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What Does the Concept of Social Responsibility Mean to Not-forprofit Organisations? A case study of two community-based not-for-profits in New Zealand Love M. Chile, Institute of Public Policy, Auckland University of Technology, and Xavier M. Black, Deloitte New Zealand, Auckland

Abstract The purpose of this paper is to critically examine the concept of social responsibility within two community-based not-for-profit organisations in New Zealand, and to test the hypothesis that having a social agenda necessarily means being socially responsible. We adopted the methodologies of phenomenology and appreciative inquiry, and found that not-for-profit organisations believe social responsibility is embedded in their mission and activities, although they may not clearly state this in their public statements. We also found that not-for-profits consider financial accountability to be a central aspect of their social responsibility because of the trust they enjoy to use funds from the public to address society’s ills. The challenge for not-for-profits is to develop evaluative frameworks that measure social responsibility. The findings of this study underpin the importance of the not-for-profit sector developing measures of social responsibility to help guide and progress its own good practice. The rhetoric of mission statements alone does not constitute social responsibility. How organisations share power, how they dialogue with and empower clients and communities, the environmental consequences of their activities, and their human rights, ethical and employment practices are important elements of not-for-profit social responsibility.

T H I R D S E CTO R R E V I E W

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Our study makes two key contributions. Firstly, we move the discourse about social responsibility beyond whether not-for-profits should be required to be socially responsible, to a critique of their activities and functions in order to ascertain the levels of social responsibility and how best they can fulfil their mandates in a socially responsible way. Secondly, by focusing on community-based organisations, this study seeks to build a better understanding of the concept of social responsibility by not-for-profits at the community level, where their impact is felt the most; it thus extends the discourse on social responsibility of not-for-profits, which has tended to focus primarily on large international organisations.

Keywords Social responsibility; not-for-profit; accountability; community-based organisations; New Zealand

Introduction The concept of social responsibility has become part of the common lexicon in the not-for-profit sector internationally (Marx 1999; Galaskiewicz & Colman 2006). A number of organisations claim that they are socially responsible, although they may not clearly explain what this means in practice. Unerman & O’Dwyer (2006) suggest that, despite the exponential growth in the discourse on social responsibility, critical examination of social responsibility in the not-for-profit sector is still very limited. The lack of academic interest in the subject may be explained partly by the presumption that because most not-for-profit organisations have a social agenda, they are socially responsible (Seitanidi 2005: 65). This perspective is supported by policies and practices such as tax and gift duty exemptions for most not-for-profits because they purportedly serve the public good, and tax benefits for individuals and organisations that donate to them because such donations support philanthropic activities for the public good. There is no doubt that most not-for-profit organisations make significant contribution to the socioeconomic,

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VO L U M E 21 N U M B E R 1

cultural and environmental wellbeing of communities. This contribution has grown substantially since the mid-1980s, following the deregulation of the state sector and the increasing contracting out to not-for-profit organisations of services previously undertaken by the state (O’Brien et al. 2009: 26). This paper presents the findings from case studies of two communitybased not-for-profit organisations in New Zealand, in order both to critically examine the understanding of social responsibility within not-for-profits, and to test the hypothesis that having a social agenda necessarily means being socially responsible. Tennant et al. (2006) point out that a social mandate is not included as one of the characteristics for an organisation to be defined as a not-for-profit. Therefore, it may be argued that ‘good intentions and doing good’ alone are not sufficient considerations to be a socially responsible organisation. In this study we identified a number of themes that constitute social responsibility within not-for-profit organisations. These include organisations’ relationship with the client groups, the impact of their activities on the environment, and their policies and practices, such as financial accountability, transparency, community engagement and employment practices. The not-for-profit sector in New Zealand has grown exponentially since the mid-1980s, in the number of organisations, their size and their complexity. For example, the number of registered incorporated societies in 2000 was put at 21,443, of which 11,582 were charitable trusts (ANGOA 2001: 7). Statistics New Zealand reported that there were 97,000 not-for-profit institutions in New Zealand in October 2005 (Statistics New Zealand 2007: 3). Tennant et al. (2006: 17) report that Bradford and Nowland-Foreman (1997: 87) ‘estimated that there may be one unincorporated non-profit organization for each one that is incorporated’. Thus, the number of not-for-profit organisations in New Zealand could be much higher than the 97,000 identified by Statistics New Zealand. In terms of size and operations, many not-for-profits employ large numbers of staff and have national and international offices, and budgets in the millions of dollars. In 2013, for example, 200 not-for-profit


