9UNP0442SD_Barry_Gaberman

- Jeanan Yasiri: Welcome, everybody. This is Building Civil Society Through the Nonprofit Sector. It is a communiversity offered through the UW Center for Nonprofits that is housed within the UW School of Human Ecology. I'm Jeanan Yasiri. I have the privilege of serving as executive director of the Center for Nonprofits. As we begin today, I would like to extend thanks to our partners who help in supporting this communiversity series, the UW Division of Continuing Studies, the Oscar Rennebohm Foundation, the Alliant Energy Foundation, the Morgridge Center for Public Service Challenge Grant, and the Brittingham Fund. Additionally, we'd like to thank our media partners, Wisconsin Public Television, and their University Place crew for taping tonight's lecture. I'm very pleased to introduce a special guest and an affiliate of our UW Center for Nonprofits, Barry Gaberman. Barry first came to Madison in 1951 after first living in Shanghai, China, and then in Israel. 

After completing high school in Madison, he joined the Army, served in several locations, and eventually returned to the University of Wisconsin in 1964. While involved in graduate studies here at UW, he joined the Ford Foundation in 1971. At the Ford Foundation, Barry held multiple assignments both overseas and in New York. As the director of the Office of Program Related Investments, his duties include the management of a $50 million revolving capital investment fund. He became the senior vice president at the Ford Foundation in 1996 and held that position until his retirement 10 years later. Barry has served on numerous boards including the Council on Foundations, the Independent Sector, the Trust for Civil Society in Central and Eastern Europe, as well as many other organizations advancing civil society issues. And since his retirement, he's been a senior advisor to the Foundation Center, a distinguished visiting professor in the Gerhart Center on Philanthropy and Civic Engagement at American University in Cairo, as well as having taught at American University in Paris, and he's developing a new program on civil society at the University of Virginia. We're delighted to include Barry as an affiliate of our center and welcome him back to Madison as he kicks off our series on Building Civil Society Through the Nonprofit Sector. Please join me in welcoming Barry Gaberman.
(applause)

- Barry Gaberman: Thank you. As you can tell, I'm the sort of quintessential townie. Primary school, secondary school, undergraduate work, and graduate work all at the University of Wisconsin in Madison. In fact, they've put me up this time at Lowell Hall which is rather interesting because I used to date a number of young women from Lowell Hall in the '60s, but unfortunately in those days there was no way I was going to get into Lowell Hall. I'm going to be making two presentations to you. One today and one on Thursday. And what I want to do is in this first session essentially to talk about civil society. And then in the second session to talk about philanthropy, both individual and organized philanthropy and its role and its attributes. I have to be honest with you in that I have a mission and I have a bias in starting with civil society. 

What I want to do is raise the visibility of civil society and argue for its importance for those of you who either will or are spending all or a portion of your careers in this civil society sector, but I also want to do the same for those of you that are going to go on and have careers in either the public sector or, particularly, the for-profit sector. I hope that you're going to demand from your law firm, from your accounting firm, from your corporation, and other places time to devote as a volunteer on a pro bono basis to the institutions of civil society. Now too often what we do when we enter this field is we immerse ourselves almost immediately in the tools of our craft. Whether it be fundraising, whether it be grant making, strategic planning, assessment, developing a theory of change or things like that. And what we do is we never really take a step back and we reflect on what it was about the society and about the sector of society and its contributions to global society. You ever notice that when people talk about a theory of change they always say "my implicit theory of change is"? Well, the reason they do that is that we mystify things so much that very few people are comfortable enough to talk about what their explicit theory of social change is. So let me demystify a theory of social change. All a theory of social change is is delineating a circumstance that exists now, envisioning a better alternative that you want to get to, developing a strategy that gets you from A to B, and a set of activities that implements those strategies. And that's just sort of the simple thing. 

And as we go on you'll notice that probably I always err in taking the simple way out on all of these things. We start with civil society because, essentially, civil society is the chosen instrument in the vehicle through which philanthropy, organized philanthropy, individual philanthropy, and corporate philanthropy, does its business. That was not always the case. And in the past philanthropy tended to pay a little bit more attention and support to the public sector. And particularly when philanthropy worked outside of the United States and in the global south it tended to work initially with the public sector. Now, in those early days it also made very few grants. The theory it had was that what you needed to do was to put smart people in development ministries, like agricultural and finance and planning bureaus, and have them whisper into the ears of the ministers because the notion was that basically to develop all you needed was a good dose of Yankee know-how. Sounds pretty ludicrous today. But if you go back and think about it in the context of the late '40s and the early '50s, it's not so ludicrous because the United States had just come off the successful intervention in World War II, the United States had just been an essential part of the rebuilding of a war torn Europe, and that notion seemed to have some merit. Over time what we found out was whispering in minister's ears wasn't quite enough. 

