The legitimacy of ideas: Institutional foundations of the non-profit community-welfare sector.Third Sector Review, Vol. 17, No. 2, 2011: 5-27.

5TH IRD SECTOR REVIEW

The Legitimacy of Ideas: Institutional foundations of the non-profit community-welfare sector

Jeffrey Johnson-Abdelmalik, School of Social Work and Human Services, University of Queensland

Abstract

An analysis of the texts of the 1995 Industry Commission Inquiry into Charities, employing neoinstitutional theory, reveals a structure of ideas that provides the third sector with legitimacy; these include the altruistic basis of work in the sector, the value that community organisations place on individual clients, and the independence from government that is needed if they are to successfully advocate for them. These ideas are taken for granted, and for this reason it may not be obvious that they have strategic importance. In 1995 they were deployed in resistance to elements of managerial reform – in particular, to demands for greater accountability. This article discusses an example of this strategic use and seeks to draw them out of their background role in order to make them more visible. It proposes that these ideas have continuing relevance to the shaping of the regulative environment of the sector.

Keywords

Non-profit; organisation; neoinstitutional; legitimacy; ideas

Introduction

This article explores the significance of the legitimacy accorded to the non-profit community-welfare sector of Australia, and specifically to the legitimacy it gains through ideas. In neoinstitutional theory, which

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underpins this article, the concept of legitimacy is used to explain how the generalised acceptance by community and government of the framework of values, ideas and beliefs of organisations enhances their prospects for survival and growth. Through widespread community acceptance, certain normative and cultural ideas have become institutionalised foundations of the sector. The taken-for-granted nature of these ideas makes them, in one sense, invisible: they are assumed to be true and self-evident. However, what is not so clearly obvious is that, once legitimated, they can be deployed defensively and offensively in the debate around the structuring and restructuring of the sector. In other words, they have a strategic potential.

Using neoinstitutional theory, I argue that this intertwined legitimacy allowed these ideas to be deployed in a strategic context during the 1995 Industry Commission Inquiry into Charitable Organisations in Australia (henceforth ‘the 1995 Inquiry’). I also argue in the Conclusion that this legitimacy continues to have implications for the shaping of the institutional orders of the non-profit community-welfare sector today. The years between the 1995 Inquiry and the more recent Productivity Commission Inquiry ‘Contribution of the Not-for-Profit Sector’ (2010) (henceforth ‘the 2010 Inquiry’) have seen a proactive response from the sector more generally to shape the regulative environment of the sector. This includes the work done by institutional bodies in Australia, such as the Australian Centre of Philanthropy and Nonprofit Studies at the Queensland University of Technology and the National Nonprofit Roundtable. In the processes of reform, however, the institutionalised ideas of the sector have tended to lie in the background, acknowledged but largely invisible. A new environment provides an opportunity to grasp the significance of these taken-for-granted ideas in shaping the institutional arrangements of the sector and federal and state governments.

These ideas, if true, have the potential to inform new relationships with civil society and with government. Alternatively, it may be time to critically interrogate them and acknowledge that thirty years of economic and political reform have emptied them of substantive content, opening the way for a reframing of the purposes of the sector. The critical questions are whether these ideas continue to contribute to



the distinctiveness of the sector, and whether they should therefore be enhanced and built into the institutional structures of program-delivery of welfare services.

To explore these ideas in this article, I will firstly review key ideas of neoinstitutional theory that have informed this research project. This includes a closer look at the concept of legitimacy and of the institutionalised idea. I will then contextualise the 1995 Inquiry, looking at the impact of managerial reform and, in particular, the impact of the culture around accountability and quality improvement. I will review the thematic methodology that underpins the research into the submissions to the Commission of Inquiry and of transcripts of proceedings, before finally isolating three institutional ideas and showing how they were deployed in debate around themes of accountability and quality improvement.

