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.

Abbott led opposition to adopt UK style Big Society policies

 Writing in the Sydney Morning Herald Lenore Taylor traces the influence of the UK Conservative Government's Big Society agenda on the Coalition Opposition's social policy agenda for the next election.

Coalition frontbenchers have been instructed to slice away federal bureaucratic oversight of aged care, childcare, employment and family services in a bid to devolve government power and deliver budget savings through public service cuts.

The Coalition, which needs to find more than $30 billion in spending cuts, will pledge cuts to the bureaucracy, but says it will not hit frontline services. The policy is in line with the controversial ''Big Society'' philosophy of British thinker Phillip Blond, who was in Canberra this week for meetings with Coalition leader Tony Abbott and most of his frontbench.

Coalition families spokesman Kevin Andrews told The Saturday Age he had developed the model for stripping unnecessary federal oversight of federally funded services delivered by community and private organisations.

But Big Society rhetoric provides cover for severe austerity measures and a fundamental transformation of the delivery of publicly funded human and community services. 
 
In the UK Big Society rhetoric was used to justify sweeping cuts to public services, to community services and even to the community and voluntary organisations it was supposed to nurture.
 
It has also produced the largest ever privatisation of human and community services in UK history with large swathes of the human and community services industry now under the control of private corporations.

Despite promises by the UK Government that local devolution would primarily benefit small community based not- for- profit, it has been large corporations who have been the real winners.

Taylor notes, correctly, that:

But in Britain, the outsourcing program that was supposed to benefit little community groups ended up giving enormous contracts to large corporations, such as Serco, which runs Australia's detention centres, and in some parts of Britain now runs all the government-funded schools.

The implications of the Big Society agenda for Australia are well documented in a recent report by the Centre for Policy Development titled Big Society: How the UK Government is Dismantling the State and what it means for Australia. 

The Report shows among other things that the reality of Big Society Agenda is vastly different to its rhetoric. The impacts of the Big Society programs in the UK have included:

• An £81 billion cut in public spending over four years including an average 19 per cent budget cut to government agencies, 60 per cent cut to the budget for new public housing and £7 billion cut to the welfare budget.
• The UK’s public service is expected to shrink by up to 710,000 public servants over six years.
• Corporations and the largest charities have dominated the commissioning process: 35 of 40 Work Programme (employment agency) contracts were awarded to corporations.
• Cameron’s budgets have dealt a £5 billion funding cut to the UK’s community sector and funding cuts of £110 million to 2,000 UK charities
• The number of people employed in the UK’s community sector fell by 70,000.
• Local government budgets were cut by more than a quarter in 2010-11 resulting in staff cuts of 10-20 per cent and widespread cuts to programs.
• During 2010-11, public sector employment fell by 4.3 per cent. Private sector employment increased by 1.5 per cent.

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."

A crises parly caused by decades of market driven reform

photo courtesy of ABC News and Micaela Rehle, file photo Reuters)

The crises in the aged care sector is indicative of what lies ahead for the human and communty service sector more broadly.

It is the culmination of 2 decades of market driven reform in which the provision of care and the delivery of human services is marketized, privatized and corporatized.

The report below is from ABC News:

The aged care sector in WA says nursing homes are sacking staff and cutting services in a bid to stay viable, following an overhaul of Commonwealth funding.

Providers predict they will receive up to $24,000 less for each elderly person in their care, under the new funding arrangements.

The head of Aged and Community Services WA, Stephen Kobelke, will attend crisis talks with dozens of stakeholders today.

He says the cuts have put pressure on an industry already struggling to cope.

"Is it sustainable to remain in residential aged care?

"They're the things they'll start to look at; WA providers are deeply concerned about their ability to operate, or in fact their desire to do so.

"They want to look after older people but they've got to have the tools."

Mr Kobelke warns companies have no choice but to cut services and staff.

"Rural providers have already needed to start some sort of downsizing," he said.

Mr Kobelke says the industry is already doing it tough thanks to WA's workforce shortages, building costs and isolation.

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. 

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?