The strategic advantage of non profits and civil society groups

image: Storm Force by John Gaffen www.whitewindmillphotography.co.uk

"After decades of discourse about how nonprofits need to be more businesslike, I am driven to discuss the differences structurally and in more detail. The admonition to be more like a business is a preposterous proposition—ill informed and exhibiting a sloppy state of mind that tries to draw us all off track to a space of unaccountability. Don’t fall for it. For goodness’ sake—if you want to act like a business, be a business! The major distinguishing factor of a business is its ability to build the wealth of individual owners rather than build collective well-being and value. Decide which bottom line you are dedicated to, and make it your own"
Ruth McCambridge

Like Ruth McCambridge, I have long been a critic of those who claim that nonprofits should be more business-like and operate like business to remodel themselves along business and market lines. It is both an ill informed and dangerous claim.

The claim reflects a naive understanding of non profit organizations and is predicated on a false assumption that non profits need a dose of "business thinking" to be more effective and effective.

Others who express similar views to McCambridge and I, include Michael Edwards and Deborah Allcock Tyler.

In her article Use it or Lose it: Frittering Away Civil Society's Strategic Advantage in the excellent online and print journal Non Profit Quarterly, of which she is the Editor, McCambridge argues that non profits have a strategic advantage that they are often blind to because they don't recognize or use it. 

And she argues that blindness to this strategic advantage is leading the nonprofit and civil society sector to lose its opportunity to become more influential, particularly in terms of responding to debates and solutions about important social, economic and political issues.

McCambridge argues that this strategic advantage springs from a number of distinguishing characteristics of non profits that need to be valued much more and worked with in a more conscious and powerful way.  

Strategic advantage is not to be found in the lure of competition, business metrics, market orientation, growth for growth's sake and obsession with money and profitability.

Some of the strategic advantages highlighted in Ruth McCambridge's article include:

• the tradition of collective association and collective endeavor for the common good
• the tradition of being close to constituents and to communities and of providing opportunities to maximise and amplify their voice
• the importance of shared values and collective aspirations
• the importance of scale, particularly smallness and nimbleness 
• close engagement and shared fit between the interests and aspiration of those who run the organization and those who benefit from its activities
• the focus on mutual benefit and the common good
• the tradition of mobilizing people to work together for shared value and of working non competitively in networks
• the important of trust and credibility in the eyes of constituents and stakeholders, rather than public image and brand 
• acting as the vehicle through which constituents and citizens can take action for the common good and mutual benefit
• appealing to common cause and individual aspiration through activity aimed explicitly at common benefit as a way for engaging the energy of stakeholders.
• availing ourselves of our constituents/stakeholders’ unpaid/volunteer labor.

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.

Attacks on the independence of the voluntary sector and civil society

" We are on a slippery slope, where it is becoming increasingly common to hear the view that voluntary organisations should deliver services but not challenge the status quo, especially if they receive government funding. We are already seeing a ‘chilling effect,’ with increasing evidence of self- censorship by voluntary organisations"

Roger Singleton, Chair of the Independence Panel for the UK Voluntary Sector

 The Panel for the Independence of the UK Voluntary sector has just released its 2014 report titled Independence Undervalued: The Voluntary Sector in 2014,  and the picture it paints is despairingly familiar to the situation in Australia:

 "The voluntary sector is losing its ability to protect the most vulnerable in society as a result of government attacks on its campaigning activities, lack of consultation over policy changes, and funding arrangements that put the future of an independent sector at risk"

In its media release the Panel:

• calls on the British Prime Minister David Cameron to take action to stop weakening the independence of the sector and to rebuild trust.  
•  calls on voluntary sector leaders to take a stand to preserve the sector’s independence, which it says is vital to a healthy and compassionate democracy and the reason why so many people lend their support to charities and trust their services.

•  documents numerous instances of a serious and growing threat from the government to Britain’s long tradition of independent voluntary action including:

• Growing criticism by some politicians, including the Secretary of State for Justice, of charities’ role as voices of communities.  There is an increasingly commonly expressed view that charities should simply deliver services and not speak out against injustices – leading to voluntary organisations self-censoring because they are afraid of losing government work, appearing too political or because of gagging clauses in state contracts.
• New and proposed restrictions to the ability of voluntary organisations to challenge government decisions in the courts on behalf of vulnerable individuals.
• Restrictions to campaigning put forward in the Lobbying Bill without consultation and, despite subsequent changes, with continuing concerns about their impact.
• Cuts in government consultation periods, leaving voluntary organisations too little time to respond to important questions, despite assurances this would change.
• Damage to support in communities due to loss of public funding for local specialist voluntary organisations as public service contracts concentrate on economies of scale rather than social return.
• Many state-sponsored charities subject to government interference, for example in appointment of board members.
• A weak Charity Commission ill-equipped to maintain public confidence that charities are pursuing an independent mission that is furthering the public good and not state sponsored or driven by private gain; and lack of government compliance with a document signed by David Cameron to protect the independence of the sector, the Compact.