Key Ideas of Neoinstitutional Theory that Inform this Research

Neoinstitutional theory has generated a growing body of research since its inception in the 1970s. It has, however, has been underutilised in exploring the dimensions of the non-profit community-welfare sector in Australia. Meyer and Rowan (1991) argued in their seminal article, which helped initiate the development of neoinstitutional theory, that organisational success depends on factors other than efficient coordination and control of productive activities. Organisations also need to incorporate socially legitimated rationalities and logics, which Meyer and Rowan (1991) refer to as institutionalised ‘myths’. Organisations draw on institutionalised ideas, logics, rules, beliefs and modes of operation to achieve that needed legitimacy, which Suchman (1995: 574) defined as ‘a generalised perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs and definitions’. There is considerable supportive evidence of the thesis that legitimacy enhances organisational survival (Deephouse & Suchman 2008: 58–59). Deephouse and Suchman (2008), however, have pointed out that legitimacy can also



be manipulated to achieve organisational goals beyond the minimal conditions for survival (58–59). This insight implies that legitimacy can have an instrumental purpose, and may be used to strategically position organisations within an institutional field. This insight helps to explains how institutionalised ideas were deployed during the 1995 Inquiry.

Neoinstitutional theory was given an impetus when W. R. Scott (2001) synthesised the diverse strands of neoinstitutional theory to create an inf luential three-pillar model of institutions. This comprised what he called normative, cultural-cognitive and regulative pillars of ideas and logics (Scott 2001: 47–70). Each of these pillars provides a different kind of legitimacy. In a broad sense, the regulative pillar refers to explicit regulatory processes: monitoring and sanctioning activities (Scott 2001: 52). The carriers of the regulative pillar are, therefore, rules and laws, governance systems and protocols (Scott 2001: 77). The normative institutional pillar is the moral root of an organisation. Each institutionalised organisational form, and indeed each organisation, is created with a core and essential raison d´être. The constitutive elements of the normative pillar are, therefore: values, or the conception of the preferred or desirable; norms, or the specifications of how things are to be done; and roles, or conceptions of appropriate goals and activities (Scott 2001: 54–56). Cultural-cognitive elements refer to the shared conceptions, or internalised symbolic representations of the world, that frame the meanings which are attributed to social reality (Scott 2001: 57). They are the basis for the taken-for-granted nature of institutions by which it becomes, for example, unthinkable to do things differently (Hoffmann 1999: 353; Scott 2001: 57). This system contains ideas about how the world works, and the individual uses it to assess the best courses of action when confronted with various stimuli (Scott 2001: 57–58, 77).

The structure developed by Scott was used to explore the ideas which are revealed through a textual thematic analysis of the documents of the 1995 Inquiry. Using this structure, an institutional idea was defined as:

A distinguishable unit of cognition which has been legitimated through institutional processes and is deployed across normative, cultural-cognitive and regulative institutional pillars.



Background to the 1995 Industry Commission Inquiry into Charities

The context of change for the non-profit sector is the restructure of the provision of welfare through the 1970s to the 2000s. Economic and social change, the increasing inf luence of the ideas of neoliberalism, economic rationalisation in Australia, managerialism or New Public Management have brought pressures for change over this period. These pressures have facilitated a shift towards an ideal of smaller government and a new institutional framework (Gilbert 2002: 43; Christensen & Laegrid 2007: 4, 8), in which governments are required increasingly to demonstrate to the public the efficiency and effectiveness of programs through increased accountability and quality management (Lipsky 1993: 79; Clarke et al. 2001: 250; Flynn 2001: 35). This has led to the growth of audit as a control system, which includes inspection, accounting, regulation, performance review and the development of ‘auditable organisations’ that are accountable and transparent (Clarke et al. 2001: 254–255). Through the privatisation of government services and the devolution of service-delivery functions, non-profit community-sector organisations and the private sector have been encouraged to take on a greater role in the direct provision of services, and have been integrated into this process (Gidron 1992; Kramer 1993; Self 1993: 121–129; Rhodes 1994; Salamon 1995; Skelcher 2000; Miller 2004: 56). In the context of managerialism in the UK, Clarke et al. (2001) have described this process as resulting in organisations that provide services becoming subject to increased control ‘at a distance’ by government through audit (254).

