Read the articles and write a personal reflection on them.

timer Asked: Dec 14th, 2017
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Question description

Please read the following articles and write a personal reflection on them (the word file has suggested questions and sources to use).

Showing critical thinking, moving from experience to critical reflection on ideas and issues.

- Approximately 3-4 pages, double spaced (about 700 words).

- Make sure to use the proper citations (source).

- No Plagiarism.

Journals are a learning tool, a powerful way for you to clarify your own experiences and observations and connect them to new concepts.

Journal is an opportunity to explore hunches, questions, and associations with less emphasis on meeting the polished standards of formal writing.

Some starting points for personal responses & critical responses:
- An example from my own experience of one of the key points here is...
- Some questions raised for me are...
- A quotation that is important for me is... because...
- A new insight I had is...
- A pattern I notice is...
- It is ironic that...
- Some things I didn’t understand are...
- A point I particularly disagree with in this article / our discussion is... because...
- I agree that... because...
- One assumption that... makes is... evident in...
- Some limitations and problems I see are...
- This material is similar to or different from... because...

Suggested questions:
- What is (are) the main point(s) of the article? What are the key ideas?
- What ideas were new / startling / changed your thinking about non-profit organizations?
- What questions did the article raise for you – things that you want to understand or discuss?

Please read the articles by Scott (pdf) and Burnley et al. (link), and choose one of the articles by either Eikenberry & Kluver (Link) or Alexander (link). Questions for the journal: 1. 2. 3. 4. Where would you go to find evidence of a 'crisis' in the nonprofit sector? What are the roles of government in creating the crisis, or solutions to such problems? How can we ask nonprofit organizations about their experience of the 'crisis'? Is it really a crisis, or is this simply the normal working out of neoliberalism? Eikenberry & Kluver
The Impact of Devolution on Nonprofits A Multiphase Study of Social Service Organizations Jennifer Alexander The following article reviews the results of a multiphase study of nonprofit social service organizations serving children and youth in Cuyahoga County, Ohio. The purpose of the study was to assess the impact of devolution and related efforts to introduce the new public management in the nonprofit sector. Study results strongly suggest that the capacity of community-based and faith-based organizations to adopt the business-oriented approach required to meet the expectations of government contracts is profoundly limited by their financial and human resources and by the conflict that a market orientation can present to the nonprofit mission. N engaged in social service delivery have survived in a tumultuous environment. Over the past twenty years, the sector’s financial support from government has fluctuated from a zenith in the early 1970s, when nonprofits were the backbone of the government’s social service delivery, to a low during the Reagan era, when federal funding for social services dropped precipitously. In spite of the changing terms of partnership, the nonprofit sector has continued to serve as the last public safety net for our most vulnerable populations. It is also paradoxically regarded as a largely voluntary, low-cost alternative to big government. While financial stresses have been the perennial challenge, two current policy initiatives are dramatically altering the values and methods that have characterized the sector to date: devolution and the new public management. Devolution, also known as “the new federalism,” has begun to occur as the federal government converts a number of entitlement and income security programs into block grants and turns responsibility for them over to the states, most notably in the area of welfare ONPROFITS NONPROFIT MANAGEMENT & LEADERSHIP, vol. 10, no. 1, Fall 1999 © Jossey-Bass Publishers 57 58 ALEXANDER reform. The driving force behind devolution is the idea that social programs run by the federal government have been ineffective, unwieldy, and excessively expensive (Gold, 1996). The devolution of government policy and services is actually a piece of a larger reform movement, directed at both government and the nonprofit sector, known as “the new public management.” The ideology of the new public management can be characterized by two assumptions. First, it assumes the efficiency of markets and the value of competition as a strategy for improving organizational performance. Second, it asserts that private-sector practices and technologies are superior and that management is a generic practice (Kaboolian, 1998). These two trends—devolution and the new public management—have resulted in stronger partnerships between local governments and nonprofit social service organizations and greater emphasis on business practices intended to foster efficiency and effectiveness. Organizations in the nonprofit sector, alternately described as “independent,” “charitable,” and “voluntary,” have formed a critical link between government, communities, and citizens in need, not only through the provision of services but also through their political capacity. Nonprofit organizations are political entities when they organize communities, respond to community needs, or articulate these needs through advocacy. As this article demonstrates, the political character of nonprofits may be imperiled by the push to become more business oriented. Many nonprofits will be required to alter their organizational character in order to survive. This article reviews the results of a multiphase investigation focused on the impact of devolution on nonprofits serving children and youth in Cuyahoga County, Ohio. Cuyahoga County comprises 13 percent of the population of Ohio; it includes Cleveland and is the thirteenth largest county in the United States. Organizations included in the study serve families in general as well as youth in particular. They include such things as social service centers devoted to the arts, food pantries and homeless shelters, neighborhood multiservice centers, alcohol and substance abuse prevention and rehabilitation, youth activity groups, adoption services, and foster care. This article begins with a discussion of how devolution pertains to social service nonprofits. The methodology of the study and a profile of the organizations that completed the survey follow. Impacts of devolution are then outlined in a discussion of the themes that emerged from an analysis of survey results and a series of focus groups conducted with nonprofit staff. Impacts of Devolution on Nonprofits in Human Service Delivery In several respects nonprofits have a central role in the federal government’s efforts to devolve government services. Proponents of devolution have asserted that this community-oriented sector would T H E I M PA C T OF DEVOLUTION ON continue as the last safety net for high-risk citizens irrespective of federal funding. Unfortunately, this vision may be an optimistic assessment of what research on the nonprofit sector would predict. By all indications, the capacity of nonprofit social service agencies is closely linked to government funding. The growth and decline of nonprofits engaged in human service delivery has largely mirrored state and federal funding patterns (Salamon, 1997, p. xiii; Estes and Wood, 1984; Liebschutz, 1992). For example, when the federal government turned to nonprofits to provide the bulk of the nation’s health and social service delivery system in the 1960s, the sector grew (Salamon, 1997, p. xiii). During the 1980s, when federal government grants were cut by 20 percent, the sector lost more than $30 billion in funding and nonprofits decreased in size and number. Nonprofits responded to the loss in revenue by terminating programs and staff and by reducing overhead (Liebschutz, 1992). Nonetheless, the close relationship between nonprofits and government continues; nonprofits engaged in human