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charitable organisations reported gross income of between NZ$10 million and NZ$100 million, with one reporting gross income of over NZ$1 billion dollars (Moulvi 2014: 80). Thus, many not-for-profit organisations effectively look and function similar to corporations, and conduct their affairs in ‘business-like fashion’. It is important to critically examine the activities, processes and functions of not-for-profit organisations with regard to social responsibility, because many organisations in the sector purport to represent the interest, needs and aspirations of the community. In addition, charitable organisations, which constitute a significant proportion of the not-for-profit sector (Moulvi 2014: 27), work with some of the most vulnerable groups in society. Conducting these businesses in a socially responsible manner should be a matter of public interest. Due to the complex nature of the not-for-profit sector and the ‘business-like’ approach of some organisations’ operations, it is important to clarify what we mean by not-for-profits. We adopt the definition of not-for-profit sector using five key ‘structural-operational features’ identified in international literature. The entity must have structured operations, irrespective of whether it has formal legal status or not; it must be private (that is, it may receive substantial support from government but must not be part of the state apparatus); it may make a profit from its operations but such profit must be reinvested in activities that advance the organisation’s cause, and must not be distributed to directors, shareholders or managers; it must be self-governing through its own internal governance mechanism, so that it is fundamentally in control of its own affairs; and membership must be voluntary (Sanders et al. 2008: 5).

Not-for-Profit Organisations and Social Responsibility While there is no universal agreement on the definition of ‘corporate social responsibility’ (Whitehouse 2006; Srivastava et al. 2012), social responsibility is primarily about organisations being conscious of the

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potential negative consequences of their activities and taking steps to prevent them (Jones 2002: 2). This moves the discourse beyond the assertion by Unerman and O’Dwyer that the social responsibility required of business corporations should be extended to all organisations whose activities and policies have a potential negative impact on society (Unerman & O’Dwyer 2006: 369). The central issue is no longer whether not-for-profits should also be required to be socially responsible, but how to critique their activities and functions to ascertain the levels of social responsibility and how best they can fulfil their mandate in a socially responsible way. A large proportion of the literature on social responsibility of not-forprofits has focused on financial accountability (Gary et al. 2006; O’Dwyer & Unerman 2008; Schmitz et al. 2013). Financial accountability has also been largely hierarchical in favour of donors and funders, rather than of less powerful stakeholders such as the clients and communities that are the direct targets of not-for-profits’ activities. Another set of literature addresses the partnerships that not-for-profits form with business corporations to support the corporate social responsibility activities of business corporations (Winston 2002; Doh & Guay 2006; Victoria Council of Social Services 2009; Joutsenvirta 2011). We argue in this paper that not-for-profits’ social responsibility is much broader than statements of financial management, balance sheets and performance evaluations, which organisations undertake as part of their fundamental management and accountability to stakeholders. The primary data collected for this study, as well as the literature reviewed, suggest that not-for-profits’ social responsibility must incorporate critical self-reflection on their social aims/objectives and their mission statements. The measure of their social responsibility should be the impacts of their processes, policies, decisions and outcomes beyond the principal-agent. For example, Beck (1999) argues that the not-for-profit sector enjoys the trust of the community because of the widely held belief that the sector is inherently socially responsible. Our research respondents confirmed Beck’s argument. One respondent suggested that social responsibility is ‘what guides the work of the community and voluntary sector – it is inherent in the work that we do’.


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Another stated that ‘every NGO starts off with the social responsibility kind of agenda’. These statements express a truism underpinned by the presumptions that not-for-profit organisations have ‘high ethical standards’ (Hogan 2009: 279), that they are community-centred because they developed primarily as an altruistic contribution to the creation of a better society, and that their stated missions and values underpin their social responsibility. We suggest that these presumptions are flawed on many levels. Salamon (1994: 118–19) refers to the ‘myth of pure virtue’, in which the not-for-profit sector is regarded as ‘fundamentally f lexible and trustworthy’ by the public and acquires ‘a saintly self-perception and persona’, despite its vulnerability and limitations. Nyamugasira (1998) argues that not-for-profits may not in fact represent the interests of their communities because organisations rarely obtain communities’ mandate for their programmes and activities; such programmes and activities may not necessarily reflect the values of the poor communities the organisations purport to represent (Nyamugasira 1998: 300). Beck (1999: 369) suggests that the almost limitless public trust vested in the not-for-profit sector on account of its social mission and objectives, irrespective of whether or not these have been accomplished, may be misplaced. The reservations expressed in the literature point to the need for a critical examination of the understanding of the concept of social responsibility by key stakeholders in not-for-profit organisations. In this paper we report on what respondents from two case study organisations in the New Zealand not-for-profit sector articulated as their understanding of the concept of social responsibility. The study focuses on community-based organisations rather than on large national and international not-for-profit organisations. We chose these two case study organisations because they are located within the same geographical region of New Zealand, and therefore operate within a similar socioeconomic and cultural context. We also chose one organisation that operates as a completely independent standalone entity, and another that is a local-regional branch of a national organisation. We felt that these conditions would provide some insights into their different understandings and practices of social responsibility.