Contractual relations with governments make non-profit community-welfare organisations accountable subjects; however, accountability in the human services has its dilemmas. An important issue often raised is the question of how objectives and outcomes can be clearly and simply specified to take account of difficult qualitative phenomena so that they are measurable (Jones & May 1992: 390–394; Lipsky 1993: 82–83; Johnson et al. 1998: 310; Clarke et al. 2001: 255–256). Miller (2004) has pointed out that as the state has:



become more proficient in its regulatory expertise . . . The output driven nature of these requirements, aimed at achieving specific policy objectives within limited time frames, undermines the sector’s orientation towards process and capacity building in which the benefits are more diffuse and difficult to measure. Indeed, if non-profit agencies as service providers working to government targets find themselves in conf lict with their service users, they may feel they have more in common with the state (Miller 2004: 78).

Miller has thereby highlighted that regulatory arrangements may impact in a perverse way on the normative and cultural framework of the sector.

The 1995 Inquiry represents an important moment in the process of managerial reform towards increased accountability. By the mid-1990s, a momentum for microeconomic and structural reform in Australia had developed under the direction of the Hawke-Keating government, notably inf luenced by Treasurer Paul Keating (Gordon 1996; Watson 2002). When Keating succeeded Hawke in 1991, he promoted John Dawkins, who shared his economic philosophy, to the post of treasurer. It was Dawkins who placed charitable organisations on the forward work plan of the Industry Commission in 1992 without, however, giving official reasons for doing so. He thereby left the purpose of the Inquiry open for speculation (McGregor-Lowndes & McDonald 1993: 1). In addressing distortion effects to the economy, the Industry Commission, now rebadged as the Productivity Commission, has typically adopted a line that is informed by economic rationalist principles, and has supported the introduction of competition and deregulation where inefficiencies are perceived to exist (McGregor-Lowndes & McDonald 1993: 2; Quiggin 1996). The choice of the Industry Commission, therefore, signified to the sector that the practices of the sector would be reviewed in the light of microeconomic reform principles (McGregor-Lowndes & McDonald 1993: 2; May 1994; McGregor-Lowndes & McDonald 1994; Rogan 1996: 132–134).

The restructure of the welfare state resulting from the pressures described above has significant implications for relationships between



state and federal governments and the sector. Rod Rhodes’ (1994; 1996) initial proposal that the state was becoming ‘hollowed’ out through devolution of its functions has been accused of being exaggerated (Peters & Pierre 2006; Bell & Hindmoor 2009); however, it is clear that government’s responsibility to determine policy, oversight implementation and evaluate results ‘at a distance’ has become more complicated (Peters & Pierre 2006; Bell & Hindmoor 2009). Governance theory has evolved to help explain this new complexity, and highlights the role of networks, reciprocity, accountability and democracy in these new arrangements (Rhodes 1997; Bevir & Rhodes 2003; Kjaer 2004: 3–7; Kooiman & Jentoft 2009).

It is in this context that ideas of partnership with the non-profit sector, which were undeveloped in 1995, have gained in significance, expressing themselves in, for example, the development of Compacts (Casey et al. 2008). This evolving environment has been supported by a significant body of research by scholars who study the non-profit community-welfare sector. Numerous scholars have wrestled with the need to develop positive models of accountability and management that ref lect the values of the sector (Conroy 2005; Grant 2006; Onyx & Dalton 2006; Almers 2008). Another stream of research is more overtly defensive of the normative values of the third sector and is linked to ideas of social capital and civil society (see, for example, Hewitt 1997; Johnston 2004; Rix 2005; Vromen 2005; Wagner 2005; Cribb 2006). By their reiterated insistence on respectful and more equal relationships with government, they have contributed to a more sensitive reading of the sector, which is evident in a comparative reading of the 1995 Inquiry against the more recent 2010 Inquiry.