What you had to do is you had to build capacity. So we turned to training people. And we trained them in universities all over the world, and the University of Wisconsin was, in fact, one of primary centers where students and faculty and people who worked in the public sector were trained. But over time we began to realize that these bureaucracies were bloated, that these bureaucracies were inefficient, and you know, my goodness, these bureaucracies were even corrupt. And as private philanthropy we were ready to throw the towel in, and then something very interesting happened. We discovered nongovernmental organizations. It was love at first sight. They cared, they worked on tiny budgets, they were incredibly committed, and we shifted our focus to do our work really through nongovernmental organizations. And today if you take a look at philanthropy, that's primarily how we do our work. Now, what we know about civil society differs a great deal globally. 

It makes it difficult to do comparative analysis, if you will. However, I'm going to try to push it as far as I can even though at times it will sound a little US centric. In the US, in Europe, and probably in Japan, we have a fairly good sense of the overall map of civil society. And we can begin to look at the differences if you disaggregate the data. For example, disaggregating by region or by substance or by funding. Does civil society look different in the Midwest of the United States than it does in the northeast of the United States? Does it look different in France than it does in Germany? Does civil society and its organizations that work in the health field look very different than those who do other kinds of social services? Are civil society organizations supported by the state different from those that earned the substantial portion of their income or those that are supported primarily by private philanthropy? We can even go across sectors and ask if it makes a difference if a hospital, for instance, is organized as a public institution, a for-profit institution, or a not-for-profit institution. 

If you remember that was a distinction that de Tocqueville gave in the book that he published, Democracy in America, 175 years ago. And de Tocqueville said governments really have a choice when it comes to delivering services. They can set up an agency to do it, as would have been the case in France then and probably still is today, or they could contract with the civil society organization to deliver those services for it. And one of the theories he had was that in the United States you would see associations everywhere unlike you would have in France at the time. And the reason was in the move in the frontier people got there before the government got there. And they had to organize in certain ways to take care of the basic needs of society, and that became sort of the bedrock of associational life. Now I want to hasten to mention that when de Tocqueville wrote Democracy in America, he was 28 years old, he had been in the United States for nine months, and he had never gone west of the Mississippi. And I asked one of my colleagues in the political science department, he was about the age of one of your graduate students working on a thesis, what would you have done if he handed that in as his PhD thesis? And my colleague said, I would have asked him what his evidence was for those assertions. Nevertheless, in the rest of the world, outside of the US, Europe, and Japan, there's a very different sort of situation because the data just isn't there. 

And what we're still trying to do is fill in the gaps to see what, in fact, this map of civil society looks like at the national level. Now, I'd submit to you that most people think of society in two-sector terms. There's a public or government sector and there's a business or for-profit sector. Yet we've always known that there were a cluster of institutions that really didn't fit into either one of those two sectors. And those institutions existed in participatory democracies, in authoritarian regimes, in transitional societies, they existed in societies at different levels of development, and these institutions at first were really thought of by what it was that was disparate among them rather than what they had in common. And you can see that by the nomenclature because what we did was we defined and we labeled these institutions by what they were not rather than what they were. These were not-for-profit institutions or these were nongovernmental institutions. And over time, as we began to see some of the similarities, we came up with new names. We had the voluntary sector, we had the independent sector, and we had the third sector. But even these seemed a little bit out or skewed. 

After all, the voluntary sector is made up primarily of paid employees. The independent sector, well, kind of confusing. The government, for instance, provides a substantial portion of the revenues of this sector. So what is it exactly independent of? And the third sector, well, there's a term that has absolutely no pizzazz whatsoever. Since the late 1980s and the disintegration of the Soviet empire in eastern Europe and in central Asia, a new term has really come up, and that term is civil society. It's not necessarily a more accurate term or easier to understand, but it's gained a certain cache. And so I'm going to use it to describe that space occupied by a set of organizations that are neither state or business. One problem we have right away is that the term civil society has been used from Plato to Putnam. I love the alliteration of that. 