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We posed two key research questions: ‘What is not-for-profit organisations’ understanding of the concept of social responsibility?’ and ‘What makes a not-for-profit organisation socially responsible?’ By focusing on the social responsibility of two community-based organisations, this study seeks to build a better understanding of the concept of social responsibility by not-for-profits at the community level, where their impact is felt the most, and thus to extend the discourse on social responsibility of not-for-profits, which has tended to focus primarily on large international organisations.

Methodology and Data Collection This study was initiated by invitation, following conversations with one community-based organisation in Auckland, New Zealand, at a seminar on community investment and how community-based organisations assessed their effectiveness and impact in the community. The project brief was to develop an evaluation framework against which a socially responsible not-for-profit organisation could be measured. This organisation offered itself as a case study to explore the meaning of social responsibility, evaluate the organisation against the developed evaluative framework to establish the general level of performance of the organisation, and identify areas of strength and weakness in the organisation’s performance in relation to this concept. The aim was to increase the number of case study organisations gradually over a period of six to eight years, to cover between 25 and 30 organisations, to make the findings as robust as possible, and to test more widely the applicability of the evaluative framework within the New Zealand not-for-profit sector. The first stage of the study was undertaken between June 2011 and June 2012 using two case study organisations. Two methodological approaches informed the development of this research study: appreciative inquiry (Cooperrider & Srivastva 1987) and phenomenology (Giorgi & Giorgi 2008). We adopted the phenomenological approach because we wanted to ground the understanding of not-for-profit social responsibility in the personal knowledge, experiences and perspectives of key actors in the sector:


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the research respondents. Because much of the literature on social responsibility of not-for-profits is contested, we wanted to privilege respondents’ personal knowledge, experience, perspectives and interpretations, and also gain some insights into some assumptions about the concept. Appreciative inquiry enabled us to identify ‘what works’ for each case study organisation, enabling them build on the positive developments while exploring further opportunities to enhance their practices. We developed the study from the position that the work of not-for-profit organisations has positive impacts on their communities and society, and that critical self-reflection provides ‘new knowledge and ideas [that] enhance and enrich organization culture’ (Quinney & Richardson 2014: 96). Thus, the starting point for data collection for the study was organisational analysis, and we used documents provided by the case study organisations. These documents included service contracts, organisational strategies, annual reports, project evaluation reports, partnership contracts, minutes of meetings and other documents that helped us better understand the decision-making processes within the two organisations, and how they perceived their impact on clients, communities and society. We identified the key positive impacts and areas of organisations’ strengths in these reports, as well as areas of weakness or negative impact. We identified the positives/strengths as ‘what works’, in line with the appreciative inquiry approach described by Boyd and Bright (2007: 1022): ‘appreciating and capitalizing on what is good, already works, and is beautiful within the community system’. Giving the research team access to highly sensitive organisational documents involved high levels of trust between the organisations and the research team, and demanded strict confidentiality agreements. The positive areas of the organisations’ strengths, including their mission statements and objectives and how these were being implemented, informed our development of key questions for interviews and focus group discussions with key staff members, partners, clients and governance boards. Another key aspect of this study that locates it within appreciative inquiry methodology is the collaborative and participative approach

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based on the first three stages of appreciative inquiry: discovery, dream and design (Cooperrider & Srivastva 1987). The three key methods of data collection identified what ‘is best’ in the organisations’ practices, and we discovered ‘positive histories’ of individual and organisational experiences. The analysis of the organisational documents mentioned above provided a starting point for the process of discovery, which was followed up in the focus group discussions and the interviews. We encouraged participants to share their positive experiences about their organisation’s positive impacts related to the theme of social responsibility. To advance the process of discovery, the focus group involving the board of trustees took the form of a workshop, which lasted for nearly three hours. The length of time was important to enable deep exploration with the organisational leadership who would lead change at the strategic level. The research leader moderated the board meeting, while the co-researcher took notes and contributed to the facilitated conversations. The other two focus groups with groups of clients and staff were much shorter, lasting between 60 and 90 minutes. All focus groups explored present practices and desirable futures, with the board of trustees’ workshop delving more deeply into what a socially responsible organisation would look like in the future, and how the concept of social responsibility could become part of the organisation’s strategic planning process, beginning with the collective construction of the organisation’s vision/mission/goals (the design state of appreciative inquiry). In all three focus groups we adopted facilitated conversations in an open and engaging forum that allowed for socialisation among group members to encourage free discussion but was moderated so that individuals did not dominate the conversation. Moderated conversation enabled participants’ self-expression, and allowed the researchers to tease out and clarify concepts and uncover latent information. Interviews with individual participants, including members of boards of governors/trustees, clients, suppliers, staff, volunteers, funders and partners, used semi-structured interviews with an interview guide. Semi-structured guides ensured that relevant issues were covered but allowed for emerging concepts to be explored, and for respondents to


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introduce and discuss topics which they felt were relevant to the theme of social responsibility. Respondents were encouraged to express views, perspectives and beliefs which reflected their personal realities and that of their organisations. Interviews and focus group discussions were audio-taped and later transcribed for analysis. This research was conducted with approval from the AUT Ethics Committee (AUTEC) (Ethics Approval Number 10/260, dated 6 May 2011). AUTEC is accredited by the New Zealand Health Research Council. We declare that we do not have any conflict of interest in this study, and did not personally obtain any financial benefits from the research or from any of the organisations in this study. The study was funded by a research grant from the Auckland University of Technology (Grant Number AX10/15).