Both streams of research, however, accept the normative values and principles of the sector as ‘taken for granted’ and do not critically explore their role as elements of institutional structure. This article instead focuses on the role of ideas as institutional elements. Their ‘invisibility’ can lead to them being overlooked, while a closer look at their function as legitimated elements of an institutional structure brings out their potential as elements that have a strategic potential.



The Legitimacy of the Non-Profit Community-Welfare Sector

The question of the legitimacy of the non-profit community-welfare sector is bound up with a discussion about the nature of the state. Whether the state consists of government institutions or a more complex set of arrangements between civil society and government is at its heart (Hay & Lister 2006). In this regard, a convergence of pluralist, poststructuralist, post-Marxist and postmodern ideas of the diffusion of power challenge the commonly cited Weberian definition of the state as ‘a human community which (successfully) claims the monopoly of the legitimate use of physical force within a given territory’ (Jessop 1990: 343). From these perspectives, the state is seen to have a wider reach than the formal structures of government (Jessop 1990: 339–342; Hindess 1996: 105–113). Modern societies are so complex and differentiated that there is no subsystem of modern society that can be at the apex of sovereignty and whose rule extends everywhere. Rather, there are many different subsystems, some of which are largely autonomous, but which are more or less involved in complex systems of interdependence (Jessop 1990: 365–366). The governing of society is no longer seen as the prerogative of government from these perspectives, but rather as a dynamic activity that takes place in different institutional settings. These give rise to different processes and involve different actors, such as decentred networks of quasi-autonomous delivery agencies, interest organisations, private corporations, social movements, local citizen groups and transnational organisations (Torfing 2007: 3–4).

This view allows for a greater role for the non-profit community-welfare sector as a player within the institutional structure of the state. Government now depends on the non-profit sector for the delivery of its programs, just as the non-profit sector depends on government for policy coordination, funding and the public-relations aspects of establishing and delivering welfare. The concept of meta-governance implies that there is a need for government to manage, negotiate and collaborate around decentralised arrangements (Bell & Hindmoor 2009). The outcome of this perspective is that any study of the state must take into account the



structuring of the non-profit community-welfare sector in its relations to the state, and implies that government, as the executive manager of the state, will constantly be seeking closer integration of the non-profit sector in the state structure. This, of course, has enormously significant implications for how the sector conducts its business and fulfils what it sees as its role.

From different perspectives within political science, the state, as a collective of government institutions, gains its legitimacy from: its institutional structure and historical context (Hay & Lister 2006: 10–13); its capacity to coerce as in the classical Weberian view; and from its abiding social contract with its citizens (Nussbaum 2006). In comparison, ideas around the legitimacy of the non-profit community-welfare sector in Australia are implicit but undeveloped. This article seeks to redress some of this balance through an exploration of the texts produced by the 1995 Inquiry.

Methodology

The textual corpus investigated included submissions by organisations to the Commission, transcripts of proceedings, and the final report of the Commission (1995). Four hundred and forty-three organisations submitted responses to the Inquiry, and 156 of these were interviewed by the Commissioners (Industry Commission 1995: p29). This process resulted in many volumes of both submissions and transcripts, and the research challenge was to capture a diversity of responses from this large body of work. To achieve this, a sampling process was employed to ensure a mix of documents from different kinds of organisations. This process utilised, firstly, the classificatory scheme developed by the Centre for Australian Community Organisations and Management (CACOM) and the Australian Bureau of Statistics between 1995 and 2002 (Lyons 2003: 12–14; Australian Bureau of Statistics 2009). The Terms of Reference of the Inquiry targeted a range of types of organisations, and so the majority of submissions came from organisations in the non-profit sector that delivered community-welfare services. These included: under the category of ‘health’, nursing home providers; under



the category of ‘social services’, organisations providing income support and emergency support and accommodation; and under the category of ‘law and advocacy’, organisations providing advocacy, referral, counselling and legal services.