The latter is the person to popularized the term social capital. But they all used it differently. Now Michael Edwards, a former colleague of mine at the Ford Foundation, wrote a lovely little book called Civil Society. And Edwards, in this book, says people really use this term in three ways. The first of these sees civil society as a part of society distinct from states and markets, formed for the purpose of advancing common interest and facilitating collective action. Civil society in this sense contains all associations and networks between the family and the state except for firms. The second set of theories that define civil society does it in normative terms as the realm of service rather than self-interest. And a breeding ground for the habits of the heart, attitudes and values like cooperation, trust, tolerance, and nonviolence. In other words, it's a type of society, if you will. And the third school that he sees out there is civil society as an arena for public deliberation. 

Rational dialogue, the exercise of active citizenship in pursuit of a common interest, in other words, a public sphere. All of these are notions that are intuitively a part of civil society. But as interesting as they are, they're very hard to operationalize and to quantify. And this makes it difficult to define civil society. And for years when I was asked to do that, I would duck the question. And what I'd do is I would fall back on that famous statement by one of our Supreme Court justices who was asked to define hard core pornography, and he said, "I can't define it, but I know it when I see it." Well, I can't define civil society, necessarily, but I think I know the organizations of civil society when I see them. These are organizations that provide social services, often to the most at-risk populations in our society. These are organizations that educate us throughout our lives. These are organizations that do advocacy, often on behalf of those without a voice. 

These are organizations that do independent policy analysis, holding the feet of the public sector, in particular, to the fire. And these are organizations that enhance our pleasure and our sense of identity through support of artistic and cultural endeavors. A debate still goes on as to whether certain kinds of organizations are in or are out. Are political parties a part of civil society? Well, by and large, people say no. Are labor unions a part of civil society? By and large, people tend to say yes. How about cooperatives? Dicey. Religious organizations? 

Well we used to exclude them but then we found out that when I look at individual philanthropy and giving in the United States, 50% of it goes to the religious sector, and we thought how can you not include where 50% of the money is going. So we tend to include them. And the hardest of all, social movements? What are social movements? I define a social movement or you can tell a social movement from an NGO or a civil society organization in that in the office of the social movement, if they have an office, they're not busy writing proposals to the Ford Foundation, they're out doing what it is that they think is important. Now Lester Salamon wrote a terrific book called Global Civil Society. This is volume two. Do not buy this book because volume three is coming out this fall. And wait until volume three comes out with sort of new data and updated stuff. But what Lester did was that he defined civil society by looking at the characteristics of organizations that make up civil society in the 36 countries that he studied. 

He felt he could do this because the countries were drawn from all the continents, they were developed, developing, and transitional societies, and they represented all the major religious traditions. And he came up with what he said was a structural operational definition and suggested these organizations have five structural operational features that define them. The first is that they're organized. They have structure and regularity whether they're formal, meaning legally constituted, or informal. The second is that they're private, they're not part of the state apparatus. The third is they're not profit distributing. They can generate surpluses but these go back to the operation. The fourth is that they're self-governing. They're in control of their own affairs. And the fifth, they're voluntary. 

Participation in them is not legally required. Now, we can easily quibble with any of these features, but beyond that there seems to be something very essential that's missing. And I suggest that among other things what's missing is what Michael Edwards called the normative dimension. In general, social scientists have trouble dealing with the normative side of things. And issues related to values and belief tend to be cast aside. Yet we all know how important they can be. When it comes to organizations of civil society, many think any definition would be incomplete if it didn't recognize the sector as participatory, inclusive, tolerant, nonviolent, and a place where trust is built. Here is the conundrum. We all know of organizations that meet the structural operational definition that Lester Salamon and his colleagues suggest, but they have none of those normative characteristics. They're exclusive. 

They're secret. They are distrustful. They bred intolerance. And these among other dysfunctional attributes. Now I've thought long and hard about this dilemma, and I've come up with a slight of hand as a way of dealing with it. The slight of hand derives from the concept of social capital. You know, that series of bonds of trust and reciprocity that seem to be crucial in society. This happens by establishing connections among individuals, and their involvement in associations teaches norms of cooperation that carry over to political and economic life. The slight of hand, then, goes something like this. All the organizations of civil society are part of the not-for-profit sector, but not all not-for-profits are civil society organizations, only those that build social capital. 