services receive approximately 40 percent of their budgets from government sources (O’Connell, 1996). A second reason nonprofits may not be an alternative to publicly funded programs concerns the misconception of the character of the sector. In spite of a reputation for providing charitable services, it has been argued by some researchers that the redistributive effects of nonprofits are minimal (O’Connell, 1996; Zimmerman, 1996). Nonprofits are most often founded to serve the needs of particular groups, such as children with diabetes or elderly Lutherans, rather than to serve the general welfare (O’Connell, 1996). These organizations tend to serve their client communities and those most like them. Research by Zimmerman (1996, p. 400) demonstrates that the most important indicator of whether a nonprofit provides services to lower-income populations is whether it receives federal funding. In short, nonprofits engaged in human service delivery are confronting new challenges along a number of fronts. They are at risk due to a historical dependence on government funding and the current changes in expectations. Nonprofits are experiencing pressures from government and funders to emulate the private sector both in structure and practice. There is increased attention to accountability and outcome measures in an effort to bring about organizational efficiency and effectiveness. Nonprofits now find themselves competing with for-profit service providers in their traditional domains, reducing revenues that financed the public service character of the sector in the past. Methodology The study began in May 1996 with the development of a database that included all identifiable nonprofits with 501(c)3 status that serve youth and children in Cuyahoga County. Two hundred thirty-nine organizations were initially identified. A survey instrument was NONPROFITS 59 By all indications, the capacity of nonprofit social service agencies is closely linked to government funding 60 ALEXANDER Discussion groups generated information and insights grounded in the participants’ understanding of the current environment rather than the perceptions of the investigators developed and faxed or mailed to all of the organizations with valid addresses. The purpose of the survey was to determine the extent to which nonprofit providers were affected by recent changes confronting the sector and whether particular service groups or organizational types were affected differently. Data were collected regarding organizational mission, age, budget size, service delivery, clientele, sources of income, changes in income, fiscal stresses, and organizational responses to changes in the nonprofit sector. One hundred twenty-four organizations (52 percent) returned completed surveys. (The survey instrument is available from the author on request.) In addition to the survey instrument, three series of focus groups were held with service providers at four- to five-month intervals over the course of the study. Attendees were randomly selected from the database of nonprofit providers and encouraged to attend focus group discussions. Focus groups were considered an optimal method for generating information on coping strategies because directed conversations among participants could reveal and explore the challenges organizational representatives deemed pertinent. Discussion groups generated information and insights grounded in the participants’ understanding of the current environment rather than the perceptions of the investigators. Nonprofit representatives in focus group discussions were grouped according to organizational types generated from the survey results. They included traditionally established, semipublic, community-based, and faith-based organizations. Discussion in the first two series of focus groups was directed to impacts of devolution and what the groups believed were optimal organizational responses. Survival strategies that appeared effective for nonprofits in the 1980s were presented in handouts and briefly summarized for participants at the beginning of the discussions. Participants then examined the merits of these strategies for their particular organizations in the current setting. In the process of evaluating strategies from the 1980s, participants also clarified differences and similarities between challenges that organizations experience in the current environment. Survey Results Organizations were classified into one of four categories based on a core set of characteristics: funding sources, staff, mission, organizational age, and size. The purpose of creating classifications was to discern whether there were differences in impacts or responses to current environmental stresses and to create focus groups according to these subcategories. The organizational types, based on the survey results, were as follows: Traditional-established organizations included the large, professionalized, often nationally established nonprofits with local satellite offices. Their annual budgets averaged $4 million; 36 percent T H E I M PA C T OF DEVOLUTION ON were between $1 million and $5 million. Organizations averaged 100 full-time staff and 255 volunteers. Participating organizations in this category included Easter Seals, Juvenile Diabetes Foundation, Planned Parenthood, and Salvation Army. Community-based organizations most often provided a broad range of services (largely in the area of education and family services) for a small locale or neighborhood. They typically maintained a strong connection with their community by having community members on the governing board. The organizations had an average age of thirty-one years. Their annual budgets were small, with an average of $907,000; more than one-third fell between $100,000 and $500,000 per year. The average number of full-time staff was 12, and the average number of volunteers was 89. Faith-based organizations represented both of the organizational types already described. Some were consistent with the traditional, established organizations (for example, Bellefaire Jewish Children’s Bureau or parochial schools); others more closely resembled community-based organizations in terms of size, budget, and organizational structure (for example, Lakewood Christian Service Center). Their missions often included a religious commitment to serving people with deep-seated problems or the indigent. In this study, these organizations were responsible for providing 59 percent of the services categorized as survival or emergency services. The average number of full-time employees was 50 with a substantially greater reliance on volunteers than the other organizational types (the average number of volunteers was 372). Semipublic organizations had 501(c)3 status but received more than 70 percent of their funding from government sources. Semipublic organizations had the largest permanent staff size: an average of 32 full-time employees and 218 volunteers. Survey data revealed that government funding was a source of revenue for 79 percent of the organizations included in the study. The organizational type with the lowest average percentage of its budget derived from government funding was the traditional-established (32 percent). After semipublic organizations (such as libraries) community-based organizations drew the highest average percentage of their budgets from government sources (42 percent). Organizational service areas most reliant on government funding were adoption services, foster care, day care, early childhood education, job training, employment, family services, housing, and emergency shelter and mental health services. Service areas least reliant on government were arts, culture, and advocacy. When respondents were asked whether their organizations served a population they would characterize as “at risk” (defined either financially or in terms of the acuity of service need), 73 percent indicated that they did. Data classified by organizational type revealed that 89 percent of the community-based organiza- NONPROFITS 61 Survey data revealed that government funding was a source of revenue for 79 percent of the organizations included in the study 62 ALEXANDER tions, 80 percent of the faith-based organizations, 64 percent of the traditional-established organizations, and 