Additionally, the questions asked in the Terms of Reference suggested further selection categories to achieve diversity. These were: large corporate organisations (defined as organisations managed by a centralised corporate structure and delivering services across state boundaries); small community-based organisations; ethnic community organisations; peak bodies; organisations providing commercial business ventures in addition to social services; and rural and regional organisations. With these additional variables, a matrix was developed to identify the distribution of the types of organisations that responded. Submissions from 47 organisations and transcripts of proceedings were analysed, as was the final report of the Commission.

Thematic analysis was employed initially to reduce the large amount of text to manageable code (Boyatzis 1998: 1–4). Each substantive paragraph of transcripts and submissions was coded for its principal ideas into themes – for example, ‘altruism’ and ‘accountability’. To guard against arbitrary selection of themes, the constant comparative method was employed (Silverman 1993: 126–149; Maykut & Morehouse 1994: 134; Marston 2001: 91) and a principle of ‘saturation’ followed (Bryman 1988: 84); if the material could not be included under a code then a new code was formed, until it was judged that the field of codes had been exhaustively described. It cannot be claimed that the process exhaustively captured all the themes of the Inquiry that may have arisen; however, the sampling process endeavoured to capture a diverse expression of ideas across the range of organisations that participated.

The identification of themes was only a preliminary step. Thematic analysis is not suited to the analysis of discursive contestation. The development of codes will support the identification of ideas, but the processes by which those ideas are negotiated and disputed cannot be captured with this method. The real work of interpretation occurred as those documents were read systematically and linkages and discontinuities identified. Because the Inquiry was a discursive process,



selected tools of discourse analysis were found to be extremely useful in making sense of the social phenomenon of the Inquiry. Neoinstitutional theory, although having a strong bias towards positivist methodology, is nevertheless a meta-theory that can incorporate a range of approaches; it has been argued that it can accommodate constructivist epistemology and qualitative methodologies such as discourse analysis (Phillips et al. 2004). Discourse analysis has developed a wide range of tools that can be applied textually, and certain concepts and ideas are of particular relevance in this context. The most important tool among these was the analysis of recontextualisation, or the process by which social events are incorporated into other social events (Fairclough 2003: 139). Fairclough (2003) describes the elements of recontextualisation as: noting which elements of events are present or absent, prominent or backgrounded; the degree of abstraction or generalisation made from concrete events; the arrangement or ordering of events; and additions made to explain and legitimise through reasons, causes, purposes and evaluations (139). In the context of the Inquiry, recontextualisation drew attention to the processes of arrangement and rearrangement of the vast amount of material available, and the addition, deletion and passing over of ideas and evidence provided by the respondents to the Inquiry.

A number of strategies were employed to ensure reliability. The first was to collect all opinions on a theme in theme documents, whether supportive or contradictory. This, of course, would not have accounted for absences of opinion; however, it was possible to determine when an idea was mentioned many times, whether in agreement or in opposition. At the same time, variability of meaning and interpretation of an idea was addressed by the development of thematic sub-categories. The simple numeric counting of instances was a measure of its generalised use, once that variability had been taken into account. The second strategy was the sampling methodology, described above, which sought to provide a diverse sample of organisations across the non-profit welfare sector. The first product of this methodology was the identification of a number of institutionalised ideas that are part of the normative and cultural-cognitive institutional framework of the non-profit community-welfare sector.



Institutionalised Ideas Revealed by the Commission of Inquiry into Charitable Organisations

The institutionalised ideas of the sector identified in this research will not be a surprise to people who work in the sector. In fact, it would be surprising if they were, given that institutionalisation implies that such ideas have become taken for granted as part of the background of the institutional order. However, the interesting aspect of these ideas is that they compose a legitimated institutional framework that was deployed in resistance to unwanted managerial reform.

The ideas that become evident in the research commence with normative ideas around the altruistic base of the sector and the need to value each individual on their own terms. These ideas then f low on to other normative and cultural-cognitive ideas, which can either describe how the sector works or be promoted to norms that should guide the regulative structure of the sector. These ideas are: firstly, that the foundation of work in the non-profit community-welfare sector is altruistic concern for the disadvantaged; secondly, that each individual is valued for their own sake separately and uniquely, and is provided individualised services by community-welfare organisations; thirdly, that non-profit organisations are close to their clients and therefore have expert knowledge about them; fourthly, that the non-profit sector is innovative and responsive; fifthly, that to be effective, non-profit organisations require independence; and finally, that community-based welfare services are the true home of welfare services.