This doesn't solve our problem, but it does move it to a more productive sphere. Now we can argue about whether a civil society organization builds social capital or not. And when I presented this in a class at American University in Cairo, one of the students in the class raised their hand and said, did I think Hamas was a civil society organization? And at this point I had learned the first trick of being a teacher, that's to turn it around and say, "Well, what do you think?" And he said, you know, I think it is. It has popular support and it delivers services effectively. And then, not to let me off the hook, he said, what do you think? And I said, there are two aspects to my answer. The first is that because Hamas has decided to become a part of the government in a political movement I think it had self-defined itself out of being a civil society organization. But the second, and perhaps the most important, if the most difficult to deal with, was that I had trouble seeing an organization build social capital if it doesn't renounce violence. 

I tell you, I'm not really certain if there's a right or a wrong answer to that question. But for the next 30 minutes or so the dialogue moved us to a new place in trying to understand what this sector was all about. If we grappled a little bit with the dilemmas about how you define civil society, let's now look at some of the numbers and get a feel of scale, if you will. To Lester Salamon, he said there are five major findings that emerge from his research in 36 countries. The first is that civil society is a major economic force. The second is it has a significant volunteer element. The third is there are great variations among countries. The fourth is it does more than just provide services. And the fifth is it's not a substitute for government. And if you look under each of these, here are some bullet points in terms of the data. 

A major economic force. In those 36 countries, and this is a few years ago, it was a $1.3 trillion industry or about 5.5% of the gross domestic product of those 36 countries. If it were a country it would be larger than either Russia or Brazil. This at a time when an estimate of world GDP would have been about $40 trillion, about 25% of that in the United States. A significant volunteer element. He said of the 45.5 million fulltime equivalents were employees, 20 million, or 44% of them, were volunteers. And that was clearly a distinction between this sector and the public sector and the for-profit sector, the reliance and the importance of volunteers. Third, that great variation among countries. In the Netherlands almost 15% of the workforce is employed in the civil society sector. In the United States about 8%, and in Mexico it's less than 1%, although one has to be very careful with this data in places where there's a very large informal economy. 

More than service providers. What he was trying to do here was to say, look, it does advocacy, it works in recreational activities, it works in culture and more expressive sorts of things rather than just service oriented things and not a substitute for government. Another meaning, I think here, is for you who realize that sometimes the arrogance we have about civil society and the notion that those of us in it in our organizations can do it better has to be tempered by the reality that if in fact you are going to sustain change on a large scale over a long period of time, there is no substitute for the government and its ability to extract resources through taxation. And the major point as a take away here is that each of the sectors, whether the public sector, the for-profit sector, or civil society, has a series of attributes that define its comparative advantage. And the trick is to craft your policy and your collaborations in a way that you play to the comparative advantage of each of the sectors. Now I'm not going to pepper you with a lot of statistics. You can get these from volume three when it comes out in the fall. But I would like to say a few things about civil society in the United States just as a way of doing a little bit of comparison. Where Lester Salamon used economic activity as his measure of scale, I'm going to use number of organizations as my measure. And unfortunately what that does is it makes you rely only on the formal organizations. 

Which means I'm leaving out those informal organizations that are not legally constituted. In the United States there are close to two million formal not-for-profit organizations, and there are an estimate of something like seven to eight million informal organizations. These two million organizations are broken into about 800,000 that are public benefit organizations and about 300,000 that are religious congregations. And the remaining 900,000 or so are membership organizations and trade associations that serve their members but not the public. It's an important distinction because while all of these organizations are exempt from taxes, it's only the first two categories, the public benefit and the religious congregations, that in addition to their exemption get a tax incentive in that the donations that one makes to those organizations can be deducted from your taxes, or at least a portion of them can be deducted from your taxes. Now these two million organizations have cumulative budgets of over $900 billion or close to 10% of the gross domestic product in the United States. They also employ, as I said earlier, 8% of the paid workforce of the country. And in the United States the studies show that if you were to add the volunteers and to add them at the sort of fair labor value, you would add about 50% to the dimension of the not-for-profit sector. The source of revenue for these two million organizations are about 40% from fees and earned income, about 30% from the government, and about 30% from private forms. And it's important to note here that the last category, the private sources, are made up of about 85% from individuals and only about 15% from organized philanthropy. 

We tend to think of organized philanthropy as the sort of elephant in the canoe. But yet in fact it's a very small portion. And if you break it down even further, it's about 10% from private organized philanthropy and about 5% from corporate philanthropy. Now, one could think of a lot of ways to characterize the institutions of civil society. I spent a few minutes telling you about what Lester Salamon does. And earlier we touched on what seemed off about his categories. And what I want to suggest is that there's a simple categorization of what civil society organizations do. And I break them, really, into two categories. Those activities that are safe and those activities that are edgy. It's important to note that either of these categories really encompasses activities that are professional, that are innovative, and that are developmental. 

