Social Capital and Non-profit Organizations

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Abstract

Ronald McDonald House Charities (RMH-CNJ) is the US non-profit organization that works for the social cause which includes the protection of the children who are undergoing the treatment. In addition to this, there are many non-profit organizations in the US that work for the accomplishment of the objective of a social cause. This paper will attempt to explain and discuss the role played by NPOs and the ethical challenges faced by these type of non-government organizations. The paper will attempt to explain the link between social capital and the non-profit organizations that help them in the achievement of the objectives that are related to social justice and social causes.

Table of Contents

Introduction

Role of NPOs

Ethical Challenges Faced by NPOs

Influence of Policies on Non-Profit Organizations

Social Capital and Non-profit Organizations

Conclusion

Final Paper

Introduction

Ronald McDonald House of Central & Northern New Jersey(RMH-CNJ) is an American independent nonprofit organization which aims at the creation, discovering and support programs that improve the well-being and health of the children. Gerald Newman is the Chief Accounting Officer for McDonalds Corporation who is also the founder of Ronald McDonald Children’s Charities and was president at RMH as well. RMH has strongly developed the global network of chapters in 64 countries and regions under the three major programs known as Ronald McDonald House, Ronald McDonald Care Mobile and Ronald McDonald Family Room. The main purpose of this paper is to determine the importance of Ronald McDonald House and the ethical challenges that are linked with it. The paper further intends to shed light on the link between the social capital and the non-profit organizations along with the influence of the policies on the way processes are carried out in the organization.

Role of NPOs

In the US, the nonprofit sector (NA) unjustly took the place of the deep periphery in the context of the government’s social policy, the contribution of the sector to the multiplication of public goods, its growth potential and efficiency was underestimated. There was not a proper understanding of the purpose of non-profit organizations (NPOs) to meet such types of needs that are functionally indifferent to the market but remain difficult for the state to fulfill.

In accordance with the study by Gonsalves and McGannon (2018), there are different forms of management that were considered the only condition for meeting the needs of society. However, in the age of rapid growth of the non-material sector of production and the development of the economy of non-commercial services, this assessment turned out to be fundamentally wrong. She clearly missed the fundamental impossibility of developing many types of socially oriented activities (services) using market mechanisms. The problem of increasing the satisfaction of the individual does not boil down to a set of market benefits. In the United States, with excessive production of market goods and their marginal utility declining, as incomes, educational status, and free time increase for a large part of people, preferences and values ​​move to a higher level. This is expressed in the requirements of nature and wildlife protection, needs for social activities, where the motivation is not a material reward, but the performance of “proper deeds”, communication, social recognition, self-realization, freedom of choice, and so on. These categories do not fit into the system of economic determination, and the demand for them is growing strongly, there is every reason to predict the further reproduction and accelerated development of the non-commercial services sector (Razmerita & Tan, 2017).

There was more need of the nation-profits organizations in the US just because of the unequal distribution of wealth in other major issues in the organization. The non-profit sector, being a system-forming component of civil society, is at the same time one of the fundamental independent sectors of the economy (the economy of non-market services). In the US, it is very numerous and diverse in its composition of participants and methods of action. In addition to hundreds of thousands of community organizations, it includes 90% of day care centers for children, primary and secondary schools, 50% of colleges and universities, canteens for the hungry and homeless, religious missions, national and city parks, private and corporate funds, 2/3 social service centers, cultural and educational organizations (65% of museums, 95% of libraries, art galleries, botanical gardens and zoos, almost all symphony orchestras), over 60% of clinics and hospital complexes, consumer associations (Moore, 2017).  In 2002, full-time employees of all non-profit organizations (NOs) in the United States accounted for 11 % of the

economically active population (in all levels of government – 14%, commercial sector – 75%) compared with 9% in 1998 and 6% in 1990 (Doherty & Lyon, 2014). On the other hand, Wang, Chou & Li (2018) stated that the rigidly structured and closed pyramidal model of the state system, the aggregate NPO is a horizontally integrated model that is reproduced in the process of direct communication of people in all directions. The United States surpasses the UK, Germany, Holland, France, and Sweden in terms of the financial self-sufficiency of the National Assembly. It is important to note that the excessive dependence of NPO budgets on government subsidies (typical for European countries) has its downside – dropping individual segments of the sector from civil society and turning them into quasi-state structures. NPOs that have a balance of different sources of income are in a favorable position, which allows them to flexibly maneuver resources. The structure of the sources of financing NPOs in a certain way influences the nature of the services provided: the higher in its budget the share of government allocations, private and corporate funds, the more pronounced the social content of the service. With the predominance of funds earned by the NGOs themselves, the tendency towards the personification of services increases (Maier, Meyer & Steinbereithner, 2016).