This article explores how institutionalised ideas are deployed in a discursive competition around the ideas of accountability and quality improvement. Because they relate most closely to these key managerial themes, the first two ideas and the fifth will be discussed in detail.

Two Ideas: Altruism and individual value

It will not be a surprise, again, to note that altruism is at the core of the value systems of many non-profit organisations. Specific reference to altruism and altruistic principles were made in six of the sampled



transcripts and four of the submissions. Altruism was not raised as a philosophical issue in the Inquiry. Rather, it was raised as a definitional issue in response to the question around the place of charitable organisations in society (Industry Commission 1994). In the context of the delivery of welfare services, altruism is best understood as drawing on Titmuss’ formulation of altruism as an ultra-obligation or ethical foundation for a more equal and socially cohesive society (Spicker 1988: 31; McClelland & Smyth 2006: 25). So, for example, the Brotherhood of St Laurence contrasted altruism with self-interest:

Generally we believe the community welfare sector can be characterised first of all by allowing for the expression of people’s altruistic motiva-tions. I would like to stress that. Today, so often, political and indeed psychological analysis is made in terms of self-interest alone . . . We are not denying the place of self-interest in people’s motivation to act or not to act but in addition to that there is within the hearts of most Australians a vision for persons and a vision for our nation which stems from their sense of idealism . . . (Industry Commission 1995: 1085).

An extension of the altruistic moral principle is that the individual should be valued for their own sake, uniquely and separately, and not for what they produce or for their status. The belief that each individual has a profound value in themselves does not require further argumentation. In this sense, it is normative. Individuals ‘should’ be treated as having that value. However, it can also be considered as simply descriptive: services in the non-profit sector are individualised according to need. In this form, it is a cultural-cognitive idea. However, in both cases it has important implications, which will emerge below, as an idea that resists the erosion of individualised service-provision by managerial reform.

The Anglican Home Mission Society stated that ‘valuing’ an individual has intrinsic worth, which is beyond the instrumental purpose of the individual achieving some desirable and measurable goal. Success that is determined instrumentally may not be possible with that individual, but this should not strip them of either dignity or resources:



. . . our valuing of people goes beyond having to be successful with them. It’s the intrinsic worth that we hold for an individual, that we are going to invest resources in them even if it is extremely difficult to demonstrate that we have moved them somewhere. They are valuable in their own right and deserving of care and resources (Industry Commission 1995: 729).

In the wider managerialist discourse around measurable outcomes and outputs, this normative value and cultural idea appears as a critical potential point of collision. If the individual’s situation cannot be improved, how do you then measure the success of the intervention with them? This problem is taken up again below, as the discussion around accountability and quality improvement is explored.

To Be Effective, Non-Profit Organisations Require Independence

The final idea to be discussed (the fifth of the taxonomy described above) has a normative character. The independence of the sector from government control is one of the most controversial aspects of the use (by state and federal governments) of the sector for the delivery of welfare services. While the sector might argue for its independence, funding by government and accountability requirements are perceived to erode that independence. Nevertheless, independence was a value cited often in the transcripts of the 1995 Inquiry.

Independence was argued on a number of points by respondents to the Inquiry. Firstly, on the basis of organisations being client and system advocates, it was claimed that due to closeness to the disadvantaged person and the subsequent expert knowledge they develop – not only of the client, but also of the wider service-delivery network – non-profit organisations are positioned to speak up on behalf of, or with, their clients. This idea was expressed in six transcripts and three submissions. In addition, effective advocacy requires independence from government, as the Queensland Council of Social Service argued:

Community organisations also play an important advocacy role on behalf of individual consumers. Because of their independence in relation



to Government, they are able to play a role in supporting consumers in conf licts with Government authorities. This role is valuable not only for the assistance it gives to individuals, but also for its potential to improve the accountability of Government services in general (Industry Commission 1995: 7).