And it's not a judgment of which one is more important than the other. Under the safe category you have organizations that largely provide basic services like health, education, and housing. The state generally likes these types of organizations. You know, they're seldom a threat to the state and they often relieve the state of some of the services that it needs to provide or its obligations to provide. As we discussed earlier, the state always has a choice. It can either create an agency to run the service itself or it can contract with civil society to do it on behalf of the state and the citizenry. Now there continues to be a debate about which is more efficient and effective. I think it's sort of interesting to note that in those places where you see both the private sector delivering the services and the state delivering the services, it is very hard to find examples in which the state excels beyond the private institutions in the delivery of those services. And I'd be delighted for examples from anyone here. While many of the organizations working in the provision of basic services are essentially providing a form of charity that deals with symptoms rather than strategic assistance that's meant to deal with root causes, that is by no means true of all of them, and in many cases those organizations evolve from charity to strategic assistance. 

Let me give you an example. One of my favorite examples of an organization is called DC Kitchens. I don't know if any of you know about DC Kitchens. This is an organization started by a man named Robert Egger. And what he discovered was that in Washington, DC, an area where large quantities of food were being served at embassy functions and other gala banquets, very little of it was actually being consumed. And this in a place where many people were going hungry every day. And what he did was he made an arrangement with as many of the catering services that he could to collect the uneaten food, repackage it, and distribute it to various soup kitchens, churches, and other locations. Now to this point, what he was doing was basically charity. Innovative, but charity. He was feeding hungry people. 

These people would be hungry again tomorrow. So while what he did was certainly innovative, it still only dealt with symptoms and not root causes. But as he gained experience, his operation became more and more professional and part of it began to evolve from charity to a more strategic activity. He began to employ some of the hungry people to be his drivers, his administrators, and his food processors. For this group of people he was now providing the training that would allow them to be empowered, to be employed, and to move off the poverty roles. About 10,000 people a day are fed through DC Kitchens just in DC. And it has spawned a series of clones all over the country. It's important that we not look down on the provision of charity. It meets a need. It can be done professionally. 

It can be innovative. And it can evolve from charity to strategic assistance. But let's move to the edgy side. This is an area in which the state is seldom happy about what civil society organizations do. The category consists of efforts like community organizing, advocacy for various causes, public policy reviews by think-tanks that hold the state's feet to the fire, human rights and social justice concerns, and other activities that usually encompass the demand for significant change. Now, one shouldn't be too quick to dismiss the concerns of the state here because the state is seldom going to be happy about an organization to which it gives and confers a tax exemption turning around and criticizing the very legitimacy of the regime, its policies, and its programs. And one really needs to understand that when we're in one or another of the sectors, we really take on the characteristics of that. I wrote an article called Obama Mania a little while ago, and it was meant to say for all of us in civil society that now thought we had an ally in the government, it takes about two nanoseconds when you make the shift from one or the other to start incorporating the values of the other side and that's okay. We've got to learn to sort of suck it up and that we're not going to get special treatment, and they've got to learn to suck it up and they're going to criticized and that's part of our function. Having presented a safe category in DC Kitchens, let me now present an activity that at first may not seem edgy, but you be the judge of this. 

And here I'm talking about the Grameen Bank and the evolution of microfinance in the world. When Muhammad Yunus, the founder of the Grameen Bank, came back to Chittagong University in Bangladesh with his newly minted PhD from the United States, he was confronted by very poor people with no collateral who needed small amounts of money to undertake productive activities that would add increments to their livelihoods. Nothing he had studied while earning his PhD helped him deal with this issue. Without collateral, these people could not borrow from the bank and were often left to the mercy of money lenders where exorbitant rates were charged and clearly washed away any increments they hoped to add to their livelihoods. Yunus studied the situation and developed a strategy that organized borrowers into groups and made the group responsible for the loan of one of its members. How this worked was that members of the group took turns borrowing, but a new loan would not be issued until the existing one was paid off. From a few loans in southern Bangladesh to many millions throughout the country, the default rate has remained negligible. He is being copied in many places, has earned the title of banker to the poor, and picked up a Nobel Prize along the way. Now much has been written about his methods, and a great deal of complexity has cropped up to explain his work. But to keep things simple, his innovation was elegant and powerful in its simplicity. 