Ronald McDonald House has also been established in the US just for the promotion of its processes and it also has currently 366 houses in 42 regions and countries and they provide a safe haven for the hospitalized children and their families, to stay and get treated in nearby hospitals and medical facilities. Ronald’s Houses provides more than 7,200 bedrooms to families around the world every night, which the families stay for free, the estimated cost of a hotel per week, per family is  around $700 per. Thus, developing an ideal plan for the treatment of people who are aged under 21 years of age. They work for the treatment of children who are young and need support in order to recover from the certain illnesses. There are certain Houses or buildings that can accommodate more than 3,000 families everyday, people who come from all over the globe. (Carlos Pinho, Paula Rodrigues & Dibb, 2014). Example; a family from the UK has a sick child who needs treatment at Sloan Kettering cancer center in NYC, that family could stay at the RMH in NYC while their child seeks the treatment they need to get well.  In addition to this, there are not many non-profit organizations that aim at helping the children who suffer illnesses. Ronald McDonald House’s mission is the provision of support to the children who have suffered minor or major illnesses, but most importantly they provide financial support to the children families.  (Acharya, Hirachan & Kohrt, 2017). This also provides support to parents who are not able to afford to stay in a hotel or rent an apartment for such a long period of time, some of these treatments take weeks, even months to complete.

In small cities of the United States, NPOs, as the staff in them is engaged in part-time work, performs their duties primarily without payment or for a symbolic reward. Society has millions of volunteers – students of schools and universities, townspeople, churches and corporations involved in philanthropy. All are engaged in cleaning their neighborhoods from debris, planting trees, controlling the protection of natural resources and wildlife, eliminating the effects of natural disasters, maintaining public order in the streets and clean parks. These volunteers are politically unbiased and operate outside the city administration, often speaking on the need to address issues and concerns in society. (King & Griffin, 2017).

In the United States, the non-profit sector (NA) has a developed structure and extensive connections throughout the world by the establishment of non-profit organizations like the Ronald McDonalds House organization. The targets of different non-profit organizations are always different in the case of Ronald McDonald House, their main target is children and their welfare. They aim at providing extensive support to the individuals living in areas that don’t provide choices for treatments, which can add to the demise of the recovery from the illness or injury. (Brudney, Russell & Fischer, 2016). In the USA, civil society institutions were formed historically much earlier than in Europe, and their reproduction did not meet any obstacles on the part of the state. Moreover, these institutions extended their democratic structure, norms, and values ​​to relations with the authorities, as a result of which an agreement was reached on the adoption of uniform legal norms and public values ​​(“public contract”). It covers human rights organizations, 90% of childcare centers, the vast majority of primary and secondary schools, 50% of colleges and universities, religious missions, 2/3 of social service centers, numerous groups of volunteers, cultural and educational organizations (museums, libraries) , art galleries, botanical gardens, nature reserves, zoos and symphony orchestras); over 60% of general clinics and hospital complexes, associations of consumers, pensioners, teachers of schools and universities, 67% of centers for conducting basic scientific research, etc. The activities of NGOs are based on certain principles, among which the main ones are the principles of solidarity and cooperation (Gálvez-Rodríguez, Caba-Pérez & López-Godoy, 2016).

Ethical Challenges Faced by NGOs

Ronald McDonald House worked for the fulfillment of the House Charities and received support from the McDonald’s food chain franchise, they worked in order to fulfill the need of their children and their families as well. McDonald’s provided support by infusing the marketing and emotional aspects in order to promote Ronald McDonald House and its aim of supporting the children in need. Designating for itself the main types of non-profit organizations, as well as persons who have the opportunity to engage in this activity, it is necessary to proceed to consider the problems faced by two subjects of legal relations (the state and NPOs) in the process of legal and practical interaction (Elfving & Howard, 2018). There are two major issues like stable stereotypes like Ronald McDonald House by proving the existence of the non-profit organizations which helps in providing social services. There are various non-profits organizations like Ronald McDonald House that provides support to the society and they are basically established in order to solve the social problems by providing the much needed social services that help in the development of exclusive nature of the organizations.