Data Analysis We interviewed eighteen individuals from the two case study organisations, and conducted three focus group discussions. The chief executives of both organisations were interviewed, as were the chairpersons of the boards of governors/trustees of both organisations, and all senior staff members in both organisations. The first focus group consisted of members of the governing board of one organisation; the second consisted of staff of one organisation; and the third consisted of a group of clients who received services from one of the organisations. Interviews lasted from 45 to 75 minutes, while focus group discussions were between 60 and 180 minutes. Interviews and focus group discussions were transcribed and analysed using thematic analysis, which involved reading and rereading the transcripts to identify emerging themes. Initial themes were based on recurrent common topics, significant actions and variations in respondents’ perspectives on concepts such as social responsibility, how social responsibility could be measured, and activities that they considered make the organisation socially responsible. Data from organisational documents was analysed to examine the relationship between stated mission and objectives, and how the organisations’ activities aligned with their mission and objectives. The

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initial analysis of documents also helped us frame interview and focus group questions for the board of governors/trustees, chief executives and other senior staff members. Consistent with phenomenology methodology, we privilege the voices and experiences of participants in reporting the research findings, rather than our own interpretations of what they said. So we use extensive direct quotes to ensure that voices are clearly articulated. We report the diversity of experiences expressed by respondents because each experience has value, recognising that each experience is personal, unique and ‘created in the moment’ (Hammond 1998: 52). While we take care to report the findings in ways that do not breach the confidentiality of the individual respondents, there may be features in some of the reported statements that, in small communities with strong views, could be suggested to be made by particular persons. Therefore, we cannot guarantee anonymity. We code the focus groups ‘FGP’ and the interviews ‘INT’, followed by the Case Study Organisation and the respondent’s number.

Understanding the Concept of Social Responsibility Research respondents were asked two open-ended questions: ‘When we talk about social responsibility, what is your understanding of that concept?’ and ‘In what ways do you see your organisation as a socially responsible organisation?’ It is the analyses of these two questions that are reported in this paper. Research respondents reported that social responsibility was not a concept used very often within their organisations, or in fact within the not-for-profit sector, and where it was used, there was no common understanding of its meaning: The terminology of being socially responsible, I don’t know that that is something that is actually talked about . . . even at the [organisation], although the underlying purpose of everything we do indeed does portray that (FGP CST 1).


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Similarly, another respondent suggested that: I’m not sure everybody’s definition of what is meant by social responsibility is clear. And it’s a bit like motherhood and apple pie; everybody will agree that it’s a good thing. What that really does mean becomes quite interesting (INT BAF 5). Notwithstanding this, all research respondents reported that social responsibility was inherent and embedded in the structure of the sector, because not-for-profits are created to deliver some social good: NGOs actually largely came about as a result of people taking on a social responsibility where it’s almost something that has developed to plug a gap. Well, I suppose it is embedded really, because their primary concern is about the well-being of people (INT BAF 3). Another respondent asserted that social responsibility was the underpinning philosophy that guides the work of the sector, noting that ‘not-for-profit organisations work both for the individual outcomes for their clients and also for broader community outcomes which are positive’ (INT BAF 2). It’s what guides the work of the community and voluntary sector. I actually think it’s a paradigm for the whole social services and not-forprofit sector so I think it’s actually something that, while it’s not explicit perhaps at times or communicated specifically, is inherent in the work that we do within the not-for-profit sector. I would start by stating that all not-for-profits are socially responsible. They are not-for-profit therefore they are for the benefit of the community, and therefore they have inherently a social responsibility already incorporated into their mission, vision, aims and objectives (INT BAF 2). Despite these assertions, respondents also reported that what social responsibility actually means in practice, and even philosophically, would be different among different organisations or even within organisations:

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I think every NGO starts off with the social responsibility kind of agenda, but I think some may move away from it without knowing and becoming more business-orientated. Certainly the intention is there to be socially responsible, but I guess . . . it means different things to different people. I don’t think it is black and white (INT CST 4). Research respondents’ understanding of not-for-profits social responsibility ranged from values relating to financial accountability to human rights and environmental impact of the organisations’ activities. Respondents referred to organisational values, mission and objectives to inform social responsibility in their organisations, suggesting that to understand social responsibility: You’d have to look at [the organisation’s] overall reason for being and whatever the values were that were driving the organisation, and then having a look to see if in fact the activities of the organisation were ref lecting those values (INT BAF 3). Respondents said this meant ‘living up to our principles and mission statement’ (INT CST 5) and ‘being true to your objectives, to your vocation’ (INT BAF 4); ‘It’s basically living and breathing what your mission is and your vision, that’s if it is a socially responsible vision and mission’ (INT CST 3). These responses suggest that organisations need to undertake some level of critical self-reflection to find out whether their activities matched their espoused vision. I think it would have an assessment on ‘is your vision and mission actually socially responsible?’ and what that means really. ‘How are the values actually integrated into your everyday work of every level of the organisation?’ (INT CST 4). While these values differ between organisations, participants suggested that ‘social responsibility means that our actions do not cause more harm than necessary and in fact will reduce the level of harm as much as possible in our actions’ (INT CST 5); for another, it meant ‘not doing any harm and always working in the best interest of the client’ (INT CST 3).


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The concept of ‘client’ used in this context was much broader than the individual recipient of service: ‘it’s hard to know what to call the public but the client’ (INT CST 3). This extended to families, communities and the public that support the organisation – ‘the communities and the partnerships that we are working with’ (INT BAF 4). So for an organisation to be considered socially responsible: The word honourable, trustworthy, keeping the concepts of confidentiality and caring. It’s one of those things that you know it’s hard to put into words. Open, honest with your clients, with your stakeholders, with the people you work with, the other volunteers (INT BAF 1). From respondents’ statements, we would suggest that social responsibility for not-for-profits covers all processes and activities ‘looking at the whole picture for their client group globally and meeting their needs to the best of their ability’ (INT CST 2). Another respondent explained that: It [social responsibility] is to me more about our power as an NGO to actually achieve things that government funded organisations aren’t allowed to encroach on. Addressing inequalities is a big one. Some people need more to reach a plateau of wellbeing than others and ethically, to me, it’s about putting those resources where they’re most needed. Advocacy I think is another area that we are really quite strong in and I think that’s part of that social responsibility (INT CST 3). The most common expressions of social responsibility across research respondents were references to terms such as accountability, ethics, social justice, honesty and service provision. Typical responses to the question ‘What makes a not-for-profit organisation socially responsible?’ included: Being accountable to the people in a community, having good values, providing core services for them, not losing sight of the people that we are working with or for. It’s making sure there are no injustices out there (INT CST 5).

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Accountability, being ethical and making a difference...I suppose it’s tied up with values like honesty and trust and doing the best you can with the resources that you have (INT CST 4). Well, my understanding would really be very much based on what I would term the four well-beings of a community. So in my context, any organisation, whether it’s in the profit or not-for-profit sector, should always, within its strategy and planning, be considering the four community well-beings, and by that I mean the social well-being of a community; in our case also economic well-being, as well as in New Zealand perhaps, a heavy emphasis on both cultural and environmental well-being (INT BAF 5). One respondent suggested that for faith-based organisations, social responsibility consisted of three elements: One has to do with the theological drivers for the very existence of the organisation . . . being socially responsible is about understanding this world, understanding the human community as the construction site of the kingdom of God, a kingdom which is marked by peace, justice, righteousness. So the whole of the mission of the church’s call to engage with is about building equity. The other answer is what does it mean for the church to be socially responsible in terms of its engagement with other organisations working for the common good? So there’s an element of partnership, there’s an element of respect, there’s an element of collaboration in there. And then there’s another [element] of social responsibility entirely, which is about the footprint that we occupy and how we ensure that footprint, in terms of our ecological footprint, our environmental footprint, is as minimal as it can be; that we are hopefully putting as much back into the environment as we are taking from it. It’s not likely that we are but that’s got to be the goal. So those three elements (INT BAF 4). All respondents reported that it was important for not-for profit organisations to be socially responsible, just as it is important for the government and business sectors. However, there were suggestions


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that social responsibility was especially important in the activities of not-for-profit organisations because of their unique position, whereby they exist to fill ‘the gaps in what the government and other agencies cannot provide’ (INT CST 2), working with the most vulnerable groups in society, and the position of trust they occupy in the community by virtue of being ‘custodians of the funds we receive from the public’; they have a responsibility to ‘apply them to the best use to help people and their families’ (INT CST 1). Thus, financial accountability was a significant aspect of respondents’ understanding of not-for-profit organisations’ social responsibility.