What he essentially did was he substituted group discipline for the lack of collateral and it worked. As he was scaling up, IFAD, a UN agency financed in large part with gulf money, offered him $3 million, the first big money that he would have, and they said they would let him have the money if someone would cover any of the losses beyond the first 10%. At that time I was the head of the Office of Program Related Investments at the Ford Foundation, and we stepped up and provided that guarantee. The loan loss rate over five years was one half of one percent. And the next time IFAD offered a loan to Yunus, they didn't even bother coming to us to ask for a guarantee. Now why was this edgy? Well, it was edgy because a whole group of powerless people, primarily in the countryside, were given voice. And it was edgy because in a strictly Muslim society, 80% of those borrowers were women, and it was the first time that many of those women had ever owned an asset in their own right. I'd like to push, if you will, the discussion of civil society a further step. Because there really is something extraordinarily interesting in this book by Lester Salamon. 

What he and his colleagues did was they created an index of civil society in the 34 countries that they had, in fact, data on. And the careful way they take you through how they create that index here is the best thing I've ever seen on creating an index. In essence they develop three dimensions of civil society: capacity, sustainability, and impact. Each of these dimensions consisted of a set of indicators that were then aggregated to reach an overall score for that dimension in question. And then the dimensions themselves were aggregated into an overall score for civil society. And you can see how that comes out in the book, with a more significant number of countries in volume three. The Netherlands comes out number one, incidentally. The United States comes out number three. Pakistan comes out number 34 in all of that. National statistics have tended to define the not-for-profit sector out of existence. 

By and large, they classify not-for-profit organizations by the source of their revenue. And if they come from the public sector, they're public institutions. If they come from the private sector, they move over into the for-profit side. To address this kind of a problem you've got to do something more than survey research because it is so costly and it is so quickly out of date. And what they've done is they've moved beyond survey research to work with the statistical offices of the UN developing a module that can then be added to the national account of statistics. It includes many of those indicators that they had in the index that they put together. And what this means is that in the future we're going to be able to measure the overall level of development civil society in an increasing number of countries, in a timely fashion, and at a modest cost. It's important to note that what this gives is aggregate data, it does not give data on individual organizations. For that you've got to move to a parallel data collection technique, and many of you are familiar with it in this country, it's called GuideStar. It has a similar base in the UK, and it has now gone international, although there are great, great problems because not all countries have the 990 tax forms on which to base it. 

But with these two things, we're going to be able to understand both the aggregate and the individual organizations that make up civil society so much better in the United States and all over the world. Now, what we've done so far is we've concerned ourselves with the instrumental functions of civil society. The things that they actually do. But many people would argue, however, that there is function that these organizations of civil society perform that goes beyond these instrumental activities and it's really an important generic function. And let me just take a moment to reflect on a recent history around the world. Beginning in the 1970s in Latin America, followed in the late 1980s in eastern and central Europe, and on to Asia and Africa in the 1990s and the early part of the new millennium, there was a pronounced shift away from authoritarian regimes and toward more open participatory regimes. If that is the case, it is fair to ask what is it to prevent that regression and reversion back to authoritarian regimes as we've seen in the past. And to many people, it's this layer of organizations of civil society that will make it much more difficult to regress. To be sure, civil society organizations have always existed, but what makes this historical period different is that there are many more of them and they are much better connected both within the nation state and beyond it. This set of connections enhances the soft power of their influence. 

And I'd submit to you that the color revolutions in Slovakia, in Ukraine, in Serbia, and in other places was an indication of this phenomenon. When democracy was threatened, it was civil society that spearheaded the movement to protect the newly acquired citizen rights. In increasingly complex societies, facing increasingly difficult and sometimes seeming intractable problems, there's a tendency to concentrate and abuse power. Now we've dealt with that historically by a separation of powers and a set of checks and balances over executive, legislative, and judicial functions, the three estates, if you will. And we added to that a fourth estate in the form of the independent press. And what I want to suggest to you is that the addition of the independent press as the fourth estate, while important, is still not enough. And in keeping with this, one might consider the generic function of this layer of civil society organizations to be a fifth estate guarding against that concentration and abuse of power. Again, it doesn't assure that there will not be a reversion or revision to a more authoritarian form of government, but it does mean that it will be harder to do so. And I think this at a time when it is particularly difficult to understand how technology is affecting the fourth estate in terms of the independent media. And we'll have to wait a little bit to see if the dust settles. 