46 percent of the semipublic organizations provided services to a population they define as “at risk.” Given that community-based and faith-based organizations comprise more than 80 percent of the emergency and crisis intervention organizations, these figures were not surprising. These two categories of organizations represented the vast majority of food banks, emergency shelters, emergency health care centers, and neighborhood centers that provide support services for families. Organizations were asked to indicate whether they had employed strategies for coping in the current environment, and they were provided with a list of several possible strategies (including “other”). Respondents were not limited as to the number of strategies they could select. The most frequently selected strategy was “reduction in staff levels and increased workloads,” which was selected by 55 percent of the respondents. Thirty percent reported “an increased reliance on volunteers,” 26 percent had engaged in “management reforms, mergers, or consolidations,” and 20 percent noted the need to “eliminate services and programs.” (Additional survey results are included under the themes in the subsequent section.) Themes from Focus Groups and Survey Data Transcripts of the focus groups were analyzed using a combination of ethnographic and content analysis. Through a review of the transcripts, the four research participants identified recurring themes, which were then systematically coded and categorized under larger themes until the following five themes emerged. Theme #1: Bifurcation of the Sector Based on discussions in the focus groups as well as the survey results, nonprofits of all organizational types are being required to professionalize their financial systems, their fundraising and marketing strategies, and other management processes. Professionalization corresponds to a trend Salamon (Salamon, 1997) dubbed “the marketization of the sector,” in which nonprofits take on private sector practices and technologies. As nonprofits are increasingly required to demonstrate their effectiveness and efficiency through outcome measures, they must implement administrative systems that document measures of fiscal and programmatic accountability. Both the survey data and focus groups revealed that particular types of nonprofits were better positioned to professionalize than others, although all seemed aware that it was a necessary adaptation. Long-established traditional organizations, such as the YMCA, Red Cross, and Salvation Army, had largely done so using a variety of management techniques; they had also expanded into new growth areas defined by county agency demand. In focus group discussions T H E I M PA C T OF DEVOLUTION ON representatives of these organizations indicated that they were strained by the requirements to adopt a management orientation. However, their organizational structures and processes had already clearly attained the level of maturation and specialization necessary to make such a shift. They were challenged but adjusting. By contrast, a diverse array of community- and faith-based organizations, including neighborhood centers and settlement houses, were in different circumstances. Research from the survey as well as the focus groups indicated that many of these organizations lacked the service capacity, economies of scale, revenue flows, and trained staff necessary to adjust to the new demands. For example, one nonprofit director spoke of the sophisticated performance measurement plan designed specifically for the needs of his organization; he lacked the staff to implement it. In other circumstances, the licensing of organizations by various state boards (necessary for Medicaid reimbursement) often requires that organizations employ staff with higher credentials, but salaries are not competitive enough to draw or retain such staff. Positions may remain vacant for extended periods of time, and organizations may find they do not meet requirements for state licenses or Medicaid licensing. Community- and faith-based nonprofits indicated in survey data that they were responding to the current environmental shifts by cutting programs, rationing services, and charging fees when possible. In focus groups organizational representatives indicated that the current shift to market- and business-directed management was resulting in an internal shift in organizational resources from service delivery to administration and management. They were spending more organizational resources on administration, grant writing, fundraising, and documenting the need for their services, and less on service delivery, than in the past. Survey data indicated that community-based and smaller faithbased nonprofits had experienced the greatest financial difficulties over the past year (Salamon, 1997) and the greatest degree of budget fluctuation (increases of greater than 15 percent or decreases of any amount over the past five years). Nonprofits with more narrowly defined missions found it especially difficult to position the organization in response to changing environmental demands. It was common for the nonprofits with narrowly defined missions to say, “We probably won’t be around in five years.” Theme #2: An Epidemic of Need All human service agencies, both county and nonprofit providers, spoke of a sharp increase in need for services from a lower-income clientele and families under stress. (The word “need” rather than “demand” is deliberately employed in this context because clients without dollars cannot shape service delivery in a market-driven sector.) Focus group participants attributed the increase in need to a variety of factors, including changes in federal income assistance NONPROFITS 63 Positions may remain vacant for extended periods of time, and organizations may find they do not meet requirements for state licenses or Medicaid licensing 64 ALEXANDER In focus groups nonprofit providers of all types repeatedly questioned how long their organizations could continue to provide services to lower-income clients programs, fewer available services, and a progressive destruction of “social capital” that has occurred in distressed neighborhoods of the inner city over the past few decades. All categories of nonprofits indicated an increased need for acute rather than chronic care because donor agencies have become more selective about which programs to sustain, changes in Medicaid regulations have limited services for chronic health issues, and available services have been whittled down as providers cancel unfunded programs. In addition, providers indicated that children and families in need of services had multiple, interrelated problems that were more difficult to identify and resolve than before. For example, the executive director of a community center explained that students remained in GED classes almost twice as long as they did five years before due to drug use or because they had dropped out of school earlier. Children in foster care may have behavioral problems related to drug exposure in utero, resulting in specialized counseling and educational needs. Social service agencies that work with teenagers in distress often find that the teenagers’ natal families struggle with a variety of pathologies (mental illness, alcohol and drug addictions, child abuse). Although problems may be complex, remuneration is often calculated at a flat rate. Providers anticipate that the number of families in need of support services will continue to rise over the next three years as the term limits for income assistance under statedirected Welfare to Work (formerly Aid to Families with Dependent Children) take effect and people lose access to income assistance. In focus groups nonprofit providers of all types repeatedly questioned how long their organizations could continue to provide services to lower-income clients given the combined stresses of increasing need and decreasing funding (for example, managed care). In spite of national research indicating that earned income is the fastest growing source of revenue for nonprofits, it was the least utilized source of revenue for organizations in this particular study because such a large number of the organizations serve the poor. Agencies participating in the focus