 Panel chair Sir Roger Singleton CBE said:

“An independent voluntary sector lies at the heart of a compassionate, democratic society, a role that has become especially important as engagement with mainstream politics declines and the state reduces in size. Yet we are on a ‘slippery slope’, in which the independence of voluntary organisations is increasingly undervalued and under threat and there are insufficient safeguards to protect an independent future for the sector. It is increasingly seen either as a delivery arm of the state or only legitimate where it provides services but does not speak out for wider social change.

 The full 64 page report of the Panel 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.

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 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. 

New Australia book on the Third Sector in Australia

I look forward to reading  the new book Driven by Purpose: Charities that Make a Difference by Australian authors Stephen Judd and Ann Robinson.

In particular, those of us committed to the growth, importance and value of the third sector need more books like this, written by Australians who work in the third sector and who write about the Australian sector from an Australia perspective. And we need more publications and book publishers willing to publish about the sector.

A brief review of the book here  in Third Sector Magazine tells us that:

Driven by purpose is a new handbook on how to lead and manage an efficient and accountable NFP organisation and contains insightful commentary on the current debate, strategy and action surrounding the role of the charitable sector in Australia.

Driven by purpose is written by Dr Stephen Judd and Anne Robinson, two of Australia’s most experienced and respected leaders in the NFP sector, as well as Felicity Errington who is an emerging leader with expertise in research and policy, international development and gender issues.

The book highlights the importance of being purpose-driven, explaining that it affects the character, operation, direction and strategies of an organisation.

The book explains that a truly purpose-driven NFP has the ‘who’ and ‘why’ at its very core saying “These are not simply academic theories and concepts that are nice to have but affect the ‘what’ and ‘how’ of the organisation, and are essential for organisations to deliver high performance.

 Driven by purpose sheds light on the important issues of identity and purpose by exploring:

• The scope and size of the NFP sector in Australia
• The history of the NFP sector in Australia
• The role that NFPs play in society and why they are vital for a healthy society
• What is meant by ‘charity’ and language wars that affect its identity
• Whether the predominance of faith-based charities in Australia an issue
• In addition, the book explores how being purpose-driven works in practice, and provides ten useful tips on how to survive NFP law".

Whilst I concur completely with the idea that successful NGO's are purpose driven and that a focus on being "purpose driven" should shape all key aspects of an agency including its character, operation culture direction and strategy, I am also somewhat wary of  the idea that NGO's can find singular recipes for success. But I will know more about that once I read the book.

Mergers as a strategy to ensure more seamless service delivery

Interesting article from the US by  Bob Harrington about the benefits of a merger between two not- for- profit organizations as a way of creating a more seamless service delivery system to address client needs.

"As the facilitator of this merger (and a former executive director with experience in behavioral health), the most compelling outcome was the creation of a seamless service delivery system to address the needs of clients in a more holistic way.

By unifying services to address substance abuse addictions, mental illness, homelessness, and to provide job training and primary health services, this merger will help to ensure that client needs do not slip through the cracks of a fragmented delivery system.

In the mainstream dialogue about nonprofit mergers, the focus is often on efficiency and costs savings   but ultimately these alliances must make sense from a mission perspective: How can services be integrated and provided in a more effective manner? What will payers – in this case the City and County Department of Public Health – find attractive for contracting?

The landscape of services in San Francisco is fragmented, with many separate organizations providing numerous different services addressing specific client needs.  However, in most cases, they are not comprehensive, integrated services. The merger of Haight Ashbury Free Clinics and Walden House creates a more seamless approach, such that clients do not have to go in search of services from multiple entities to get the care they need"

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.

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.

The dominance of big powerful NGOs

Despite their rhetoric about the importance of the not-for profit, non-government sector, the reality is that Federal and State Government policy and funding is predominately biased towards large corporate and business oriented NGO's. 

When it comes to shaping public policy, attracting public funding or winning large contracts there is an inherent bias towards larger more influential NGO's and to certain powerful service provider interests.

