Management vs. democracy: how NPOs reach their goals

Non-profit organizations make an important contribution to society and the public good. For some years now, more and more NPOs have employed management tools and structures in their work. This benefits the organizations but undermines their democratic foundation, as non-profit researcher Florentine Maier has discovered in her most recent work.

Culture and Society

February 10, 2025

Non-profit organizations and volunteers form a major pillar of a country’s social infrastructure and economic welfare. This is why the non-profit sector can be regarded as a yardstick for the stability of the democratic system. Economist Florentine Maier has studied non-profit organizations and their development for more than 15 years now. “We have been witnessing a certain trend since the 2000s that a lot of experts are skeptical about,” the researcher shares in her talk with scilog. Since the turn of the century, organizational culture and practice in NPOs have started to resemble the standards of the business world. Whether this can be reconciled with an NPO’s charitable cause has been a matter of controversial discussions. But until recently, there were no empirical data to support the criticism voiced.

Data collection in the Austrian NPO landscape

In a research project funded by the Austrian Science Fund (FWF), Maier and her team at the Vienna University of Economics and Business carried out the first statistically representative survey of the non-profit sector in the City of Vienna. Collaborating with an international network of researchers from top universities such as Stanford and a broad array of countries from China to Australia, the scientists strove to find out whether the adoption of conventional management practices by NPOs has a detrimental effect on their core responsibilities.

Based on survey data from close to 600 NPOs, the researchers investigated the links between management and democracy-related practices and an NPO’s three core functions: providing services, advocacy, and building community. The results showed that many of the concerns were unfounded. On the contrary, management practices were found to be beneficial across all three functions, though the positive impact was smallest in terms of community-building.

For non-profit organizations, profits are a means to an end. However, many of them now use management methods like profit-oriented companies. A research project at the Vienna University of Economics and Business has investigated the advantages and disadvantages of this trend.

Participative and transparent systems

On the other hand, democratic practices are a strong driver of community-building but tend to weaken the focus on delivering services. It follows that a combination of both would be most conducive for NPOs to make sure all functions are equally considered. The researcher confirms that this is in fact the case: “There is no one-size-fits-all solution. Many organizations do a good job in blending democratic and hierarchical elements. That’s, for instance, the case with volunteer fire departments or the Red Cross. The structures found in such organizations strongly resemble those of a conventional federal republic. Managers and supervisors are democratically elected.”

New forms of agile organizational democracy are also developing. Maier cites caregiving as an example: “In a decentralized system, caregivers can engage in self-management within a group. There are a lot of experiments in this regard at the moment because it not only increases productivity, but it also makes caregiving professions more attractive and thus addresses the issue of a shortage of skilled labor.”

Discrepancies between business and democratic practices

Despite these advantages, there are very few NPOs that manage to reconcile democratic structures with the kind of professionalism usually seen in the business world. It can frequently be observed that a plus in management savvy comes with a minus in participation. What’s clear is that the enthusiasm for business practices is well-founded. Maier’s survey results unequivocally show that an implementation of management practices in NPOs increases their financial stability, growth, and their focus on the varied societal roles they shoulder.

The downside is that more professional business demeanor often goes hand in hand with a cannibalization of democratic structures. “The more an NPO acts like a company, the smaller the roles of its members and volunteers, i.e., the representatives of civil society, become.”

Non-profit work: Figures for Austria

There are about 135,000 non-profit organizations in Austria, the majority of which are associations. They are active in a broad range of fields: from volunteering, health services, and caregiving to culture and sports. Statistics Austria recently started to record the economic output of this large number of diverse NPOs. According to the records, about 280,000 people work in the non-profit sector, which corresponds to about six percent of the country’s labor force. The net value of the services provided by salaried employees and volunteers amounts to about 22 billion euros.

Fostering participation and innovative models

Particularly developments in the field of advocacy are cause for worry. Effective lobbying – for example for marginalized groups and environmental protection – requires ever more professional structures to have an impact on policymakers. This often hurts democratic structures within the NPOs, and, as a consequence, people have less space to experience and learn how joint actions have to be based on compromises and effective self-organization.

Hat in hand, the researcher admits that it would be a good idea to have a stronger focus on teaching participative methods that have an acceptable workload. Outside the classroom, organizations are much faster to adapt because there is pressure to perform. Innovative organizations learn from their struggles and develop models based on participation and transparency, making prudent use of their resources in terms of time and money.

Volunteering as a safeguard against a decline in democracy

If NPOs also uphold democratic principles within their organization, it benefits them as much as society at large and every person involved. This means that there’s a positive impact also outside the organization. People who volunteer or work within democratic structures tend to be happier and have more solid skills and views regarding democracy, which in turn stabilizes society as a whole. As polarization is on the rise, NPOs play an important role as a training ground for democracy. “A diverse and democratically organized civil society acts like an immune system that fights authoritarian tendencies,” the expert says.

About Florentine Maier

Economist Florentine Maier heads the Research Institute for Cooperation and Cooperatives and is a senior researcher at the Institute for Nonprofit Management and Governance at the Vienna University of Economics and Business. In her research, she focuses on how democratic and business structures of organizations impact society. She further investigates civil society in cities in the framework of the Civic Life of Cities Lab. She teaches cross-functional and non-profit management.

Publications

Hohensinn L., Litofcenko J., Maier F., Cornips L.: Talking the Talk, or Walking the Walk? How Managerial Practices Relate to Nonprofit Organizations’ Role as Schools of Democracy, in: Nonprofit and Voluntary Sector Quarterly 2024

Terzieva B., Burkart C., Maier F., Meyer M.: Democracy and Management: Organizational Practices and Nonprofits’ Contributions to Society, in: Nonprofit and Voluntary Sector Quarterly 2024

Management vs. democracy: how NPOs reach their goals

Data collection in the Austrian NPO landscape

Participative and transparent systems

Discrepancies between business and democratic practices

Non-profit work: Figures for Austria

Fostering participation and innovative models

Volunteering as a safeguard against a decline in democracy

About Florentine Maier

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