So are there too many non profits?

Like Deborah Allcock Tyler I am constantly annoyed when I hear business people, Ministers, senior people in Government agencies, and many people in the non profit sector complain that there are too many non profits, particularly too many small non profits.

The claims vary- overlapping or uncoordinated services, duplication of effort and resources, failure to'get their act together', lack of efficiency, wastage of resources and reduced effectiveness, too many different voices, too many agencies for Governments to deal with. I have heard them all.

And the suggestion that follows is usually that someone- Government, the sector, the bigger agencies, the smaller agencies- should rationalise and reduce the number of non profits, particularly smaller ones who, it is claimed, are often unviable and less effective.

Many Government agencies have operated on this assumption for years, and have used their contracting and procurement regimes as a defacto strategy to rationalise the sector.

On many occasions I have heard senior Government officers and leaders of nonprofit organisations admit that one benefit of the contracting and procurement regimes that Federal and State Governments have imposed on the non profit sector here in Australia is that it it leads to a rationalization of the non profit sector by squeezing out what they perceive as 'unviable and less effective' (they mean 'less businesslike') non profits, usually smaller agencies.

Obviously, non profits should look at ways they can work more effectively with others to reduce duplication and improve their effectiveness and impact. This includes exploring collaborative partnerships with other non profits, if it is a way to deliver better outcomes for the people and the communities they exist to serve.

However, I have never understood the claim that more non profits is a bad thing. In particular, it is fundamentally anti-democratic for someone else to decide which non profits should exist, or to decide that there should be an arbitrary limit on the number of non profits.

Efforts to reduce the number of non profits, ultimately has the effect of reducing the democratic rights of citizens to take action.

And compare this claim that there are too many non profits, with views about for profit businesses. You never hear the claim that there are too many for profit business, despite the evidence of a huge number of failing, poorly run businesses, engaged in criminal and highly questionable conduct. Rather, the view is that the more for profit businesses there are, the better.

Deborah Allcock Tyler is spot when she writes:

One principle of a free democracy is the ability of people to come together in service of something they care about, regardless of whether or not someone else is already doing it and thinks they're doing it better than anyone else (which they always do!) or, indeed, if others don't think their cause is important..................................

The belief that there are too many charities is pardonable from those outside our sector, who are less likely to see the bigger picture and more likely to see donors and volunteers as willing and obedient stooges and beneficiaries as voiceless, choiceless victims who should be grateful for whatever they get from whomever is allowed to give it.

But that belief is, for me, incomprehensible when held by those within the sector. To them I say this: all right, if you genuinely believe that there really are too many charities, close yours down and that will be one less.

The issue of whether there are too many non profits in the US context is discussed here and here. A Canadian perspective is here.

Under outcomes based contracting small agencies are the big loser

More evidence that outcomes based contracting approaches such as payments by results and prime/lead contractor models are bad for small not- for- profit human and community services organizations.

In the UK outcomes based contracting models lead to the issuing of larger contracts which primarily benefit large corporate prime contractors.

Outcomes based contracting has the effect of forcing smaller agencies out of public procurement processes.

This report is from the UK online publication Third Sector

Heather Wilkinson, chief executive of Striding Out, which provides career support and training, told Third Sector her organisation had been affected by changes to the way government departments commissioned contracts for the Work Programme, the Skills Funding Agency and the National Citizen Service. 

"The challenge is that these departments are now only looking to work with large corporate prime contractors with a view to only issuing bigger contract values, and they are paid-by-results models."

Striding Out had been in talks with a prime contractor about NCS services, she said, but "due to its profit margins, the money it offered us for delivering our element of work was unviable".

"The money is there and the contract opportunities are there, but the problem is that we cannot get to them," she said.

"I don’t feel there have been fewer opportunities, but our ability to bid competitively and fairly has been reduced."

James Allen, head of public services and partnerships at the National Council of Voluntary Organisations, said the introduction of payment-by-results contracts, such as those offered to charities under the Work Programme, had proved particularly problematic.

"Payment-by-results is a significant barrier to organisations bidding for contracts in the first place," he said.

"The problem is moving from a model of upfront payments and grants straight to payment-by-results without the transition being skilfully managed. Organisations are already under pressure and margins are tight. They won’t bid because they cannot take the risk."