As indicated by Spillane, Hopkins & Sweet (2017) in his study, the ethical issues can involve the invasion of other individuals privacy to protect the right of some individuals who are the part of society. Those who are participating financially for the support of non-profits organizations should also be respected and their privacy should be maintained along with their information. On the other hand, the second stereotype is connected (and in many respects intertwined with one of the problems of regulation by the legislation of non-profit organizations) with the statement that the main distinguishing feature of a non-profit organization is its complete rejection of profit (Anderson & Dees, 2017). A well-known fact: many non-profit organizations conduct active and uninterrupted business activities (this is a powerful indicator, a feature that distinguishes NPOs from existing government agencies working in this field). Non-profit organizations are largely involved in the implementation of the most diverse, ambiguous and ambitious commercial projects related to their activities. And it causes great concern of commercial structures, tax services, and is also a small island in the middle of the ocean of problems associated with possible anti-state (subversive activities) affecting the image of the country (up to serious economic and ideological damage).

The functional approach is linked with the representation of the theoretical benefit by the active commercialization of the organization and then making them turn into the semi-legal, shadow business structures and legal ones. The activities of non-profit organizations have come under the strict control of various state institutions. In accordance with legislative requirements, they conduct checks on the compliance of the activities and expenses of the non-profit organization with its statutory goals under the threat of the forced liquidation of legal entities in the event of gross violations. This led to the fact that the number of non-profit organizations today is less than 15 percent of the total number of legal entities registered in the American Federation (Anderson & Dees, 2017). All these problems require a special approach, a planned solution at the legislative level, taking into account requests for the formation of a civil society. Despite the existing difficulties, many works and actions of non-profit organizations are directed towards legal protection, free legal education of citizens. In essence, one can speak of a special form of charity of people who are guided by moral and ethical considerations, which are motivated by a desire for a philanthropic nature. Over the past years, non-profit organizations in the US have been able to strengthen their positions both functionally and financially. There was a close cooperation of non-profit organizations with the media. The latter is not always successfully implemented in the form and scale that would be desirable for non-profit organizations. Nevertheless, the trends of this cooperation suggest a high potential of NPOs (Gálvez-Rodríguez, Caba-Pérez & López-Godoy, 2016).

The plans of non-profit organizations for the future are encouraging, but this requires large cash infusions into non-profit organizations, which are designed to form the basis for the development of one of the most important components of the democratic type of the American Federation – legal initiatives and associations of citizens. The problem of leadership development is one of the most relevant in the social, organizational and psychological sciences, as well as in the practice of management especially in the management of the ethical issues occurring in non-profits organizations like Ronald McDonald House. The development of best leaders and quality leadership in Ronald McDonald House, can be led to a huge increase in leadership development programs. According to some estimates, companies spend billions of dollars on the development of leadership and management skills of their employees. However, many authors have questioned the effectiveness of such programs and argue that it is very difficult to understand what is actually developing in them. Some researchers generally claim that leadership is too complicated and in many ways an intuitive phenomenon for understanding the major concepts in non-profit organizations like Ronald McDonald House (Brudney, Russell & Fischer, 2016).

