measurement of progress. 

More recently, President Sarkozy of France fully endorsed a report produced by a Commission he set up to review measures of societal progress, which included figures such as Joseph Stiglitz, Amartya Sen and Lord Nicholas Stern. The report called for “new political narratives … to identify where our societies should go” and advocated “a shift of emphasis from a ‘production-oriented’ measurement system to one focused on the well-being of current and future generations.”

Understanding well-being

It is this idea of ‘well-being for current and future generations’ which best captures what we need to be aiming for. It clearly echoes the definition of sustainable development first proposed by the UN in the Brundtland Report in 1987. In the UK at least, well-being is gaining increasing interest in various areas of government policy, including sustainable development, children’s policy, and health. Indeed, in 2007, the UK Government produced a document stating that “the purpose of local government is to take responsibility for the well-being of an area and the people who live there.”

But what exactly is well-being? Far too often it is left ill-defined. In the simplest terms, well-being is an individual’s experience of their life. It is a dynamic process, emerging through the interaction between their circumstances, activities, and psychological resources. Aside from feeling ‘good’, it also incorporates a sense of individual vitality, opportunities to undertake meaningful, engaging activities which confer feelings of competence and autonomy and is also about feelings of relatedness to other people (see figure 1). Psychological research indicates that different cultures and indeed individuals have different ways of achieving well-being, but that there are some universal needs that all people share. Any complete measure of well-being needs to assess whether those needs are being met.

Figure 1. A dynamic model of well-being

National Accounts of Well-Being

nef (the new economics foundation) made a first step towards a full account of subjective well-being at the beginning of 2009, with the National Accounts of Well-Being (www.nationalaccountsofwellbeing.org).  Using data from across Europe, the Accounts measure multiple aspects of well-being, including emotional well-being, vitality, resilience, functioning and social well-being. They reveal that, whilst Scandinavian countries top the list, Europe’s largest nations such as the UK, France and Germany perform poorly, particularly in terms of social well-being.

However, the Accounts are only a starting point. They only a measure people’s reported well-being, and it will be important to assess other things such as health objectively.  More importantly, though, for a measure of well-being to be successful, it needs to represent the views of a broad section of society.  We believe that it is vital to engage with community and voluntary organisations to develop the Accounts, as well as consulting with the public directly as to what counts for their well-being. In October this year we will be running our first workshop to explore the views of ordinary people on what they feel makes a successful society. Ultimately, we call for an international public debate on this topic.

Bringing in the environment

Lastly, high current (and of course equitable) well-being can only be considered a picture of success, if it is also sustainable – i.e. does not come at the expense of the well-being of future generations.  Currently, it is clear that this is a criterion that we are not meeting in the West, given our rampant exploitation of finite resources, destruction of ecosystems and contribution to irreversible climate change.  We need high-profile indicators which monitor environmental impact as well as well-being.  But we also need to bring these two goals together in a way that allows the public and politicians to see whether we are moving towards true sustainable well-being. Some policies may both increase well-being and reduce environmental impact, but in many cases we will need to pit the two requirements against one another. To do this, nef created the Happy Planet Index (HPI, www.happyplanetindex.org) in 2006 which measures the environmental efficiency with which happy, healthy lives are achieved.  The HPI made it clear (see figure 2) that, whilst we may have high well-being in the West, it comes at an unsustainable cost.  The countries that are closest to achieving good lives that do not cost the Earth are, perhaps surprisingly, middle income countries such as Costa Rica.  However, even these countries have shortcomings – the HPI points them in the direction they need to go.

Figure 2. HPI results around the world

Slides from the Brno conference

Through this set of slides there is a possibility to get a general view of the main issues regarding the theme NGO-identity.

Is it possible to reduce the democratic deficit through civil participation?
Marilyn Taylor, Emeritus Professor, University of the West of England

The 1990s hailed a new dawn for democracy, with the first free elections in the post-Soviet countries and in South Africa.  Yet even as the television flashed pictures of the long queues of first time voters in South Africa around the world, voting figures in many of the more established democracies in the West were plummeting, with opinion polls showing alarmingly low levels of trust in government. Indeed, despite the advance of democracy in the twentieth century, its institutions seem increasingly ill-adapted to the global economy and the complexity of today’s world. At a supranational level, globalisation and the advance of neo-liberalism mean that many of the forces that affect our lives are beyond the reach of the state.  Closer to home, as Michael Saward has argued, the formal system of electoral representation and – in my country at least – majoritarian rule was never well-adapted to the representation of minority interests, emergent interests or what he calls ‘intense’ interests. 

The response - from global institutions to governments in many parts of the world - has been the promotion of new forms of governance, of new forms of devolution along with a growing interest in civil society and civil participation, whether as a counterbalance to the state, a support to it, or a potential agent for its transformation.  At a local and national level, these developments have the potential to bring new knowledge, and resources into the process of governing as well as increasing its legitimacy.  At the supranational level, they can be seen, as Annette Zimmer has argued elsewhere, as a proxy for the transparency and democracy that international institutions typically lack. 

For me, these developments raise two important questions.  The first is whether civil society and citizens should take up the challenge this implies.  The second is whether it can. 