The dangers of outcomes based contracting models

As the Barnett Government and the funded not- for- profit sector in Western Australia move to adopt outcomes based contracting models for the delivery of human and community services, the evidence from the UK demonstrates the danger to the sector of such models.

The use of outcomes based contracting models- such as prime or lead contractor models and payment by results models- within the UK Government Work Programme is having devastating impacts for small agencies and disadvantaged service users.

The UK experience is that outcomes based contracting and procurement- in its many forms- results in Governments, or the agents of government, moving public money into bigger contracts and bigger services, which increasingly are awarded to large private and multinational corporations  such as SERCO G4S, A4E, Virgin, Ingeus (There Rein's company) and Capita to name but a few.

The majority of contracts are won by large for profit corporations who claimed that they would sub-contract smaller local not- for- profit providers to deliver tailored specialist services, however this has not happened.

Many of the smaller not- for- profits were used as "bid candy" to enable the corporate providers to tender for and win the contracts and were promised work as sub-contractors. Such work (and income) has not eventuated and even when it has major delays in being paid have severely affected the income and cash flow of small agencies.

The result is that more and more smaller agencies are having to shut down due to cash flow problems and loss of income. And the closure of small agencies with specialist knowledge and expertise and strong local links directly impacts on the most vulnerable and disadvantaged clients.

The Third Sector, an online  publication for the sector reports that:

Eco-Actif Services, a community interest company based in Sutton, south London, and Red Kite Learning, an education and learning charity in Southwark, south London, both closed in July and blamed the government’s move to large-scale payment-by-results contracts.

Lin Gillians, chief executive of the LVSC, said: "Over the past two years, longer, larger contracts for employment programmes have been almost exclusively awarded to large private sector providers.

"The intention was that specialist voluntary and community sector providers would deliver tailored support as subcontractors – however, as time goes on we are seeing this specialist provision disappear.

"This raises enormous concerns about the quality of support available to the thousands of Londoners facing serious or multiple barriers to work."

The homelessness agencies the Single Homeless Project and St Mungo’s have also withdrawn from the Work Programme in recent months, citing problems with the way it is run.

Gillians said: "The government urgently needs to review the impact of this commissioning model on disadvantaged job seekers and special employment providers before more damage is done.

"This isn't about blaming the Work Programme or prime contractors – it's about providing appropriate support to give everyone a fair chance to work."

Brendan Tarring, who founded RKL 25 years ago, said: "The Department for Work and Pensions needs to reassess its one-size-fits-all mentality and acknowledge that individually tailored employment support for vulnerable jobseekers is best delivered by innovative mid-sized charitable organisations."

The demise of small local communty run third sector agencies

What this piece describes in the UK is precisely what many of us see happening here in Western Australia- the demise of small locally run and locally driven not- for- profit organisations that have unparalleled local knowledge and expertise in their specialist field and that provide services to high-need individuals at the local level.

The evidence is growing that the current agenda of marketisation, corporatization and service reform being imposed across the human and communty services sector by both Federal and State Governments and increasingly supported and adopted by the bigger agencies threatens the existence of small locally run and locally focused agencies.

And this trend is particularly bad news for the people who rely on the services provided by small agencies. This UK piece by Isobel Spender is spot on when it concludes that the demise and loss of small third sector agencies will  ultimatley damage our society and the vulnerable people within it.

In the piece in the Guardian about the situation in the UK Isobel Spencer writes:

The government wants a more efficient third sector: less dependent on state support, more involvement of volunteers, and better use of private finance. This may emerge in time, but it will not do so quickly enough for a small, vital group of local service-providing charities – where failure will be the norm.

The UK has more than 160,000 charities. Over half have annual incomes of less than £10,000; a few are national or international in scope and major brands in their own right. These will survive, either because their needs are small or because they have sophisticated fundraising machines.

But somewhere between them is a smaller group of charities, which are at risk of closing. They are perhaps fewer than 5,000 in number and typically have annual incomes over £100,000 and significantly less than £1m. They deliver social services into the community – and focus on the hardest-to-reach and most disadvantaged people. Moreover, their "service delivery" usually involves significant numbers of volunteers.