Even the Benevolent Society, a very large corporate charity with close links to government, expressed a concern around the loss of independence due to its dependence on government funding:

My organisation is too dependent on government funding, for example; that concerns me more than the fact that we have got some government nominees on our board or that we have contracts or interlinkages with government in its different forms (Industry Commission 1995: 867–868).

The issue of independence was scarcely acknowledged in the 1995 Report. The Commissioners at this time were concerned with establishing competitive funding arrangements rather than with assessing the impact of these arrangements on the independent functioning of sector organisations (Industry Commission 1995: 359–408).

The institutionalised ideas identified above, however, have not diminished in importance in the intervening years of change in the sector (see, for example Recommendation 11.3 of the 2010 Productivity Report). This article argues that these ideas, of which only three are explored in this space, constitute institutional foundations of the sector. Discourses around the sector are evolving. They now include, for example, concepts around social entrepreneurship, social capital and social inclusion (Productivity Commission 2010: 15–17, 37, 237–240). However, the generalised acceptance by government and the community of the three core institutional ideas described above – that is, of altruism, individual value and independence – provides these ideas with a level of legitimacy that means they cannot easily be discounted in the relationships of government and sector. In the remainder of this article, the specific interplay between these ideas and the managerial themes of



accountability and quality improvement will be described, highlighting how they were able to shape some of the recommendations advanced.

How Institutionalised Ideas Were Deployed in Contest with Managerialism: Accountability and quality improvement

While government services have always ref lected some form of accountability to the electorate, the decades since the 1980s have seen accountability requirements become centrally important (Lipsky 1993: 79; Flynn 2001: 35). Non-profit organisations that are contracted by the state to deliver human services become implicated in this process through their contractual relations with the state. In 1993 the idea that non-profit welfare organisations in Australia should be accountable was, nevertheless, a high-level concept accepted by all parties (Industry Commission 1995: 354). Where alternative ideas became apparent was in to whom organisations should be accountable, what that accountability entailed, and to what level of detail the organisations should be accountable. It is around these points of resistance that institutionalised ideas play a significant role.

The texts display a concern that the application of positivist measurement processes in performance management and output-outcome systems may be epistemologically unsound. The tools of measurement that are appropriate in industry, for example, are not appropriate for the measurement of human needs, as the Family Support Services Association argued:

. . . if you’re a manufacturer – chairs, and a chair comes off a production line with something missing, like no back on it, you know exactly where the problem lies; someone might have fouled up. But if you’re changing a person, and a person is living in the community, then there’s a whole lot of inf luences on the person besides your service. That has an effect on how you try and measure performance, what sort of performance measures you have (Industry Commission 1995: 760).



Targeting of services through an outcomes-output model – where performance is measured by throughput – can result in a ‘creaming’ effect. The result is that the most difficult cases are shelved (Industry Commission 1995a: 729, 9, 710–711, 760).

The Commissioners were primarily concerned with the development of regulative mechanisms that would integrate managerial ideas into the institutional form of the non-profit sector; however, they were not insensitive to the ideas identified above. The Commissioners appeared to be struggling to find adequate models, and they complained that although two submissions cited that outcome-based accountability was preferable over output-based accountability, no models that they could adopt were submitted. In neither case were ‘examples of current or planned outcome-based funding’ provided (Industry Commission 1995: 365). This highlights that the Commissioners were keen to identify good regulative systems and policy ideas, but that the sector representatives were not in a position to supply them. The ideas the sector representatives advanced were almost entirely (with the exception of the question of the taxation of donations) in the normative and cultural-cognitive domain rather than the regulative domain.

To ensure quality in an outputs framework, the Commissioners developed the argument for a quality-improvement process. They proposed that quality improvement would be congruent with the normative values of the sector:

During the Inquiry, the Commission gained the impression that the sector understands that being concerned about the quality of service provided to individuals dignifies those people during times when their self-worth is often at its lowest (Industry Commission 1995: xxii).