As Gavin Mooney points out, in the health sector it is always the  interests and the voice of the medical profession and the powerful bodies that represent them, who dominate public policy making and shape funding distribution. Mooney points out that in current debates about the direction of primary health care policy in Australia, smaller community based health NGO's, such as the Aboriginal community controlled health sector, which has strong links into Aboriginal communities and represents and advocates for Aboriginal people, are being marginalized

This piece appeared in Crikey and we acknowledge Crikey as the source.

Are Medicare Locals Entrenching Institutional Racism

by Gavin Mooney*

A few years ago, together with two Aboriginal colleagues, I wrote about institutional racism in the Australian health care system.

In the last few months, reading some of the documentation around on the new Medicare Locals (or Primary Health Care Organisations -- PHCOs) from the Department of Health and Aging, the Minister and the Australian General Practice Network (AGPN), it is evident that today such institutional racism is alive and well.

Indeed it is being built into the future of these PHCOs. In the current discussions on primary health care for the future in this country, the Aboriginal community controlled sector and its voice are being ignored.

The concern of that sector at not being invited to be engaged adequately in deliberations about the PHCOs is reflected in a recent media release here in the west from the Aboriginal Health Council of WA. That states, for example: "We are alarmed that there has been so little effort made by the minister and the Divisions of General Practice to involve our sector."

I do not think this is sour grapes on their part. I share that view. The views of the Aboriginal community controlled sector are not being sought and not being heard by the Minister, by the department or by the AGPN.

The reason? The new PHCOs are being seen as just bigger if fewer GP Divisions, with a few bells and whistles (which have been forced to be?) added on. This is reflected in the fact that all 15 of the new PHCOs are to be GP Divisions-based and according to the recent discussion paper from the department on Medicare Locals the rest will be "largely" Divisions-based.

In her speech to the APGN Forum in Perth 10 days ago this Divisions-focus was confirmed by the Minister.

As one example (but there are many) in that speech, she stated that her department was engaging consultants "to develop a funding formula that will enable funding for Medicare Locals to be fairly distributed, taking into account the needs of different parts of Australia".

According to the Minister the only body that the government will consult "before finalising the funding formula" is … the AGPN! No others seemingly and certainly no mention of consulting the Aboriginal community controlled sector on this funding formula.

But then, as the funding formula, according to the Minister, is to take into account only differences geographically ("the needs of different parts of Australia") and there is no mention of the differing cultural needs of Australians, such as the special cultural needs of Aboriginal Australians, then maybe she feels no need to run the funding formula past the community controlled sector.

The discussion document is similarly neglectful of the community controlled sector.

Yes, it lists that sector as one of several with appropriate "skill-sets" that "complement those offered by the Divisions of General Practice Network". But where is the recognition beyond "skill-sets" of the need to embrace the cultural base of the community controlled sector? Where is the acknowledgment that AMSs already often have the breadth of primary care that Divisions currently lack and which PHCOs are being asked to embrace?

It is noteworthy that the AGPN has set out some good principles, including on equity and on Aboriginal health, in its ‘blueprint document’ on PHCOs.

It is most unfortunate, however, that when AGPN comes to the operational end of things, as in its paper on a framework for PHCOs, both equity and Aboriginal issues are sadly neglected. When push comes to shove, the principles in the AGPN blueprint document thus turn out to be empty rhetoric.

There is still time for Minister Roxon and for AGPN to think again.

There remains a wonderful opportunity to build an exciting, fair and inclusive primary care sector in Australia. This needs to start with the idea of caring for patients and their health, sharing the vision with all relevant parties, including the Aboriginal community controlled sector, and embracing more firmly both equity and the social determinants of health.

Indeed I’d like to switch the letters round and have PHCOs become COPHs -- Caring Organisations for People’s Health, even if not in name at least in principle and practice.

I suspect that is what Australian citizens want. It is just a pity they are not being asked.

*Gavin Mooney is a health economist with an honorary appointment at the University of Sydney

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.

Social media tools and social action

image courtesy of Stanford Social Innovation Review
Currently reading an excellent article in the Stanford Social Innovation Review about the use of social media tools and network approaches to driving social change. The article Working Wikily by Dianne Scearce, Gabriel Kasper and Heather McLeod Grant provides many examples of US based NGO's who are using social media to fundamentally change they work and to achieve greater social and political impact.

The paper argues that rather than see social media as an ancillary part of an agency's work and a way to just disseminate information, the technologies and ways of doing business derived from social media can lead to fundamental transformation and re- imagination of ways to achieve social action.

The article identifies 5 benefits that social media networks can provide and describes examples of how this is being done:

1. Weave community
2. Access more diverse perspectives
3. Build and share knowledge
4. Mobilize people
5. Coordinate resources and action

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.