Unfortunately, they share another characteristic: they are overwhelmingly dependent on statutory funding, particularly local authority grants – the fastest-declining source of charity income. More than £2bn of funding will be lost from this area over the next three to four years, according to the National Council for Voluntary Organisations (NCVO).

They have often developed unparalleled expertise in their specialist areas, but their focus on providing services to high-need individuals at the local level has made them uniquely suited to, and reliant on, statutory funding. 

The gap between Government rhetoric about civil society and the reality

The UK Cameron Coalition Government has made all sorts of policy statements about the importance of civil society and the NFP sector in contributing to the "Big Society", but the sector is being devastated by funding cuts and the privatization and outsourcing of human services and public services to corporations.

A new report publicized in the UK Independent shows that not for profits and charities are set to lose 3 billion pounds in public funding over the next 5 years.

This comes on top of research by False Economy UK, which used freedom of information requests to show that 2,000 charities in England have suffered funding cuts this year and these cuts represent just a small amount of the agencies facing funding cuts.

The gap between the rhetoric of Governments about the importance of the not- for- profit sector and civil society and the reality has never been starker and should serve as a caution to NFP's here in Australia. 

The Independent reports:

"Britain's voluntary organisations face losing almost £3bn in funding over the next five years, according to the first comprehensive report to analyse the coming impact of spending cuts on the public sector.

In a blow to David Cameron's much-trumpeted "Big Society", charities across the UK face the prospect of their funds dropping by £911m a year by 2016, and losing £2.8bn in total over the next five years, according to research by the National Council for Voluntary Organisations (NCVO) published today.

The six-month study, which looked at how cuts to central and local government over the next half decade will hit the voluntary sector, predicts that charities will lose 7.7 per cent of their current public funds by 2016 if government departments pass on their cuts proportionately. Currently, central and local government together contribute at least £11.8bn to charities each year".

Mixed reaction to National Fair Pay Case

Last week Fair Work Australia upheld a pay equity claim for 200,000 community services workers in the National Community Services pay claim case but has fallen short of ordering an equal pay order, instead calling on the unions to show how much of the pay gap is caused by gender discrepancies.

Not surprisingly the decision by Fair Work Australia in the  has generated mixed responses, as outlined in this extract from an article that first appeared in Pro Bono News.

The Australian Not for Profit sector has reacted to the long-awaited ruling by Fair Work Australia in the equal remuneration case with a mixture of optimism and caution, saying it is now up to the government to commit to funding a pay rise for community sector workers.

With many in the sector hoping Fair Work Australia would finally award an equal remuneration order for 200,000 social and community sector workers, the decision by FWA to delay ordering a wage rise for workers was seen by some as an anticlimax.

Fair Work Australia upheld the pay equity claim for community services workers, saying it does recognise that there is not equal remuneration for SACS workers when compared with state and local government employment.

However FWA fell short of issuing an equal remuneration order, saying the extent to which this is based upon gender is not yet clear. FWA has instead calling on the unions to show how much of the pay gap is caused by gender discrepancies.

UnitingCare Australia says Fair Work Australia’s decision today to extend its inquiry into community sector wages is a bit of an anticlimax.

National Director, Lin Hatfield Dodds says with additional submissions due by August this year, the sector expects an outcome by Christmas.

Community services peak body the Australian Council of Social Service says that the tribunal’s finding validates the claims of those working in the sector that they do not receive equal remuneration for the work that they do, and that gender has been an important factor in creating these conditions.

ACOSS CEO Cassandra Goldie says she congratulates Fair Work Australia for getting it right.

With FWA calling for further evidence on the extent to which lower wages are due to gender considerations, Dr Goldie says ACOSS would like to see a final ruling in line with the 2009 Queensland decision that awarded pay rises to community workers of 18-42% per cent.

She says this is the bar if wage equality is to be achieved in the community sector

Community sector employer group Community Employers WA received the FWA decision with a mixture of optimism and caution.

Community Employers WA’s Executive Director, James Lawton says they still strongly caution that any increases that may be awarded by Fair Work Australia, following the next series of submissions and hearings, must be accompanied by a guarantee by the Federal and State Governments to fund these increases.