groups emphasized the need to be a Medicaid-licensed facility in order to receive reimbursement for services. Focus group discussions revealed that several organizations believed they had begun to absorb the costs of welfare reform and managed care. The executive director of a traditional-established organization that provides abortions and abortion counseling noted that in 1997 the number of indigent clients increased by 60 percent for reasons staff were unable to explain. In another instance, the executive director of a neighborhood community center provided an example of how her organization was assuming the costs of serving lower-income populations through day-care services: women may not qualify for a child-care subsidy, they may lose their qualification temporarily, or they may miss day-care payments. One woman’s wages had recently been garnished to repay a defaulted student loan. The director faced the decision of whether to absorb the costs of a T H E I M PA C T OF DEVOLUTION ON few weeks of lost day-care income or refuse child care to a woman who had recently found work. The choice of whom an organization can afford to serve can present a conflict in mission that is nearly unresolvable. This dilemma is particularly trying for community-based and faith-based organizations, which make up a substantial portion of the safety net in the area of emergency and crisis services. These organizations often have a mission to serve the most needy. One director of a faith-based organization that provides job training indicated that the city funding agency wanted government dollars expended more efficiently. The organization was directed to serve clients who had a higher probability of success in the program, thereby enabling the organization to demonstrate effective performance. Representatives of faith-based and community-based organizations can sometimes find that the conflict between fulfilling organizational missions and meeting funding requirements is too great to resolve. Theme #3: Loss of Public Service Character In focus group discussions nonprofits of all organizational types indicated that adaptation to financial changes was negatively affecting their capacity to fulfill traditional public service responsibilities, such as advocacy, serving the most needy, research, and teaching. Choices as to whom to serve and how are increasingly shaped by reimbursement rates and the capacity to generate revenue. Representatives of all organizational types besides semipublic indicated that they were cutting programs, charging new and higher fees, and rationing services—a finding corroborated by the survey data. The Challenge of Serving Clients with Deep-Seated Needs. Nonprofit providers gave several examples of how devolution and a management orientation had negatively impacted their ability to assume traditional public service responsibilities. In the context of serving particular populations, they protested that private sector organizations entering new service areas where the profit margin is thin have compensated by screening for clients who appear to have chronic and deep-seated needs. By contrast, nonprofits with an established mission to serve these same populations find that they incur greater service costs and may appear less effective based on outcome measures, ultimately jeopardizing organizational funding and survival. The Challenge of Supporting Research and Teaching. Nonprofits not only struggle to continue serving lower-income populations but their traditional public service mission of support for education and research appears threatened. With the reduction in reimbursement rates through managed care (and now also with Medicaid dollars), revenue that funded research and education for teaching hospitals has been reduced substantially. As the percentage of patients in managed care increases, local teaching hospitals compensate for lost income by requiring doctors to serve a mandated number of patients per day, by reducing the NONPROFITS 65 Choices as to whom to serve and how are increasingly shaped by reimbursement rates and the capacity to generate revenue 66 ALEXANDER A central assumption of the new public management— that competition will improve efficiency—is poorly suited to this organizational context number of staff, and by looking for revenue-generating medical services. Hospitals are relying on fewer staff members as well as staff with fewer credentials when possible. Certainly, this suggests the possibility of reduced quality of care, in addition to less income available for teaching and research. The Challenge of Political Advocacy with Multiple Dependencies on Government. The distinctly political character of nonprofit organizations requires a strong base of community support and some degree of financial independence to sustain. The current shift of policymaking power to the states through devolution may diminish nonprofits’ ability to advocate even more as the public linkages increase in number. In spite of references in scholarly literature to a growing interdependence between governments and nonprofits (Nevin-Gattle, 1996; O’Toole, 1997), nonprofits in all categories clearly indicated in focus group discussions that they regarded themselves in a dependent position vis-à-vis the county and state. Under devolution, state and local governments depend on nonprofit and private sector agencies to provide an expanding array of social services formerly assumed by the federal government, such as job training, employment placement, drug testing, and day care, to name a few. In turn, nonprofits depend on local and state government agencies not only for grants and contracts but for professional licenses, referrals, technical assistance and training, political support, and information on policy initiatives and sources of revenue. Hence, the shift from federal to state and local funding appears to be expanding linkages between nonprofits and local governments and, in turn, increasing the dependence of nonprofits. The multiple dependencies of nonprofits have increased the capacity of county and state government to shape services. This was further validated by the survey results: all new programs and initiatives identified in the survey of nonprofits mirrored county agency demand generated by welfare reform (job programs, parenting classes, day care). Nonprofit agencies with a history of county contracts repeatedly indicated that they saw their agencies’ long-term survival closely linked to meeting county needs. Perhaps the greatest indication of how nonprofits are losing the capacity to advocate for client needs was the reluctance of nonprofits with county linkages to speak frankly about the impact of county policies on clients or client services. Although agency representatives conveyed misgivings privately, relationships with the county were too important to jeopardize. Nonprofits represented by county boards regarded themselves as better positioned to advocate for clients and policies that reflected their knowledge base. Theme #4: Maintenance of Service Quality with Dwindling Reimbursements The structure of relations between nonprofits and local governments illustrates how a central assumption of the new public management— T H E I M PA C T OF DEVOLUTION ON that competition will improve efficiency—is poorly suited to this organizational context. First, local government is, in many instances, the primary client for a number of nonprofit providers, and one that may determine the prices for services rendered. Moreover, local government agencies act as competitors to nonprofits by providing the same services (for example, foster care and parenting classes) for lower rates. In addition to the difficulty of providing good-quality services at a level of remuneration that will sustain the agency, nonprofits identified the additional challenge of providing services that are consistent with state and county policy and that also meet the nonprofit providers’ professional knowledge of what constitutes best care. For example, the state policy regarding children’s services emphasizes that services be directed to family preservation and in-home care for children. However, a number of larger providers believe that many children are too damaged to function in a family-like