Having acknowledged the link with one of the most important of the sector’s normative ideas, a client focus, the Commissioners jumped to a regulative idea: that a client focus is provided through the adoption of quality-improvement systems.

In addition, the Commissioners appealed to the concerns of community organisations about the efficient deployment of resources



and independence (Industry Commission 1995: xxii–xxiii). Two benefits, although not necessarily contingent, are linked in the Commission’s presentation:

The Commission considers that the adoption of quality management systems – accredited to standards acceptable to the sector and govern-ments – is a way to ensure quality service outcomes of an acceptable standard. Such processes would protect the rights of clients and free up resources and energies of agencies to allow them to deploy and manage their resources more independently . . . (Industry Commission 1995: xxii–xxiii, emphasis added).

This association of the dual themes of client focus and savings to the organisation is reiterated in Chapter 14 of the Report, indicating that it is a conscious linkage with a strategic purpose (Industry Commission 1995: 346). There is a certain irony in these claims, as managers of community organisations may find it necessary to redirect resources to deal with accountability requirements; this irony was acknowledged in the Commission’s own report (Industry Commission 1995: 353).

A recontextualisation process is revealed around the implementation of a quality-improvement system. The association of ideas legitimises quality-improvement with regard to the normative values of the non-profit sector – i.e. the wellbeing of the disadvantaged person. Sector respondents’ views about quality improvement reveal that there are issues of interpretation that were passed over in this identification. In one respect, however, the institutionalised idea that the sector should retain its independence provided a point of resistance. The Commissioners acknowledged the idea indirectly as the organisations’ dislike of regulation (Industry Commission 1995: xxii), and sought to def lect it through a compromise resolution. By recommending that regulation be self-managed by organisations (Industry Commission 1995: xxiii–xxiv), the Commissioners sought to reduce the fear of overregulation and make it less onerous and threatening.

The deployment of normative ideas, therefore, had a mixed effect. A compromise is evident in the Commission’s preference for self-regulation



of quality management, but also in the failure of the respondents to link the normative and cultural-cognitive domain with effective regulative proposals, which meant that the opportunity to shape the regulative environment around outcome reporting was missed.

Conclusion

The first dimension of significance of this analysis relates to the legitimacy of institutionalised ideas. This research project identified a taxonomy of ideas that were expressed by respondents to the 1995 Inquiry. Some of these ideas were acknowledged by the Commissioners, indicating the extent to which they are generally accepted institutionalised elements of the sector. They provide the sector with legitimacy and are themselves legitimated, in a ref lexive relationship. While these ideas may be considered self-evident, what is less obvious is their clear strategic importance. Deployed by respondents, they were used to resist the perceived erosion of the normative and cultural institutions of the sector by managerial reform proposals.

The 2010 Inquiry ref lects a similar range of ideas in an evolving context, indicating that these ideas continue to have legitimacy as institutional elements of the sector. There is scope for the sector to proactively foreground these ideas and make them criteria for the effectiveness of reform proposals, rather than reactively accommodating and adjusting to a regulatory environment which may erode them. This direction, therefore, affirms the direction taken by research bodies that have focused their attention on establishing a regulatory environment that reflects the values and culture of the sector in the intervening years since the 1995 Inquiry.

ACKNOWLEDGEMENTS

I would like to acknowledge foundational work done by Catherine McDonald, Wendy Earles and Pamela Spall in using institutional and neoinstitutional theory to study the non-profit community-welfare sector in Australia, and also their support in different ways during the research that underlies this article.



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ABOUT THE AUTHOR

JEFFREY JOHNSON -ABDELMALIK teaches social policy at the School of Social Work and Human Services, University of Queensland. He also works in a community mental-health service in Brisbane and has 25 years of management experience in public and community services. His research interests are the relationships of government and the community sector, and the provision of mental-health services in the community sector. Email: [email protected].


The legitimacy of ideas: Institutional foundations of the non-profit community-welfare sector.Third Sector Review, Vol. 17, No. 2, 2011: 5-27.

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