Lawton says while they are pleased that the process is continuing and the issue of fair and just pay is still on the agenda, they cannot underestimate the disastrous effect of increased pay, without a corresponding increase in funding, on the sector.

He says if this funding is not provided, there will be a reduction in community services and staff who provide those services, resulting in the most vulnerable members of the community being the real losers.

Federal Member for Melbourne Adam Bandt has backed calls for the Government to commit to funding any pay rise awarded by FWA, saying the tribunal had made a clear statement that government funding was the problem.

Should more not-for-profits be encouraged to close down?

Interesting article in the New York Times about nonprofits that have closed or are planning to close in the next few years – not because of any financial trouble – but because they have accomplished their missions.

The New York Times emphasizes some of the benefits of agencies voluntarily closing their doors:

Executives who have closed nonprofits say a feeling of pride overcomes any potential regrets. 

“Knowing that we were going to close helped us work with extreme urgency and intensity and not slack off for a minute,” said David Douglas, a founder of Water Advocates, a charity that closed late last year. 

Over its five years, Water Advocates raised more than $100 million. Its goal was to increase awareness of water issues, as well as to pull together the efforts of a wide range of organizations. The open knowledge that Water Advocates was destined to go out of business helped it encourage greater collaboration among those various groups. 

“We weren’t trying to attract attention to ourselves, which allowed us to focus on the issue itself, and we were always looking at ways to hand off things to other nonprofit groups,” he said. “And we weren’t competing for money, which also helped us build relationships.”

As Ruth McCambridge writes in the Non-Profit Quarterly this an unusual occurrence:

"........... because a voluntary closing in a moment of strength is a fairly unusual outcome for a nonprofit. Many nonprofits institutionalize to such an extent that closing becomes virtually inconceivable."

But perhaps more NFP's should have the courage to ask the questions- is our mission still relevant and should we still exist?

Managerialism as a prevailing ideology in the not- for- profit sector

image courtesy of Steve Blizzard

This important piece by Vern Hughes, Director of the Centre for Civil Society first appeared in the Sydney Morning Herald on February 4 2011.

Australia's voluntary, charitable and community organisations have changed over the past three decades, almost beyond recognition. Such transformation of the non-profit sector has attracted little public debate.

 Many organisations that began life as voluntary associations have become corporatised instruments of government service delivery and no longer need, or even want, volunteers. Those that still have a place for volunteers are often trapped in a web of regulations and risk-management protocols that reduce volunteering to narrow, mechanistic and unsatisfying tasks.

Most found it easier to seek and obtain public contracts for their operations and to tailor their mission to the delivery of these contracts, than to rely on private fund-raising or commercial income generation.

In the process, their programs and operations came to reflect the silo structure of government, and their internal cultures mirrored the government's risk-averse culture. They became accountable, not to their clients or founders, but to their funding departments.

A generation of non-profit managers rose to ride this service-delivery train, replacing their organisations' once colourful and idiosyncratic cultures with a bland managerialism.

The result is a third sector in deep confusion, torn between its voluntary heritage and its managerialism. Most organisations with a history of more than three decades are unrecognisable from the groups that formed in church halls and around kitchen tables in a previous era.

Disability service organisations are a case in point. Most of the disability agencies now headed by chief executive officers, complete with a raft of risk-management, regulatory-compliance and brand-protection policies, were formed by parents of people with disabilities. These parents knew they needed to create, from scratch, the supports and services required by their sons and daughters.
They usually began around a kitchen table. Everyone was a volunteer. Consultants were unheard of. The only resources on tap were goodwill and a willingness to work together for no reward apart from securing something in the future for their loved ones.

Today many such parents find themselves referred to, in the annual reports of the bodies they created, as ''stakeholders'' in the welfare of their sons and daughters. They appear alongside key stakeholders such local governments, suppliers and corporate partners. Many shake their heads in disbelief at the entity they unknowingly created. ''We gave birth to a monster,'' some say.

Managerialism - in public, private and community sectors - is the prevailing ideology of our time. It has trumped entrepreneurship in the private sector, and perverted notions of service in the public sector. But in the non-profit sector it has swept all before it.

