ISTR Sixth International Conference Toronto, Canada / July 11-14, 2004 Contesting Citizenship and Civil Society in a Divided World

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	Abstracts

Isomorphic Adaptation and Structural Inertia: major trends in the institutional environment of nonprofit organizations in Brazil
by
Mário Aquino Alves
Mackenzie University and FGV/EAESP
Coauthors: Natália M. Koga

In March 24th 1999, Brazilian National Congress promulgated a new Federal Law N. 9790/99 for nonprofit organizations - the Lei do Terceiro Setor (Third Sector Law). The new legislation created a especial qualification for civil society organizations - Organizações da Sociedade Civil de Interesse Público (Civil Society Organizations of Public Interest). It also established the Termo de Parceria (Partnership Term), which regulates contracts between government and Organizações da Sociedade Civil de Interesse Público.

The new legislation brought some advantages for those organizations that opt for the Organizações da Sociedade Civil de Interesse Público qualification (like the legal possibility to pay senior staff and the liability to enact a Termo de Parceria contract with the government). These advantages would be so interesting (from a rational choice perspective) that civil society organizations would migrate quickly to the new qualification. An interesting characteristic of this new legislation is that it did not abrogate the older legislation. In practical terms, organizations should opt to maintain their former status simultaneously to the new one, for period of two years.

However, this was not the case in the first moment. Despite all governmental efforts, from a universe of about two hundred thousand organizations (figures from 1993), according to the Ministry of Justice, only 647 (six hundred forty-seven) organizations tried to be qualified as Organizações da Sociedade Civil de Interesse Público until August 9th 2001. It was even more problematic because from these 647 organizations, only 217 achieved all the requisites to qualify as Organizações da Sociedade Civil de Interesse Público. Just before the end of the initial two-year period set forth by the Law, Interim Measure No. 2.123-29, on February 23rd 2001, extended the original application period for another three years, so that the period for entities that already held public interest and OSCIP titles now had a total five years to choose between them (until March 23rd 2004).

Interim Measure No. 2.113/32, dated July 21st 2001, amended Law No. 9245/95, which, from that date onwards, also contemplated OSCIP-qualified entities. Now, OSCIPs might also offer Income Tax-deductible receipts to donating Legal Entities. Donations from legal entities are an important source of financing for entities, and the ability do deduct donations from the taxable base is a powerful incentive to businesspersons’ social responsibility and to private philanthropy. Except for Income Tax exemption, which was extended to all nonprofit entities that met the requirements of article 15 of Law No. 9.532/97, OSCIPs lacked, until then, access to any tax incentives.

After the changes in legislation, the average of approvals rose from 20.45%, in the first two years to 77.3% in 2001. If the number of approved applications rose, this may reflect a sizable share of renewed submissions; the total number of OSCIP-qualified organizations is still low. At the end of March 2002, only 415 organizations obtained the qualification as OSCIPs.

Thus, an exploratory study was carried on to analyze the effects of the legislation in third sector organizations and level of change they achieved. Questionnaires were sent to each one of the 415 OSCIPs in order to identify some of their key characteristics: date of foundation; date of the qualification as OSCIP; mission and goals of the organization; localization; field of operation; beneficiaries; number of employees and volunteers; and financial resources. One hundred and twenty four organizations replied the questionnaires, which resulted in response of approximately 30%.

The results obtained from this sample of organizations clearly pointed to the following findings. Organizations that adopted the new format of OSCIP are relatively new (less then ten years from their foundation), assume a collaborative attitude towards government, and have only one or two major financial resources (mostly governmental). Thus, it was possible to infer that organizations that rejected the new format of OSCIP are mature, more traditional or assume a more confrontational attitude towards government, and have a more diverse set of financial resources.

After the analysis of the results, interviews with managers and leaders of nonprofit organizations were conducted in order to check possible reasons to explain some of the inferences that were achieved.

The present article explores this case from two perspectives in organization theory: new institucionalismo and population ecology. There are strong evidences that organizations that adopted new form of OSCIPs have been submitted to isomorphic forces that lead them to this new form of organization, and organizations that have not assumed this new form of OSCIP continue in the same path, which results in a process of structural inertia.

Date received: September 30, 2003

Copyright © 2003 by the author(s). The author(s) of this document and the organizers of the conference have granted their consent to include this abstract in Atlas Conferences Inc. Document # caml-30.