Some of it may be very good. Since 1989 in Tiananmen Square we now know that you can no longer repress your society and have no one know about it. Fax machines and cell phones told us that. And in 2009 in Iran, we saw the increasing development of technology informing the outside and now it was internet and smart phones and social networks. So I think it might, in fact, be a positive aspect. And let me stop here. We'll pick up on Thursday on a little bit on philanthropy and its primary obligation to support civil society and its attributes. And open it up to any questions, disagreements, issues that anyone would like to take with any of this. 

- Yasiri: Thank you, Barry. I failed to mention at the very beginning that we, of course, will have a question and answer period and we need to pass the mic so that we can actually capture your question on the taping that we're involved in. 

So if you just want to wave at me if you've got a question it would be terrific and I'll hand the mic off and you may care to introduce yourself as well. I want to introduce our faculty director at the Center for Nonprofits. Shep, why don't you stand up. And I know that Shep is also going to be helping in leading this discussion. One of the interesting things that we have happening in this particular session, Barry, is that our communiversity series is not only open to the general public and many of the nonprofit executives that have chosen to participate with us tonight but we have about 40 undergraduate students from the University of Wisconsin, many of them new nonprofit and community leadership majors. And I'm wondering if you might be willing to comment on why we see a surge of young people wanting to be of service in the sector. 

- Gaberman: Why the surge? 

- Yasiri: Yeah. 

- Well, you know, I was talking to a group in Brussels at the European Foundation Centre's meeting of sort of next gen leaders and one of them said what is it that's different today when you talk to us than was the case when you became a part of philanthropy and civil society almost 40 years ago? And I said the most interesting thing is looking at who's in the room. 

When I joined the Ford Foundation in a room of sort of next gen leaders diversity would have meant there would have been one white guy under 40. And now when you look at the room, aside from the sort of obvious feminization that's taken place of the sector, it really is people from all over, ages, color, gender, and so there's a sort of much different feel to it. Does that have an effect on attracting people? I don't know. Some of the things are straightforward. What people can be paid in this sector today compared to what the reality was 40 years ago is really quite different. And of course, it's not going to match often what you can earn in the for-profit sector. But by the scale of what's closer and closer to a living wage, it's much better. So it's a more attractive sector to get into in that sense. It's more welcoming to a greater diversity of people. 

And I think that people really are in a sort of spiritual way almost searching for things that really turn them on, that commit them, that they can commit themselves to and feel good about. That's why you see, and I mentioned it earlier, if you're a graduate of one of the better law schools in the country today, in order to attract you to the firms, the better law firms in some of the bigger cities, they have got to offer you time to do what you really care about in terms of pro bono activities. They can't get you otherwise. And that's a fascinating sort of development that's occurred in the last 25 years and I hope will continue. I think also it's become recognized as more professional. There is a tendency, often when I would teach the course and interestingly enough very often the place in universities in the early days where you could teach it was out of the business school because they were so much more flexible about course offerings than the straight disciplines were, political science, sociology, history, and others. But it meant that you had a hard core of people from the business school there. And very often you would hear a criticism about the fact that what the not-for-profit sector really needs is some of the management acumen and skills of the business sector. And of course it always made me reflect on what did that really mean? Was it examples that we should model ourselves after like Enron and BP and others? 

And the basic notion that good managers are good managers whether they're in the public sector, the for-profit sector, or the not-for-profit sector. And I think more and more we're beginning to see that. We had, through Woodrow Wilson, the introduction of public administration. Later on we had the introduction of the MBA, and now you see the movement to the introduction of this in the not-for-profit sector. And I think this professionalization of it along with the diversity and along with the increase in salary makes a big difference. 

- I'm going to walk over here and hand the mic to somebody who has another question. 

- Hi, my name is Lee. I really appreciate your talk. I have a question about sustainability for the civil society. I think you kind of alluded to it a moment ago that maybe there is some kind of need for a management acumen but maybe we still have to further explore on that. 

But other than that, do you have other tips or hints for anybody who is involved in the so-called civil society? How can they best build and maintain the sustainability, especially at this time of the critical moment where everybody is looking for money? 