A perfect storm that threatens the future of the not-for-profit sector

Australian Greens Senator Rachel Siewert spoke some truths at the National ACOSS Conference this week, warning that the NFP sector faces a "perfect storm" of coinciding forces that threaten its future.

Whilst these threats have been acknowledged and recognised before by many in the the sector, they are becoming more urgent, and as Rachel points out, there is no evidence that any of the reform proposed by the Rudd or Gillard will address them. The threats identified by Senator Siewert were:

• The Social and Community Sector Workers pay equity case before Fair Work Australia, which has received no indication that Government will deliver a matching funding boost to services. She says everyone agrees a rise in wages is needed, but the sector is unable to support it without an increase in resources.
• The introduction of the Increased Super Guarantee provision – again with no promise there will be matching funds
• The increased cost of delivering services amidst increases in power, water, rent and insurance costs
• The struggle to find workers, a situation Senator Siewert says will only grow worse as the population ages, demands on services increase and the value of community sector wages continues to erode. She says in areas of Western Australia and Queensland, the Not for Profit sector – and in particular the aged care industry – is losing staff to the mining industry. She asks how can the sector hope to hold onto underpaid staff when they can get a job earning $80,000 as a cleaner in a mining town?

As Rachel points out Federal (and State Governments) have promised plenty, but delivered little. Indeed rather than deliver 'reform' Governments continue to impose inappropriate and contradictory funding and reporting requirements and fail to address the historically high levels of underfunding. Reform is done to the sector, rather than to inappropriate government policy, practices and processes.

She concluded with this:

“The Rudd and Gillard governments have continued to promise much needed reforms for not-for-profits and community services, but so far their much-vaunted compact with the sector has failed to deliver anything by way of practical reforms to address the crisis facing the sector".

 Very true.

Victorian Government backdown on Fair pay for communty sector workers: Will the Barnett Government be next?

Once again the not-for-profit sector has been betrayed by a government that made all sorts of promises about the importance of the sector and the need to address the problems of funding shortfalls and low wage.

The newly elected Baillieu Government in Victoria has backed away from a promise made before the election to fund a pay rise for the community sector workforce should it be ordered by Fair Work Australia.

In its submission to Fair Work Australia in relation to the Equal Remuneration Case for Community and Social Sector Workers, the Victorian Baillieu Government warned of possible cuts to jobs and services if it has to fund a large pay rise for the female-dominated workforce.  The Australian Services Union brought the case before Fair Work Australia (FWA), and is seeking a pay rise for community and social sector workers – a workforce which is predominantly female. The case is based on a 2009 Queensland decision to award pay rises to such workers of up to 37 per cent over three years.

The online publication Pro Bono News reports that

....Victoria’s Not for Profit sector has reacted angrily, pointing to the election promise made by the Minister for Women’s Affairs and Community Services Mary Wooldridge to fund the pay rise even it went over the budgeted $200 million over four years.

In its submission to FWA, the Victorian Government says that that contrary to the unions’ submission, it ought not be assumed that all governments have undertaken to fully fund the unions’ claim in the event that it is granted by FWA.

It says the Victorian Government estimates that this year it will provide $1,568 million funding for SACS workers wages.

It says the pay rise sought by the union means the cost to the Victorian government of funding SACS workers will be in the range of between $700 million over 4 years (if an 18% rise is ordered) and $1,700 million over 4 years (if a 37% rise is ordered).

The submission says the Victorian Government’s public commitment of $200 million over 4 years to support the decision by FWA is consistent with their election commitment of responsible management of the State's finances, which includes maintaining an operating surplus of at least $100 million each year without pushing up debt.

The submission says depending upon the extent of any wage increase granted and the prospect that any increase in wages may not be fully funded by the Commonwealth Government, this may mean that there will be a “gap” between the rates of pay prescribed by FWA and the funding of the sector.

It says this gap may result in a reduction in services which in turn may have an impact on the numbers of positions in the sector, and / or on the hours of work available to workers employed in the sector.

The Government submission says evidence provided by Lincoln Hopper from Mission Australia demonstrates that there is a possibility that the claim, if granted in full or in part, will have adverse effects on employment, hours of work and service provision in the SACS sector.