Social Responsibility as Financial Accountability The centrality of financial accountability to not-for-profit organisations’ social responsibility was framed in two main ways. Firstly, financial accountability was critical to the organisations carrying out required activities and achieving their mission: Probably I’d start with the fact that we can’t exist without public funding and so the first responsibility we have is to make sure we use the funds we gather wisely and fairly. That’s where social responsibility comes in, and it’s keeping the community well informed, consulting the community, giving them some sense of ownership of what an NGO is doing with their money (INT CST 5). Secondly, not-for-profit organisations’ finances were matters of public trust: ‘I am always really aware of the trust that people put in you when they actually donate funds . . . So we have a huge responsibility and obligation to those people (INT CST 3). Thus, one of the respondents argued that: . . . a socially responsible organisation in my opinion considers the needs of their client group first and foremost and they work towards meeting those needs in a very broad way . . . I guess that’s part of their

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responsibility to have an open, transparent system, making sure that their finances are open and above board (INT CST 2). This involves critically examining how the finances of organisations are allocated across organisations’ activities so that the key functions that define the mission of the organisation are adequately addressed in financial allocations. I guess if you look at it in terms of their broad organisation framework and their reason for being. Then you look at it in terms of their operational activities. And I don’t think social responsibility should ever be solely defined by economics but you can look at it in that sense, that they ensure that they use their money effectively and efficiently, how they attribute costs or how they ensure that funding and the costs that are attributed go to clients (INT BAF 2). A board member suggested that for their organisation, financial accountability was central to social responsibility: We are trustees . . . of funds that are donated to the [organisation], for those funds to be used in the best possible way to achieve our mission statement, which is improving the community’s well-being through the reduction or lessening the impact and incidence of . . . in the community (FGP CST 1). Some participants argued that contracting not-for-profit organisations to deliver services and activities traditionally undertaken by government could potentially undermine organisations’ mission and values: If you look at the funding pie, you’ve got a portion, which is a contract, and in that contract you have outputs that you have to achieve. The need is the circle and often community funding needs to top that up to allow the organisation to actually achieve the outcomes for their clients. I guess if you were socially irresponsible you would not bother and you’d just fulfil that contract, the legal contract. As a CEO, if you wanted an


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easy life, I mean, the easy life would be to fulfil the contract and then go on your merry way (INT BAF 2). The tension between meeting contractual obligations and organisational mission and values created dilemmas for organisations striving to act socially responsibly. The first dilemma was not-for-profits accepting donations from, and collaborating and/or partnering with, corporations whose activities conflict with organisational values and/or negatively impacted on society. For example, participants questioned if it was socially responsible for organisations providing counselling services to gambling addicts to accept grants from casinos and other gambling businesses, or for cancer organisations to accept grants/donations from alcohol and tobacco companies. Participants suggested that social responsibility includes ethics. A board of governors’ focus group split five-to-two against accepting donations from corporations whose activities conflicted with the organisation’s mission and values. One of the respondents reported: We’ve discussed this at length, and our whole committee, we could say we are divided on it, but I’m an accountant and I could see that if we could use that $100,000 to help fix up some of the wrongs that they have caused, then why not take the money? As long as we can explain the reasons for accepting the money – that it’s not a bribe, that it’s money that we can genuinely use to fight . . . and that with that money we can help to fix some of the wrongs that they are doing. Because, let’s face it, tobacco companies are going to continue to exist. We can’t stop that (INT CST 1). Another respondent argued that ‘we need the money, and if it’s $100,000 and no strings attached, I would take it. I mean, why would I be so bloody stupid not to?’ On the other hand, there were strong positions that accepting such donations was not socially responsible because it was ‘immoral’ and contradicted the values of the organisation, its credibility and public standing: ‘it directly conflicts with the aims, ideals, mission and vision of the society – and we just corrupt ourselves’ (FGP CST 1).

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I would say it is immoral because it is one of the foundational things of the [organisation] that it is very, very much anti-tobacco because we have seen the damage that tobacco does. And for a tobacco organisation, to me that is guilt money. It’s trying to appease its own conscience; no thank you (FGP CST 1). Another board focus group participant suggested that it was ‘tainted money’: The reality is that 5000 New Zealanders every year are dying from smoking-related causes, and a number of them cancer-related causes. It’s just fundamentally absolutely wrong. The only way I’d take that money is if the tobacco company would go out of business (FGP CST 1). Another respondent reported: “It’s been engrained in me for twenty years, having worked in Australia, that we are not to accept that. That’s a policy from national office’ (INT CST 4). Respondents suggested that not-for-profit organisations must move beyond the theoretical association of society’s ills and develop strong policies against such donations: ‘I think we need to also be able to not [only] espouse theories but actually demonstrate it’ (FGP CST 1). However, respondents opined that shrinking their funding base created ‘grey areas’: As you get right around the table, there’s nothing much left of big corporate money. So the answer is: do you sup with the devil? Yes, that’s a dilemma, isn’t it? And at some stage I think probably the society or the NGO has to make a decision on the degree of ethics involved. But I guess also it’s acceptance that life is not perfect, and which is more important: to get the end result of helping people or supping with a minor devil? (INT CST 5) The ethical dilemma of funding partnership between not-for-profit organisations and corporations was illustrated thus: . . . a dilemma in this for me is that yes, we make choices around our partners. I found myself in partnership relationships with people that