Interest in leadership development is associated with a change in the nature of organizations. The movement from bureaucratic to postmodern organizations implies a different view of the working environment – it loses its certainty and acquires the properties of a constantly changing flow. Although management is still vital, leadership, in all likelihood, is a key aspect in resolving the complex ethical issues that arise in the nation-profit organization working for some social support. The researchers stress that we know relatively little about the leadership development process. This is due to the fact that most efforts to develop leadership focus on its individual aspects without the ability to track the systemic and long-term outcome of developmental influences. The leadership of Ronald McDonald House also plays the most significant part in resolving these type of ethical issues and providing extensive support to the overall organization (King & Griffin, 2017). Acharya, Hirachan & Kohrt (2017) mentioned in his study that the leader development is described through the development of various individual characteristics, such as skills, abilities, competencies, and leadership skills while handling the organizational processes of non-profit organizations. Leadership cognitive development includes the ability to recognize, understand, and solve problems, as well as critical thinking skills and it requires to solve the major ethical issues that occur frequently in the non-profit organizations as well. Socio-emotional skills are better known as interpersonal and imply communication skills, understanding of other people and situations, as well as the ability to train others in the process of group work and solving the major issues in the organizations. Behavioral skills are understood as aspects of leader behavior that influence the group. Their improvement should contribute to the development of the characteristics of transformational leadership — idealized influence, individualized attention, inspirational motivation, and intellectual stimulation. In addition to this, Razmerita & Tan (2017) stated that leadership matters and helps individuals in the development of different skills at different stages of a career. At the lower levels of management, technical skills are more in demand, then the importance of interpersonal and problem-solving skills increases. In addition, at higher positions for effective operation is more important is the acquisition of strategic skills and business skills, compared with cognitive and interpersonal skills (Gonsalves & McGannon, 2018). For the development of leadership qualifications, so-called metacognitive skills are of particular importance, their role becomes more and more significant as they move up the career ladder. Metacognitions (second order cognitions) are knowledgeable about their cognitive system, based on the reflection of one’s own cognitive actions and cognitive abilities (Moore, 2017). The development of metacognitive skills contributes to a better assessment of knowledge, the formation of goals, actions, and social reactions and frees cognitive resources that can be directed to effective self-regulation. Thus, the development of a leader involves the development of self-awareness, which includes not only a deeper understanding of their cognitive processes but also the development of identity. Leadership identity formation is expressed in a shift from personal identity, when a leader defines himself as different from others, to interpersonal, in which a person characterizes himself in terms of roles and relationships, and then to a collective one, when a person interprets himself through the prism of belonging to a group and organization (Elfving & Howard, 2018).

Influence of Policies on Non-Profit Organizations

There are different policies that have an impact on the effectiveness of non-profit organizations like Ronald McDonald House. Gonsalves & McGannon (2018) mentioned that accounting policy is compiled with the observance of the principles of formation and qualitative characteristics of information defined by the aforementioned Regulations of Ronald McDonald House. Accounting policies are specific accounting methods selected and consistently applied by an organization that, in the opinion of the NPO management, correspond to the conditions of its activities and are best suited to fully present its results and financial position. Since the accounting policy conducted may significantly affect the reported results and financial position, the policy on significant items of income and expenses should be explained (Razmerita & Tan, 2017). Naturally, if there were a range of acceptable methods, and without detailed disclosure of financial statements, internal logic and comparability with the financial statements of the following accounting periods and with other reporting parties would not be enough. Notes disclosing accounting policies should be as clear, precise and concise as possible. Adequate disclosure of accounting policies is a necessary factor for accurate financial statement presentation (Doherty & Lyon, 2014). Ronald McDonald House finds it difficult to manage the processes in the organization which is related to the accounting policy because it helps in the determination of the profits that helps in running the businesses in an effective manner. In addition to this, it becomes difficult for the organization to manage the profits and then invest them for the provision of further support to the children who are targeted by Ronald McDonald House (Maier, Meyer & Steinbereithner, 2016).

Social Capital and Non-profit Organizations

The social capital of non-profit organizations is defined by us as the conscious formation and use of social networks by the organization, expanding its capabilities, increasing the level of trust in its ideas and beliefs of the population, as well as representatives of other sectors of society. The useful acquaintances, joint social practices of NGOs, cooperation with business, cooperation with channels of mass communication act as networks of informal communications (Elfving & Howard, 2018). The process of the formation of non-profit organizations as an institution of civil society is faced with difficulties caused by the distrust of citizens, their inclination to state paternalism, and the lack of developed channels of social communication. An indicator of the state of civil society in the US, based on initiatives from below, is not only the composition of non-profit organizations (NPOs) but also the volume of their social capital (Doherty & Lyon, 2014). In analyzing the situation related to the formation of social capital of non-profit organizations in The US, we highlighted the following problem: the low level of trust and weak communication of NPOs with other social actors do not contribute to the integration of citizens around socially significant issues. We study the problem from the perspective of a communicative approach, which contributes to the consideration of non-profit organizations in the context of changing social conditions, allows us to study the interaction of actors in the

Socio-political space at different levels, and open channels of interaction with other social sectors based on common ideas and values. Socio-economic, political, socio-cultural differentiation of the American regions predetermined differences in conditions and patterns of development of civil society in different territories. The special role of voluntary organizations in the life of specific territories, creating an atmosphere of trust and solidarity requires a sociological understanding of the activities of NPOs at the regional level. Social contacts and connections, but it is unlikely that they can be called social capital in a positive sense since social connections and relationships are often used to carry out corrupt activities. On this basis, the quality of social capital in The US is assessed as low, which manifests itself in a low level of mutual trust in American society. Under the influence of corruption, the most significant social ties of American citizens, entrepreneurs, state and municipal servants are becoming increasingly informal, and the level of regulation of social interactions by the norms of law and morality is constantly decreasing.