It says Mission Australia employs 1,052 people who would be affected by an equal remuneration order, which would see the organisations salary costs rise by a total of $3.735 million per year, affecting the organisations ability to employ people and resource projects.

In a pre-election interview with VCOSS, CEO Cath Smith just a couple of days out from the 2010 Victorian State Election, Liberal member for Doncaster, Mary Wooldridge said the Liberal Government would fund the pay-rise even if it cost more than the estimated $50 million per year.

In the interview, Wooldridge said the Victorian Coalition fully supported the pay equity case, and would support the decisions of Fair Work Australia and would be passing them through in their funding arrangement.

She said the Victorian Coalition was very clear that they believed this needs to happen and that they would be funding the outcome.

The Australian Services Union says the Baillieu Government backflipped on the election promise in their submission to Fair Work Australia, stating that any unfunded increases would have to be paid for by reducing services and jobs.

ASU Assistant Branch Secretary Lisa Darmanin slammed the recent announcement, saying it is an insult to hard-working, mostly women community workers who the Minister for Community Services Mary Wooldridge promised - on the eve of the state election - that a Coalition government would value their work by funding and supporting the equal pay claim at Fair Work Australia.

Darmanin says the Baillieu Government’s submission is effectively saying that equal pay for these workers needs to be paid for by cutting services to the most disadvantaged in our community, or make those working in it work harder by reducing staff.

VCOSS CEO Cath Smith says she expects the government to honour its pre-election commitments to community sector workers.

With the Victorian State Budget to see an estimated $46 billion in transaction revenue over the next 12 months, Smith says there must be room in the budget to fund this key election promise.

Why we should be skeptical about "social enterprise"

The concept of social enterprise has found its way into the centre of debates about the future of the not- for-profit sector in Australia and is viewed as a policy panacea for the sector.

Here in West Australia, the Barnett Government's Economic Audit Committee, which has been accepted and endorsed by large segments of the WA not-for-profit sector, has a vision to make all not-for-profits into social enterprises.

A UK study by the Third Sector Research Centre shows why we should be deeply skeptical of claims about social enterprise. The UK study found that social enterprise approaches are poorly defined, and they exclude black and ethnic minority groups as well as small not for profits that serve disadvantaged groups and communities.

Lessons from the near collapse of a small NGO

Cate Steane runs a small Californian not-for-profit providing shelter for families between homelessness and a home. Twelve months ago the agency faced collapse as government funding and donations dried up, and its invested reserves disappeared during the financial crises. The agency had to confront the reality that it had run out of money and would have to close its doors. Twelve months on the agency faces a brighter and more secure future.

This situation is very familiar to many small and medium sized NGO's in Australia, for whom viability is a monthly, even weekly proposition.

On the US not-for-profit website Blue Avocado Cate has written an important piece about the strategy the agency pursued to keep the doors open.

Reading Cate's intelligent and honest piece about what not-for profits can do when facing such a crises, and drawing on my experience with small agencies, ten lessons emerge:

1. Act quickly, don't accept denial of the problems and be completely transparent and frank with all stakeholders about the depth of the crises of and what is needed to overcome it (this includes beneficiaries and service users, funders, politicians, donors). Take all stakeholders along on the difficult journey
   
2. Withhold nothing from staff and Board and make use of the diversity of opinion about how to move forward (even when management is doubtful) and acknowledge and work with the negatives.
   
3. Develop a brief Plan (and clear message) of how the agency intends to overcome the crises
4. Mobilise and act in service of the agency's core social mission which is to address social problems and meet social needs. Ensure that the social/community need that the agency exists to address is not compromised
5. Be clear about what and who the agency is there for and what has to be preserved
   
6. Explore all possible angles, including new and better ways to make use of government funding and new sources of funding and be prepared for scenarios that cannot be foreseen in the beginning
7. Keep well informed about the policy context in terms of how these may affect the agency's survival and possible opportunities
   
8. Raise funds through the agency's network of supporters and constituents who understand and support the agency's mission and values, regardless of the size of their donations (don't just pursue big donors). Corporate funding and donors is not a high priority.
   