Let me take the ‘should’ question first.  There are many who argue that the apparent dispersal of power in contemporary society masks a reality of increasing centralisation.  While the quantity of opportunities for engagement has increased, there are strong reservations about the quality of these opportunities, as those in power maintain control over the rules of the game, resist the transfer of power and/or lack the skills to engage citizens effectively. Voices that do not fit are excluded, while an increasingly managerialist and technical approach to decision-making risks leeching the messiness and complexity of real politics out of the system altogether. As partnership becomes the ‘only game in town’, civil actors become institutionalised into the system and spaces for dissent and debate are increasingly hard to find. Thus Nikolas Rose argues that the “community discourse” has “hi-jacked a ‘language of resistance and transformed it into an expert discourse and professional vocation”.  Not only this, but as decisions are devolved to local level, citizens find themselves increasingly made responsible for problems whose origins lie way beyond their reach.

What about the ‘can’ question? Civil society has long played a role in informing and framing political debate and mobilising citizens, but as Jan Aart Scholte has argued, their organisations can be underdemocratic, non-democratic or even anti-democratic.  Indeed he goes on to argue that, at global level, civil society engagement rests on an overly narrow cultural base, with little or no engagement with the wider constituency. 

Ideally, the in-depth engagement of the few who have the time and expertise to engage needs to rest on strong roots at the local level and to be able to draw on a pool of engaged citizens who can hold their leaders accountable.  But what we have noticed in the UK is that many of the local institutions that used to act as schools of democracy -  especially for the less powerful classes in society - have been eroded.  While the local union branches, educational institutes, local political parties, the chapels and working men’s clubs that fed local political life in the past may have had their faults, their loss leaves a political vacuum. While many might see the internet as filling this vacuum, in my country, the most successful organiser at local level may now be the extreme right British National Party. 

A second challenge which civil society organisations need to address is that of diversity.  The rhetoric of civil society is often bathed in a soft romantic glow, portraying it as a site of cohesion and integration.  But it is nothing of the kind.  There are deep divides between communities who define themselves as much by what they are not as by what they are.  A competitive funding environment pits civil society organisations against each other, while social movements are prey to the ‘mischief of factions’. 

This brief review presents 4 key challenges for civil society actors:

First comes the expert citizen dilemma.  How can we reconcile the tensions between the expertise and leadership required to act strategically, whether on the inside or the outside, and the need to engage citizens more widely.  How can we scale up political engagement without losing our link to our roots?  And how can we build a pool of informed and engaged citizens who will hold those who claim to speak for them accountable?

The second related challenge is that of building alternative spaces where communities can find their voice and a strong base from which to take power and/or engage effectively with government.  This is a challenge that will vary from country to country and it is possible that these new spaces will be in cyberspace rather than in village halls – certainly this seems to be true at a global level. But there are still challenges of reach, inclusion and accountability.

The third relates to the ‘should’ question.  How can civil society organisations work in and against the state? We need outsiders to force issues on the agenda, reframe debates and develop an independent voice, but insiders to negotiate changes through the political system and to identify and work with allies.  Some organisations manage to work at the interstices of power very effectively, but this requires political sophistication and skilled boundary spanners who have credibility and commitment on all sides.

The fourth relates to the diversity that should be the strength of civil society.  How can we make this diversity work positively for democracy, without suppressing voices?  The participatory world will never lend itself to easy consensus building.  Its contribution to democracy is more likely to lie in the ability to promote debate and express difference.  But this contribution depends on the capacity to mediate conflicting interests effectively.

These challenges are not just for civil society organisations. John Keane argued that civil society and the state are the condition of each others’ democratisation and the state has a critical role to play.  Speaking in Scandinavia, it is perhaps easier to make a case for this than elsewhere in the world.  The challenges for the state, from EU level downwards, are manifold but let me restrict myself to three.  The first is to create a responsive and engaged public sector, with the skills and commitment to engage effectively and the will to commit meaningful resources to civic dialogue. This requires significant cultural change, as does the second, which is to recognise that civil participation involves diversity, critique, accountability and flexibility.  State actors, if they are serious about civil participation, need to resist the temptation to dictate the terms of reference. The third, in a world where key decisions are taken beyond the purview of the state with no line of accountability to the citizen and where the ownership of the media is increasingly concentrated, is to reassert the role of the state – to resist the erosion of the public sphere, to reassert the importance of social as well as economic wellbeing, and to safeguard the public space that is essential to democratic life.

In workshop nr 5 the main topic will be if we are in fact leaving one industrial mindset and the GNP-based methods connected to that,
for a new post industrial mindset of well-being-based methods?

One fundamental document that deals with these issues is the report from
the OECD “Committee on the Measurement of Economic Performance and Social Progress”.

OECD Committee report on the Measurement of Economic Performance and Social Progress

Since the travel connections from Örebro and Sweden have proven to be difficult to combine with our previous time schedule for the afternoon of the 28:th, we have decided to make the programme a bit more condensed.

Our main priority has been to make participation in the debate and voting possible for as many participants as possible.

The new time frame is accessible here at the web site, and will be enclosed in the information that is sent to all registered participants after tha last day of registration, 9/10.

Maria Johansson, the great singer will performe at the NGOforum09 dinner the 27:th of October.