setting. They believe these children need residential care. This tension between government policy and the professional judgment of nonprofit providers mirrors a tension between politics and administration that is widely discussed in the public administration literature. How this tension will be resolved in partnerships between local government and nonprofits, given the decreased influence of the contracting entity, remains to be seen. Nonprofits in the study believe that a degree of fiscal autonomy is necessary to meet both county agency requirements and organizational standards of accountability. Those organizations with a broad base of financial support were able to continue meeting internal standards of good-quality care whether or not government rates of reimbursement met service costs. For example, if the county were to deny the need for more extensive services in the case of a particular child, there are nonprofit organizations that would continue to provide services they deem necessary based on their professional expertise. The organizations would absorb any unreimbursed costs. Whether these same nonprofits will be able to continue services that reflect their internal standards and professional expertise under managed care remains an open question. Nonprofit providers expressed serious concerns about the impact of managed care; they believed that it would limit their capacity to deliver high-quality services in very short order. According to focus group results, the agencies most immediately affected by shifts in county demand and policy were the larger agencies that had a history of county contracts and, therefore, an established dependence on county funding. These agencies were struggling to determine how best to prepare for the future because local government had not yet articulated a clear direction. The dilemma of how to prepare is compounded by the problem of cost (for example, hiring and training workers in anticipation of need). NONPROFITS 67 Nonprofit providers expressed serious concerns about the impact of managed care; they believed that it would limit their capacity to deliver high-quality services 68 ALEXANDER Theme #5: The Exodus of Knowledge Workers Organizations of all types found their public service character threatened by the “marketization” of the public sector One of the biggest challenges for nonprofits in competition with forprofit providers involves holding on to “knowledge workers”— employees with portable skills, often in the form of credentials or professional licensing, who through their training may develop greater allegiance to their professions than to the organizations in which they work. Traditionally, the public and nonprofit sectors have paid a lower wage than could be earned in the private sector. In turn, there has been a tendency for knowledge workers to seek better salaries and benefits in the private sector after a period of training in the public or nonprofit sector. Focus group respondents noted an unintended effect of competition between nonprofit and private social service: the “bubble up” of knowledge workers. The movement of mid-level professionals from smaller to larger nonprofits and then to for-profit organizations has become particularly pronounced in service areas where nonprofits are competing with private providers and where professional licenses are required for service delivery. In focus group discussions nonprofit representatives recounted the debilitating effects of losing key staff members. The phenomenon appeared particularly devastating for smaller organizations where a small staff fulfills a variety of responsibilities and organizational memory is fundamental to effectiveness. The loss of knowledge workers is a difficult issue to resolve because smaller organizations can seldom compete with the benefits and salaries offered by the larger nonprofit and private sector organizations. Moreover, loss of staff affects an organization’s Medicaid license and capacity for reimbursement. The dilemma for community- and faith-based organizations is how to provide the training without becoming the training ground. Conclusion This research project sought to identify how nonprofit organizations serving children and youth in Cuyahoga County, Ohio, were being affected by devolution and the new public management. Given the changing nature of the public-nonprofit partnership, the study found that nonprofits were under pressure to alter their traditional character. This was most clearly evident in a bifurcation of the sector as the larger, more established nonprofits continued along a trajectory of business-oriented practices while community- and faith-based organizations struggled to adopt this new tack. The latter two indicated that they often lacked the financial and human resources necessary to adopt the management orientation required to meet the expectations of government contracts and necessary to compete with private service providers. Hence, their most often cited responses to the current environment included cutting programs, rationing services, and directing more organizational T H E I M PA C T OF DEVOLUTION ON resources to administrative and management exigencies and less attention to service delivery. Organizations of all types found their public service character threatened by the “marketization” of the public sector. Nonprofit social service organizations have historically generated public goods in the form of services to the indigent, advocacy, community education, and research. Their capacity to continue as political entities is becoming limited due to the need to emulate private sector organizational structures and practices. The current environment encourages nonprofits to provide reimbursable services of individual benefit where the outcome can be measured and documented, such as substance abuse programs for Medicaid-eligible clients. Organizations are financially discouraged from serving populations with deepseated and chronic needs or providing services to the community when outcomes are difficult to measure. Community- and faith-based organizations with a commitment to service delivery based on need rather than demand are experiencing a mission conflict that is difficult to resolve. This study suggests that the capacity of these faithbased and community-based nonprofits to continue as the last safety net for families in distress may be in question. JENNIFER ALEXANDER is assistant professor in the master of public administration program in the Maxine Goodman Levin College of Urban Affairs at Cleveland State University. Her research interests include administrative responsibility in public administration, the survival of nonprofit organizations, and the relationships between nonprofit social service agencies and government. References Center for Community Change. “Influencing the ‘New World Order.’” Winter 1996, pp. 34–37. Estes, C. L., and Wood, J. B. “A Preliminary Assessment of the Impact of Block Grants on Community Mental Health Centers.” Hospital and Community Psychiatry, 1984, 35 (11), 1125–1129. Gold, S. D. “The Potential Impacts of Devolution on State Government Programs and Finances.” The Urban Institute. Testimony to House Budget Committee, Mar. 5, 1996. Kaboolian, L. “The New Public Management: Challenging the Boundaries of the Management vs. Administration Debate.” Public Administration Review, 1998, 58 (3), 189–193. Liebschutz, S. F. “Coping by Nonprofit Organizations During the Reagan Years.” Nonprofit Management and Leadership, 1992, 2 (4), 363–380. NONPROFITS 69 70 ALEXANDER Nevin-Gattle, K. “Predicting the Philanthropic Response of Corporations: Lessons from History.” Business Horizons, 1996, 39 (3), 15–22. O’Connell, B. “A Major Transfer of Government Responsibility to Voluntary Organizations? Proceed with Caution.” Public Administration Review, 1996, 56 (3), 222–225. O’Toole, L. J., Jr. “Treating Networks Seriously: Practical and Research-Based Agendas in Public Administration.” Public Administration Review, 1997, 57 (1), 45–52. Salamon, L. M. “Holding the Center: America’s Nonprofit Sector at a Crossroads.” Report to the Nathan Cummings Foundation, 1997. Zimmerman, U. “Exploring the Nonprofit Motive (or: What’s in It for You?)” Public Administration Review, 1996, 54 (4), 398–401.
