New governance is a new way of thinking about how government and public administration meet the diverse needs of society. New governance is a movement away from public agencies and programs to a collaborative, tools-based system of public action. While earlier government activity focused on direct delivery of goods and services, new governance leverages third parties and seeks to network their capabilities to create solutions to an increasing array of public problems. Loans, loan guarantees, grants, contracts, social regulation, economic regulation, insurance, tax expenditures, vouchers, and more serve as tools that contribute to an increasingly decentralized government structure.

In new governance, picking the combination of tools to use involves political decisions. Salamon notes, a strong pro-market bias underlies tool choices in the U.S. Under new governance, public administrators become network managers, and activation, orchestration and modulation skills become essential. New governance is more than contracting or decentralization. It is the replacement of command and control with a network of managed third parties.

Tools for public action are required to build the knowledge base the new governance requires. Salamon evaluates tools for public action using four dimensions (coerciveness, directness, automaticity, and visibility) and five criteria (effectiveness, efficiency, equity, manageability and political legitimacy). Governments are increasingly likely to adopt less coercive, indirect, automatic and invisible tools, which are typically delivered by private actors in the form of a loan or liability. Although these appear effective and efficient, they have significant accountability and legitimacy challenges as well as management difficulties.

A tool for public action is defined as an identifiable method through whichcollective action is structured to address a public problem. (p.19) Tools differ from programs in that a single tool can be applied to different programs. Tools structure action by defining the participants of public programs, their roles and the relationships amongst them. The entities that exercise tools for public action are not only governmental but also private. A tool is a package of different elements, such as a type of good or activity (a cash or in-kind payment or a restriction), a delivery vehicle for this good or activity (through a loan, a grant, voucher, the direct provision of service), a delivery system (a government agency, a nonprofit organization), and a set of rules defining the relationships among the entities that comprise the delivery system.

Tools can be evaluated through five criteria: Effectiveness, efficiency, equity, manageability and legitimacy. Salamon also examines each tool by four dimensions. First is the degree of coerciveness, which measures the extent to which a tool restricts individual or group behavior. Directness measures the extent to which the authorizing body of public activity is involved in its execution. Automaticity measures the extent to which a tool utilizes an existing administrative structure.Visibility measures the extent to which the resources devoted to a tool show up in the normal government budgeting and policy review processes.

With the growing tendency toward decentralization, public skepticism of government, and efficiency as a criterion of public action, indirect, invisible and automatic tools are increasingly popular. However, policymakers are under increasing political pressure to select tools which are the most difficult to manage and the most likely to diverge from public objectives. Thisleads tomore management accountability and legitimacy challenges.