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some of my colleagues would say I shouldn’t be entering into a partnership with. And that just seems to me to be missing the point. So we are not un-critical. We have to ask the question. But my instinct and I think the instinct of the organisation is to say, ‘Well, whoever gets on this bus, they get on this bus. If we’re going in the right direction then let’s enjoy the fact that we’ve got these companions on the journey.’ And who knows what impact they might have on us and what impact we might have on them (INT BAF 4). A second social responsibility challenge associated with financial accountability was running a budget deficit to fund ‘good causes’. The issues raised included whether it was socially responsible to run budget deficits to meet the needs of clients, and whether it was socially responsible to build organisational reserves for longer-term sustainability of the organisation rather than committing funds to address ‘today’s issues’. Respondents argued that social responsibility and financially accountability required some degree of flexibility: I think there’s a balancing act. I’m sure people donate or leave legacies to help people now, not five, ten or fifteen years in the future but you still need to capital-proof your future, because a dollar now is not going to be worth a dollar in a year’s time or two years’ time. So you do have to have reserves to meet unexpected expenditure (INT CST 1). Respondents argued that ‘running a deficit is sometimes necessary to do the work that we need to do . . . but I don’t think as an organisation you want to be foolhardy with money and knowingly enter into a situation where you’re going to put yourselves into a significant deficit’ (FGP CST 1). But the rider . . . is it is not socially responsible to go on year after year. At some stage you’re going to have to say look, we’re doing this and these people are benefiting but it’s costing a much greater group . . . therefore there would have to be a tailing off if it’s an unacceptable deficit year after year (INT CST 5).

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Another financial accountability dilemma for organisations was the geographical allocation of funds raised in particular communities to fund programmes in regions other than where those funds were raised: People like to know that the money that they are donating is staying in the place where it is donated to. So . . . I think holding our money here and doing what we want to do with it in our local area is actually really good (INT CST 7). The challenge for national organisations with regional chapters that pool funds and reallocate them according to pre-determined criteria becomes whether it is more socially responsible for funds raised locally to be used locally, and whether this argument should extend to allocations for research, administration and advocacy. One respondent suggested that the ‘raise-local spend-local’ approach was not socially responsible, because funding research, for example, enables national and international organisations to advance knowledge and good practice in care and treatment nationally and internationally, which is more socially responsible. These issues are complicated and partly explain why research respondents reported that the concept of social responsibility is not well understood or even widely discussed within not-for-profit organisations. The dilemmas posed by these examples illustrate some of the challenges that push not-for-profit organisations’ ethical boundaries. Some organisations’ activities may seem contrary to their mission and values. Strong ethical principles and clear measures of social responsibility would help organisations work more effectively with donors, communities and clients. Respondents also raised social responsibility issues such as the environmental consequences of organisations’ activities, human rights, organisations’ employment practices, and their engagement with and empowerment of clients and communities to effectively participate in organisations’ governance. The challenge for organisations is how to develop evaluative frameworks to measure social responsibility.


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Discussion and Conclusions We found evidence that supported Seitanidi’s (2005: 65) suggestion that the not-for-profit sector is inherently socially responsible because organisations consider social responsibility to be embedded in their mission and activities. Hogan (2009: 278) argues that standards of responsibility expected from not-for-profit organisations are higher because of the public trust invested in them, but that social responsibility must go beyond mission statements and objectives. Hogan’s observation that a lack of transparency and accountability undermine the credibility of an organisation, which then has a direct impact on its funding from citizen donations (Hogan 2009: 277), is not limited to financial management but extends to how not-for-profits walk the talk of their mission. Social responsibility is as important to not-for-profits as it is to corporations, governments and individuals. Society invests substantial amounts of trust in not-for-profits to operate ethically, sustainably, and with policies, processes and practices that are strongly rooted in social justice, human rights and environmental sustainability – that are transparent and ‘above board’. Financial accountability is important, but this does not represent the full spectrum of social responsibility. This study has demonstrated that not-for-profit organisations consider social responsibility an important aspect of their work and reason for existence. The rhetoric of mission statements alone does not constitute social responsibility, just as lists of values and principles posted on corporations’ walls and websites do not tell the full story of their corporate social responsibility. Mirvis (2012: 100) reports that, not long after being awarded a top international prize as a global top employer and ‘corporate citizen of the year’ in 2000, Enron collapsed because of unethical practices which did not reflect the publically espoused values of the organisation. Similarly, Fannie Mae’s and Freddie Mac’s stated social responsibility of increasing the availability and affordability of home ownership masked corrupt financial practices by financial corporations that triggered the 2008 economic crisis (Mirvis 2012: 100). Organisations’ social responsibility includes how they manage their human resources, how they engage with the values and interests of