Devolution of Services to Children and Families: The Experience of NPOs in Nanaimo, British Columbia, Canada Author(s): Caroline Burnley, Carol Matthews and Stephanie McKenzie Reviewed work(s): Source: Voluntas: International Journal of Voluntary and Nonprofit Organizations, Vol. 16, No. 1 (March 2005), pp. 69-87 Published by: Springer Stable URL: . Accessed: 17/10/2012 12:12 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact . Springer is collaborating with JSTOR to digitize, preserve and extend access to Voluntas: International Journal of Voluntary and Nonprofit Organizations. Voluntas: International Journal of Voluntary and Nonprofit Organizations Vol. 16, No. 1,March 2005 (? 2005) DOI: 10.1007/sll266-005-3233-y Devolution of Services toChildren and Families: The Experience ofNPOs inNanaimo, British Columbia, Canada Caroline Burnley,1 4 4 Carol Matthews,2 and Stephanie McKenzie3 This studyfocuses on the current experience ofNanaimo's nonprofitfamily and child sei'vice organizations (N = 29) providing senices on behalf of government and their adaptation to this devolution. The effects and consequences of con tracting on organizational practices, accountability, and sei~vices were explored through interviews and focus groups with executive directors, board members, line staff,government representatives, and theUnited Way. Results show that a significant proportion of funding comes fi'om provincial government contracts. The funding climate is uncertain, and there is considerable confusion, stress, and time involvedwith the contracting process. Accountability requirements are de manding and nonprofit organizations (NPOs) express concern about a shift to a business management model. Recommendations include a need for increased collaboration between NPOs, a body that speaks for the voluntaiy sector, and improved relationships between NPOs and governmentfunders. KEY WORDS: nonprofit funding; nonprofit accountability; competition; collaboration; Canada. nonprofit boards; devolution; for-profit INTRODUCTION last half-century has seen considerable development in Canadian vol untary agencies thatprovide services to children and families. From being small, The Professor, Malaspina University-College, Nanaimo, British Columbia, Canada. University-College 2Retired Dean of Human Services and Honorary Research Associate, Malaspina University-College, Nanaimo, British Columbia, Canada. 3 Graduate Student, University of Regina. 4Correspondence should be directed either toCaroline Burnley, Department of Psychology, Malaspina or University-College, Nanaimo, British Columbia, Canada V9R 5S5; e-mail:; toCarol Matthews, Centre for Continuing Studies, Malaspina University-College, Nanaimo, British Columbia, Canada V9R 5S5; e-mail: 69 ResearchandThe Johns ? 2005 International 0957-8765/05/0300-0069/1 SocietyforThird-Sector HopkinsUniversity 70 Burnley, Matthews, and McKenzie marginal organizations funded primarily by private donations and occasional gov ernment grants these agencies have expanded to become major service providers contracted to provide services in partnership with, or as agents of, government. This study was designed to focus on the current experience of Nanaimo's nonprofit family and child services organizations and to explore how the increas ing role of nonprofit organizations (NPOs) as providers of government services has affected their organizations in terms of (1) organizational practices, such as management, governance, and financial administrations; (2) accountability (e.g., accountable to government, membership, or community) and (3) impact on ser vices: specific deliverable versus broad social capital. It attempted to assess some of the consequences of current contracting practices and to examine the advan tages, disadvantages, and opportunities for agencies when moving from a model that emphasizes voluntarism and citizen participation to one thatemphasizes pro fessionalism, accountability, and efficiency. Nanaimo, a small city of approximately 78,000 people, is situated on the east coast ofVancouver Island, British Columbia (BC). Originally named Snuneymuxw, which means "great and mighty people," it is the historic and current home of Coast Salish people. Their land possessed rich natural resources thatattracted the European immigrantswho opened coalmines in themid-19th century, Chinese settlerswho built theCanadian railway, and Japanese who came to open herring salteries and boat works. Until the mid-20th century when themines closed, Nanaimo was primarily a coal-mining town; later,other resource-based industries, fishing and forestry,provided most of the employment in the area. As well, Nanaimo has another longstanding and rich resource?the energies of itspeople in voluntary activities. The voluntary sector inNanaimo has a rich history of citizens participating in thedelivery of services to children and families. This is a community inwhich voluntary boards thatoversee theatregroups, music groups, sports and recreational groups, and a broad range of community social service organizations, have flourished and made substantial contributions to the social fabric of the community. In 2002, a total of 465 community organizations in theNanaimo area alone were registeredwith theNanaimo Volunteer Centre. Government support for the voluntary sector was visibly in place, both fed erally and provincially, during the 1960s and 1970s. Federal funding through the Canada Assistance Plan (CAP) encouraged local communities to define and meet local needs supported through the emergence of new organizations, in particular through funding for job-creation programs. Federal dollars were also funneled into the provinces throughLocal Initiative Project (LIP) funding and Opportuni ties forYouth (OFY) fundingwhich provided new funds forboth new and existing voluntary organizations (Rekart, 1997). As a result, in small communities such as Nanaimo therewas flourishing of programs designed to create grassroots community action in response to specific local issues, problems, and needs. Using short-termfederal grants, existing NPOs Devolution of Services 71 serving children and families began to expand their services and generate new organizations. Nanaimo's JohnHoward Society, established in 1958, developed many new projects such as neighbourhood diversion programs thatwere integrated into valuable ongoing services. Nanaimo Family Life Association, founded in 1967 on seed money from theUnited Church, seized the opportunity offered by federal job creation programs to establish a Crisis Centre, which developed into an importantnonprofit agency inNanaimo. In 1972,Nanaimo Women's Place, the precursor to theNanaimo Women's Resources Society, was established through successive LIP project funding.These, and other new agencies established during this period, formed the foundation for the network of services thatnow exists in Nanaimo. Beginning in the 1980s and continuing into the 1990s, the focus of both provincial and federal governments was on reducing deficits. As Brock (2000) notes, In the face of rising public demands for services and declining revenues, government began to cast about for alternative means of providing services more efficiently.While privati zation of departments and agencies was one means, offloading services to the voluntary organizations working in an area of policy, particularly social policy, provided a second attractive alternative to government delivery of services, (p. 4) InNanaimo, as inother communities, theagencies mentioned above and other responded to federal and provincial government agendas of privatization by entering into contracts thatallowed them to expand the services theyoffered. In British Columbia, theNew Democrat Party government initiated a Con tractReform Project intended to reduce fragmentation in itsapproach to contract NPOs ing services with the social and community services sector. The stated outcome objectives of the project were to establish long-term relationships with eligi ble