Entrepreneurship in the Public Sector: The Horns of a Dilemma

Private support for public services is not new. Even in ancient Greece and Rome, rich citizens were obliged to underwrite the cost of public activities, albeit primarily festivities. In the American context, private contributions for public purposes have, historically, been limited and primarily of two types. First, are the bequests or special gifts such as art collections, parks, or Andrew Carnegie's support of public libraries; second, are the special ad-hoc contributions for public events such as the 4th of July fireworks. We are currently witnessing a dramatically new phenomenon: the reliance of municipalities on non-tax dollars to support ongoing public services. This is a critical shift, no longer an occasional or ad-hoc occurrence. Furthermore, a distinction must be made between the earlier gifts, which depended on the initiative of the donors, and supported programs of their particular choice and preference and the current policy. What is now evolving is a deliberate public policy designed to counter budget cuts and to enhance public services through organized fundraising approaches. And the onus is on the public administrator to assume an entrepreneurial posture, one traditionally associated with leadership in the profit-making sector (Peters & Waterman, 1982). Proactive administrators reverse a trend of contracting and government load-shedding. Prior to the contracting era, governments both raised money (through taxation) and provided services. Contracting is characterized by the separation of raising money (by government) and service delivery (by private organizations) (James, 1989; Kramer, 1992; Salamon, 1987; Weisbrod, 1977). From the government's perspective, these grants and contracts, federal, state or local, allowed the government to retain its responsibility for service delivery while shifting the provision of these services to nonprofit organizations (Cnaan, 1993; Lipsky & Smith, 1989). This phenomenon was identified by Bendick (1989) as government load-shedding, a process whereby the role of government in the provision of services was reduced. The new trend of public fund-raising runs counter to contracting. The new policy is characterized by fund raising (not tax dollars) to finance public service provision. Thus we also note a new balance in the field of public-private relationships. This article presents a case study of effective entrepreneurial leadership in a city agency which successfully expanded its services on the basis of contributions obtained, in cash and kind, from private donors. The article has two objectives. First, a case study presents a description of effective entrepreneurial leadership in the public sector: when faced with political and fiscal pressures, this executive thoughtfully and effectively developed a philosophy and designed a strategy for new public-private relationships. Second, we examine the public policy issues associated with the phenomenon of entrepreneurship as it highlights some dilemmas in the blurring of boundaries between public and private agencies, as the costs of this approach also merit careful consideration (Bellone & Goerl, 1992). We hope that this article will further the public policy debate concerning the responsibility for the financing and provision of public goods and services. This is especially critical at a time when former socialist nations are looking to our country for models as they struggle to redesign and restructure their public service sector (Perlmutter & Reiner, 1991). Context As a backdrop to the study, it is necessary to highlight two distinctive contexts: federal and local. In the last decade, there has been a dramatic shift at the federal level from contracting for an array of services from nonprofit organizations (Ascoli, 1992; Billis & Harris, 1992; Grossman, 1992; Perlmutter, 1969; Saidel, 1989) to an emphasis on "government load-shedding," a process that reduces the role of the government in the provision of services (Bendick, 1989; Cnaan, 1993). …