- It's a terrific question. A couple of points. First of all, I think that right now within philanthropy, and I'll say something more about this on Thursday, there is a notion of a new kind of philanthropy beyond the sort of independent endowed in perpetuity foundation. And it goes under various names like venture philanthropy and social enterprise and entrepreneurship and social entrepreneurship. And there's a tendency to think sometimes that this is going to cure all the ills. Well it's not going to cure all the ills but it's introducing a set of concepts often that are very important. For example, we get now the whole notion of an exit strategy coming from venture capital into philanthropy. And what it means is that at the very beginning you're thinking about as you grow how you're going to sustain yourself, what are you going to do when you lose that initial source of funds. 

And that's important. Secondly, the whole notion of a business plan to go along with your strategic plan is coming in and a very important element there. And to that, the notion of diversifying your sources. Also, arts institutions are the sort of primary example where basically fundraising strategy was to wait until there was a crisis and then scream that unless we all sort of chipped in the doors would close tomorrow. And things like the National Arts Stabilization Fund and those that began to try to bring in that discipline were very important to that. So I think that a business plan along with your strategic plan, a notion of how you diversify your sources, a question about in fact what role earned income and fees can play in the organization, some sort of a grappling with an exit strategy, and I think that more and more what people are receptive to is a genuine collaboration between funders and operating organizations. We tend often to call things collaborations that are not collaborations. If I invite you to join me in funding a project I'm funding, that's not a collaboration, it's joint funding. It's important and we wouldn't want to turn it down, but it's really not a collaboration. And in fact when a group of funders get together and think of a partnership in a particular area, it's a pretty good partnership but it's also not a collaboration. 

A collaboration occurs when in fact those that are providing the funds to support what's going on are sitting at the same table with those that have to carry out that activity. And each of them know they have to give up some piece of their sovereignty to get this thing moving. And it takes time and that's a genuine collaboration. But when that collaboration takes place, you get a vested interest across people that makes them stick with it. 

- Do we have a final question for Barry? I see a hand over there, and I'm sorry I'm going to have to run across the row. 

- I'm Ralph Nervig and I've worked both in the business world, as well as in nonprofit. I was uncertain about the title for this series. When it said building civil society I thought it was referring to building a sense of community, building a sense within society that is working for the common good. But nevertheless, my question is do you think that this civil society or the nonprofit sector can influence back towards the business world to counteract some of the garbage that we've seen like this whole financial meltdown, the greed, this whole real estate bubble, all of that kind of stupid stuff? 

Is there a way of influencing that? 

- I think there is and I think that what's beginning to happen, civil society has tended to concentrate on the public sector. And when it's moved beyond the services that the public sector contracts with it to provide, it's looked at its advocacy and other sorts of works and its target to be the public sector. And it's looked to the public sector very often as the place that would pick up and scale up the activities that might have been tried on a demonstration in a pilot project basis. But what we're beginning to see now is the sort of watchdog and the advocacy and the other things like that on the public sector beginning to happen on the for-profit sector as well. And the first few examples of it tended to happen with watchdog groups that looked at things like the world bank and the IMF and the sort of biggies that were out there. And more and more I think you're starting to see the way the environmental movement shifts and others. So I suspect that this is a growth industry for civil society, although it's a more recent kind of development. I want to make one point because you touched on something that's really, really important. And I think there is a role for civil society to play in helping to be a catalyst on getting the for-profit, the public, and civil society together to work on what is important in society in terms of building a social compact. 

Because when you don't have a social compact, a set of usually a Constitution, a set of policies, some cultural and some historical pieces, what tends to happen is you tend to ask the wrong questions. Because a social compact really says what are the rights and the responsibilities of the citizens of the society. And I'll give you an example of that. We probably had a nascent social compact in this country in the early to mid-'60s up until the early '70s. It was flawed, it had holes in it, but it pretty much was trying to set a safety net below where society would have a set of responsibilities towards you as a citizen and the rights you had there but also the responsibilities that you had. And it tended to fall apart because of the Vietnam War and other things. And then we went into a period of real devolution and decentralization in this country. And without some sort of a social compact to guide us, we tended to ask the wrong question. Example: we asked whether for-profit organizations can run prisons. Well the answer is yes, for-profit can run prisons. 

But that's the wrong question. The question is should for-profit organizations run prisons? And that's the kind of debate. Now, what would be interesting in what you brought up is that in places, in particular in Europe and Japan to some extent and Australia and some others, where that social compact has weathered a bit better than in this country, is it going to able to survive the kind of economic crisis that we're seeing now? And the early evidence is pretty dicey on that. 

- Well, I know the group joins me in thanking Barry for his lecture this evening.
(applause)