contractors, improve consistency and coordination of contracting practices, streamline administration, and increase accountability.With theNew Era agenda of the provincial Liberal Government, the emphasis on accountability continued, but the focus moved towards implementing new regional governance and service delivery structures.This new initiative, intended to be inplace by 2004, was to in clude "province-wide standards for locally delivered programs, the establishment of accountability and performance management mechanisms, and the increased use of output and outcome based contracts for service" (B.C. Ministry of Child and Family Development, n.d.). The development and expansion of the voluntary sector took place within a context of provincial and federal governments defining and expanding their social welfare responsibilities, and in a climate in which citizens increasingly have come to consider social security and social services to be a right. As we move into this new century, the voluntary sector still holds a significantplace in the delivery of family and child services, and there are increased expectations of the capacity of the sector to partnerwith government in the delivery of services. 72 Burnley, Matthews, and McKenzie There are also expectations that the sector will provide opportunities for civic engagement, which allows communitymembers to participate in theplanning and delivery of social services. Across the country,new initiatives are being proposed to support voluntary organizations in the face of heightened expectations and increasing demands. With thegrowth and development of thevoluntary sector have come government expectations of greater accountability and improved governance practices. At the same time, financial pressures, changes in funding practices, and increased competitiveness have created additional stress. As Scott (2003) notes, in a study conducted for the Canadian Council on Social Development for the Working Group on Financing, a subgroup of the Capacity Joint Table of the Voluntarily Sector Initiative (VSI), Society today is increasingly looking to the nonprofit and voluntary sector to serve and represent the public, even as theways and means of supporting these organizations in their various roles?delivering services, connecting communities, speaking for the vulnerable, and building social capital?are becoming unstable, (p. 149) On the national scene, theVoluntary Sector Roundtable (VSR) emerged in 1995 as an unincorporated group of national organizations and coalitions that came together to strengthen the voice of Canada's charitable, voluntary sector. Noting thatboth federal and provincial governments were contemplating a larger role for the voluntary sector in response to gaps in service resulting from govern ment cutbacks, theVoluntary Sector Initiative (VSI) was established. The VSI is a joint undertaking between the voluntary sector and theGovernment of Canada and has as its objective to enhance their relationship and to strengthen the sec tor's capacity (Government of Canada/Voluntary Sector Joint Initiative, 1999). The research and reports provided by the VSI have helped to increase knowl edge and awareness about the sector (Voluntary Sector Initiative Canada, 2003). In particular, Scott's study (2003) provides a very thorough overview of new funding approaches and challenges faced by the nonprofit and voluntary sector in Canada. The present study investigated the changing funding experience forNPOs within a Canadian community thathas a rich history of nonprofit involvement. It was based on a similar study conducted by Alexander (1999) inwhich she inves tigated the impact of devolution on nonprofit social service agencies inCuyahoga County, Ohio, United States. In particular, she looked at the capacity of different types of organizations (established organizations, community-based, faith-based, and semi-public) to adopt the business-oriented approach required tomeet the expectations of government contracts. The studies by Alexander (1999), Scott (2003), and this study serve to elu cidate the challenges thatNPOs are facing. The findings from this community research study are reflective of the findings fromAlexander's American study and Scott's largerCanadian study. Devolution 73 of Services RESEARCH METHOD This study employed a multi-method approach, incorporatingAlexander's (1999) use of a survey instrumentand focus groups. Using existing databases, a list of 31 participating NPOs (as defined by the BC Societies Act) thatprovide services to families and children in theNanaimo region was produced. Twenty nine agencies agreed to participate. The average age of the agencies was 21 years (ranged from 5 to 42 years). All age groups of clients were represented, and 25 of 29 of the agencies reported that their clientele came from all ethnic groups. The agencies provided services for advocacy, alcohol/drug problems, commu nity support, corrections, crisis counseling, disabilities, education, employment, recreation, family support,FirstNations people, health issues, housing/residential, mental health, immigrants,women, youth, and children. A surveywas designed and completed in the fall of 2002 during one-on-one interviewswith executive directors. The survey sought informationon: (a) typeof service, budget size, service delivery, clientele, and lengthof operation; (b) extent of reliance on government funding; (c) other sources of funding; (d) impact of changes resulting from providing government services; (e) number and source of volunteers; (f) nature of composition of boards; and (g) indicators of connection to community (e.g., linkages to older community agencies and neighbourhood activ ities). In a follow-up conducted in the fall of 2003, 25 of the original 29 agencies participated. Executive directors were interviewed again about changes over the one-year period based on responses to the original survey instrument. Six focus groups (each 120 min in duration) were conducted in the spring of 2003 with separate groups of board members, executive directors and line staffof organizations, representatives of government funding agencies, and the United Way. All volunteered to participate. Each focus group consisted of six to eight people. The purpose of these focus groups was to provide more detailed information about the changes occurring within organizations from the different perspectives of each of these groups and how theywere responding to these changes. All focus groups were asked the same set of questions, including: (1) How would you describe thegeneral climate with regard to funding of family and children's services inBC? (2) What do you see as the greatest challenge facing nonprofitagencies at this time? (3) To whom is your agency primarily accountable and how do you demonstrate thataccountability? An advisory committee, comprised of representatives from community agen cies, United Way, andmunicipal, provincial, and federal governments, was formed to provide consultation and to oversee research activities. All agencies surveyed were given a copy of the report and invited to attend a follow-up session at which theywere invited togive furtherfeedback. The participants at this session indicated that the findings and recommendations corresponded with theirown perceptions and theyexpressed appreciation for the opportunity to comment on the research. 