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clients and communities rather than elite stakeholders, the equity of power between organisations and the communities they serve, ethical practice and the impact of their activities on the physical and cultural environment of communities. Respondents ref lected that how organisations share power and dialogue with clients and communities on decisions that shape the organisation and its services is a measure of their social responsibility: ‘what we do or don’t do well and what we should be doing in terms of social responsibility, is involving the community more in the actual planning and oversight of the work we are doing’ (FGP CST 1). The active engagement of clients and communities also enables organisations to engage sources of fresh ideas to help shape organisations’ culture and build networks of relationships that connect them to their local and wider communities (Mirvis 2012: 105). Active client and community engagement also reduces potential paternalistic and elitist attitudes from professional staff who may become detached from the realities and lived experiences of the marginalised groups, clients and communities they serve. The findings of this study indicate the importance of the not-for-profit sector developing its own measures of social responsibility to help guide and develop its own good practice, although not in the same way as the Global Reporting Initiative (GRI), which has its own challenges and critics (Sherman 2009; Nikolaeva & Bicho 2010). We do not anticipate that organisations will be required to apply such measures in terms of strict accountability compliance or explicit standards of performance imposed by external stakeholders, but rather negotiated within the context of individual organisations and their key stakeholders (Kearns 1994: 188). The reasons for social responsibility in organisations are ethics, environmental sustainability and concerns for social justice outcomes embedded in good corporate citizenship. The justification for social responsibility for not-for-profits is even more compelling because of the public trust to work with some of the most vulnerable in society. While the concept may not have a common universal meaning across the staff, senior management and boards of governance, all stakeholders who participated in this study reported that it is important


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for organisations to be socially responsible. Social responsibility is central to the public service mandate of not-for-profits because they are generally funded through public donations, and because their mission and values are predicated on ‘doing good’ and limiting their actions’ negative consequences. Research participants identified financial accountability, integrating organisational mission and values into everyday practices, active community engagement, client empowerment, and responsive employee practices as key aspects of not-for-profit organisations’ social responsibility. Despite these strong indications, this is only one case study of two community-based organisations in New Zealand. It will be premature to draw firm conclusions, or to condemn or fully endorse the assertions expressed by respondents in this study, based on its findings. Further studies, including multiple organisations within countries, and international comparative studies, are required to more fully inform our understanding of the social responsibility of not-for-profit organisations. REFERENCES Association of NGOs in Aotearoa (ANGOA) (2001) Aotearoa New Zealand Civil Society: A Framework for Government-Civil Society Dialogue. A Preliminary Report on the CIVICUS Index on Civil Society Project in New Zealand. CIVICUS Index on Civil Society Occasional Paper 1 (5). Beck, U. (1999) World Risk Society. Cambridge: Polity Press. Boyd, N. M. & Bright, D. S. (2007) Appreciative Inquiry as a Mode of Action Research for Community Psychology. Journal of Community Psychology, 35 (8): 1019–1036. Cooperrider, D. L. & Srivastva, S. (1987) Appreciative Inquiry in Organizational Life. Research in Organizational Change and Development, 1: 129–169. Doh, J. P. & Guay, T. R. (2006) Corporate Social Responsibility, Public Policy and NGO Activism in Europe and the United States: An institutional-stakeholder perspective. Journal of Management Studies, 4 (3): 47–73. Galaskiewicz, J. & Colman, M. (2006) Collaboration between Corporations and Nonprofit Organizations. In W. W. Powell & R. Steinberg (eds), The Non-Profit Sector: A research handbook: 180–204. New Haven: Yale University Press. Giorgi, A. & Giorgi, B. (2008) Phenomenology. In J. A. Smith (ed), Qualitative Psychology: A practical guide to research methods (second edition):26–52. Thousand Oaks: Sage

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ABOUT THE AUTHORS is Associate Professor and Director of the Centre for Community Investment and Development in the Institute of Public Policy, Auckland University of Technology. His areas of research, teaching and practice are community development and community investment, not-for-profit organisations and their contribution to community transformation, community health, refugee and migrant settlement. He has supervised over twenty PhD and Masters candidates on a range of topics in these areas. Email: love.chile@ aut.ac.nz. D R LOV E M . C H I L E

works in corporate responsibility at Deloitte New Zealand, and previously was a research officer at the Institute of Public Policy, Auckland University of Technology. Her main areas of research include education on and implementation of social responsibility, community engagement and community investment strategies. She has also worked as a researcher with the Robin Hood Foundation, and as a corporate relations manager at Fly Ltd. Email: xblack@ deloitte.co.nz. X AVIER M. BL ACK


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