9. Build and protect the agency's reputation for excellent services, frugal stewardship and scrupulous honesty
10. Develop and retain a strong constituency base and appeal to them to assist in a multitude of ways
    

Funding crises enveloping small not- for- profit agencies

The funding crises affecting Deckchair Theatre, the Fremantle based not-for-profit arts organization, may arise from factors unique to the arts industry (such as declining public funding, lower ticket sales and flagging corporate sponsorship), but it is symptomatic of a much larger funding crises affecting small-not- for-profit agencies in WA.

After 28 years Deckchair Theatre faces its greatest crises, forced to lay off 3 of its 4 full time staff and reduce its operations substantially. Deckchair receives annual funding from the WA Government and it is using an advance of $50k from next years funding to remain afloat before its remaining annual funding becomes available.

The problems confronting Deckchair are similar to those confronting many small not-for-profit agencies around WA, for whom survival is a month by month, even week by week challenge.

There are a number of reasons for the funding crises affecting small agencies. There is growing structural inequality in the not-for-profit sector across all industry sectors between the haves (usually the big agencies) and the have nots (usually the smaller agencies).

The funded NGO sector has seen growing concentration of power, voice and resources as a result of the rapid growth of large NGO's. Government contracting and funding regimes advantage larger agencies who take a greater share of available funding. Governments prefer to deal with a few large agencies than a multiplicity of small agencies. Corporations and business also prefer to deal with and fund larger higher profile agencies. The result is that smaller agencies have to compete for declining funding and are forced to operate in ways that serve funder interests. Viability and survival become ever more precarious.

The adoption of market and corporate practices and managerial values across the not-for-profit sector has the effect of extending market ideology and attitudes across the sector. They become a standard which all agencies are expected to aspire to and are judged by, although this severely disadvantages small agencies who are not funded to a level appropriate to these expectations and requirements (in terms of governance, accountability, management practice, salaries, business planning, risk management etc).

Sadly, government policy compounds the funding problems facing small agencies and the result is that more and more small not-for-profit agencies are struggling to survive, whilst the larger NGO's continue to grow and prosper. This situation is not a positive outcome for the not-for- profit sector, nor for the wider democracy and society.

Strategies to ensure the viability of small NGO's

Recently I participated in a conference panel on the sustainability and viability of small community based not-for-profit organizations in Western Australia. We discussed strategies that small agencies could use to ensure agency viability and sustainability, whilst maintaining their small scale, local grassroots efforts.

Small NGO's are under pressure on many fronts- from governments, from the private and corporate sector, and from larger NGO's who are moving in to the territory previously occupied by small agencies. For many viability it is a month by month struggle.

A number of us on the panel stressed the importance of "political strategies", particularly the need for small NGO's to have a unified voice in the form of a representative peak body to advocate for their interests. Most existing peak bodies are driven by representatives of big NGO's and so tend to advocate and promote strategies that benefit big NGO's first, but not necessarily small NGO's. For a number of reasons , many small agencies don't feel that their interests are represented by most peak bodies.

We also discussed "collaborative" strategies, whereby small agencies collaborate with other small agencies as shared entities, while retaining their individual identity and mission, and capacity to address local needs. This included using consortia to tender for larger projects and developing partnerships to deliver projects, programs and services.

We also emphasized the benefit of what I call "Shared Services Alliances", in which small agencies create 'back office' alliances involving partial integration or sharing of business and administrative functions. Sharing services assists small NGO's to leverage their size and resources to spread the costs of services across a number or agencies, making them more affordable. Agencies can maintain their grassroots local identity but develop more sophisticated models and services.

Shared services alliances are not new in the NGO sector (eg. co-location, shared service delivery, partnerships) however they have been underdeveloped by small NGO's in certain areas.

In addition to shared serviced delivery (probably the most common example) some shared service options include:

• shared office space (as per the Lotteries House model or other forms of co-location of services)
• shared purchasing, where agencies use their joint purchasing power to purchase goods and services
  
• shared staff roles where agencies share particular staff roles
  
• shared funding such as grants
• shared services and functions, where agencies share administrative and business functions such as payroll, IT, accounting and bookkeeping, IT, insurance, facilities management, research, consultancy etc.

Useful articles on shared services in the Non-Profit sector can be found here, here and here.