As indicated by Gonsalves & McGannon (2018) in his study, the lack of trust, the inability to unite, leads to the fact that American citizens are constantly forced to solve their own household, financial and other problems alone, without uniting with other citizens. As a result, the majority of citizens can (or cannot) solve their problems in government by legal, completely legal means: it is difficult for them to resist the actions of government representatives alone. In order to exercise their constitutional rights and freedoms, citizens are forced to resort to corruption actions: for the right to obtain a position in the public service, for registering apartments and land plots in property, for receiving medical assistance in public medical institutions, for admission to budget places in public higher educational institutions etc. Since the solution of various social problems is carried out only with the help of corruption actions, most often with the help of bribes, therefore, despite the fact that the majority of American citizens negatively assess corruption actions, they are ready to use them in their interactions with state and municipal employees. The low quality of social capital leads to constantly deteriorating conditions for investing in the American economy. Low investor confidence in private business and government makes investment difficult. The state and municipal authorities, including in the investment processes, conduct it for corruption purposes, i.e. in the interests of their own or private corporations, and not to solve the country’s strategic problems, the development of society, the economy and the state.

Wang, Chou & Li (2018) stated that public non-profit organizations should be involved in solving social problems, but if these decisions are developed exclusively by the authorities with significant restrictions on public control of their activities, the ego will lead to the opposite result – increased corruption in government and an increase in the corruption component of social capital. The level of development of social capital is determined by the degree of development of informal social institutions and voluntary organizations (associations, unions), the development of social actors capable of creatively interpreting those signals and meanings that come from formal state institutions, i.e. to their processing and development, and not to accept them in the directly proposed form. The experience of the post-industrial development of modern countries shows that with close or even the same legislative norms, the level of development of the economy can vary significantly depending on the level of social capital. In our country, the development of post-industrial sectors of the economy should be accompanied by the expansion of the interaction of private business with various social groups of American society, aimed at supporting their initiative, self-realization of their members. Representatives of these social groups will gradually be able to exercise control over the activities of government bodies, to counteract corruption in them, to protect the character of citizens, including businessmen themselves, to perform other social functions that are not characteristic of private business, but ensure its normal activities (Moore, 2017). In the process of such development, social capital will gradually be formed in American society with a high proportion of non-corruption components, which in turn will contribute to the development of the business. Whether the elite of the American business can make such a choice will be shown in the near future. The social capital is directly related to the non-profit organizations and how they work for the establishment of the organizations and the achievement of the goals as well. Ronald McDonald House also helps in the development of social capital which helps the organization in the fulfillment of their goals. In addition to this, it helps in the accomplishment that are mainly devised by the organizations that work for the social objectives. The social capital is formed by the Ronald McDonald House when they work for providing effective care to the children and work for the most important social causes (Wang, Chou & Li, 2018).

                                                            Conclusion

Hence, it can be concluded that non-profit organizations are the organizations that work for the wellbeing of a society and group.  The charitable donations that are acquired are distributed equally, first, to the cause, then to the directors, officers or members. Nonprofit oagnziaitons are the organizations that can take the form of a corporation, unincorporated association, foundation, and partnership. This paper discussed the importance of the non-profit organizations and how they work toward the accomplishment of the goal. This paper further discussed the case of Ronald McDonald House and that it is the charity organization which works for the provision of residence to those who are under the age of 21. This organization works for the social cause and of the protection and the rights of the children in helping to achieve their desired results. As a board advisory to Ronald McDonald House and an active volunteer for over 6 years, I must say, I really enjoyed writing this paper. It’s helped broaden my understanding of NPOs and how they work. It also taught me a lot from a political perspective. When giving one’s time to an important organization, when you know it can help so many who really need it, and who appreciate you being there, is very rewarding.

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