74 Burnley, Matthews, and McKenzie RESEARCH RESULTS Results were analyzed using a content analysis to identify significant themes from the interviews and the focus groups. The following is a description of each of themain themes thatwere identified. Current Funding Climate inReaction toDevolution In focus group sessions, current changes being initiated by theB.C. govern ment dominated the discussions, illustrating how profoundly government policy changes can affect agency stability. Focus group participants consistently de scribed the funding climate in very negative terms (e.g., "depressing," "disem powering," "confusing," and "desperate"). The main concern expressed by board members, executive directors, and line staffrelated to a sense of uncertainty about funding. This uncertainty has been expressed by others investigating this issue as well (Alexander, 1999; Scott, 2003). Workers were uncertain about the future of their own funding, concerned about the very existence of their agencies, and worried about the potential loss of jobs, staffmorale, and the impact that funding cuts were having on clients. The provincial government staffwas described as providing only "dribs and drabs of information." It was suggested that the gov ernmentmight be supplying only limited information because it is engaging in ongoing "creative evolution" and staffdo not know themselves what is going on day-to-day. Participants mentioned that theyoften turned to government websites for information, but even there they found that informationwas inadequate and frequently changing or contradictory. At a focus group of regional representatives from United Way and from provincial, federal, and municipal bodies that contract with NPOs, therewas an agreement that the current climate is uncertain and that significant changes are taking place in the funding environment, in particular with provincial govern ment funding.These perceptions are illustrated in the following statements: "We are in a time of significant change?it is not just a shift;" "The foundation is shaking;" and "The buffer is disappearing." Itwas noted thatwhile the nonprof its report experiencing uncertainty, there is uncertainty experienced on the part of the funders as well, as they find themselves with fewer staff and a reduced budget. Focus group participants expressed uncertainty about the role of government with regard to the voluntary sector and about the relationship between government and voluntary organizations. Itwas noted thatgovernment funders "don't talk to each other," that there is littledialogue between differentministries or between different levels of government. Communication between government funders and the voluntary sector is limited, as inNanaimo there is no structure that speaks for voluntary agencies (e.g., a social planning council). It was suggested that a Devolution 75 of Services $200,001-1500,000 SO-$200,000 ^?"30% 26,6 $500,001-51MOIkn i Over Got*tGrants| GtovHCooftacts | Fig. 1. Budget breakdown of agencies SI MBUkm Gaming O | | surveyed. social planning council might be helpful by providing a vehicle forcommunication between government flinders and the local voluntary sector. Given the number ofmultipurpose agencies, itwas decided that for purpose of analysis the groups would be categorized according to their annual budgets rather than by agency purpose. The annual budget of the agencies ranged from $12,000 to $3,600,000. The budget distribution was as follows: 10 had bud gets between $0 and $200,000; 6 had budgets between $200,001 and $500,000; 5 had budgets between $500,001 and $1 million; and 8 had budgets over $1 million. Government contracts play a significant role in the annual budget of all of the agencies surveyed. As indicated in Fig. 1, as annual budget increased, the proportion of the budget accounted for by government contracts also increased = .489, < (r .05). Figure 1 also shows theextent towhich agencies with budgets between $500,001 and $1,000,000 are dependent upon government contracts. These contracts account for 85% of theirbudgets. Between the original study and the follow-up a total of 10 of 25 agencies reported a furtherdecrease in provincial government funding. It is themid sized agencies (with budgets between $200,001 and $1,000,000) that appear to be most affected by the cuts in the provincial contracts. While two agen cies reported a decrease in provincial contracts over a five-year period in the original study, six reported a decrease between the original and the follow-up study.One agency that lost itsprovincial funding is now completely operated by volunteers. 76 Burnley, Matthews, and McKenzie Focus group participants expressed a concern thatgovernment cutbacks re flect short-term thinkingwithout consideration of the long-term effects. Cited as an example of this short-termapproach was the provincial government hav ing reduced some contracts from one year with a 30-day cancellation clause to 30 days with a 10-day cancellation clause. This type of funding reduces long-term decision-making, which makes itdifficult forNPOs to plan strategi cally. The negotiation of contracts requires a great deal of administrative time, effort, and support. Guidelines for the services to be provided are often not the process clear, and the speed at which change is occurring makes frustrating. There are also differentexpectations from thedifferent levels of government. Federal government funders have a project-based approach and require itemized cost reporting on a project basis, whereas the provincial funders are less pre scriptive in theirRequest forProposals (RFPs), which emphasize deliverables and measurables. Federal funders emphasize that theywant "to make sure themoney goes to clients and not to support infrastructure,"and therefore they trackproject expenditures indetail, whereas provincial funders emphasize "results."Municipal funders only provide very small grants on an annual basis. Funders at all levels of government are concerned about sustainability of projects and are reluctant to fund projects thatwill require theirongoing support. As indicated in Fig. 1, gaming has made up a significant proportion of the < .05). annual budget of the agencies with the smaller budgets (r = ?.68, Most organizations surveyed rely on revenue from gaming. However, there were concerns about lack of clarity and transparency around the eligibility and the process of acquiring gaming licenses and uncertainty about the long-term future from this source. was There also a sense that those who monitor, regulate, and police gaming activities do not always have the requisite knowledge and skills about the organizations receiving funding. In addition, a number of focus group participants expressed frustration over the rigidity of the gaming commission process, especially around the accountability requirements and restrictions about how money from gaming can be used. Some feared that time and energy are being taken away frommeeting urgent client needs in order to develop special projects tomeet funding requirements. With regard to donations, survey responses indicated that as the proportion of the budget from government contracts increased, the increased reliance on donations decreased (r = ?.32, < .05). At focus groups, however, there was frequentmention of increased fund-raising activities and a suggestion that short termcontracting and uncertainty regarding contract renewal will increase theneed for donor funding. As can be seen inFig. 1, again the smaller agencies are more dependent upon sources other than government and gaming funds. These other sources include donations, money from theUnited Way, settingup businesses, and fund raising other than gaming. Devolution of Services 77 Services to Clientele Information from the survey and focus groups indicated that therewas an increased demand for services experienced by 27 of the 29 agencies over the last five years, and this increase included both an increased number of clients and increased complexity of client problems. Focus group participants stated that clients are presenting more complex and multi-layered problems, yet sometimes the very basic problem of survival (shelter and food) is at the forefront.On an anecdotal level, some staffexpressed concern that theywere not able to do what theywere hired to do because theywere simply helping clients meet basic needs. The majority of agencies (19 of 25) reported yet another increase indemand at the follow-up. Respondents suggested that the increase was due to people be coming evenmore desperate in theirattempts to secure basic needs of food, shelter, and employment. As well, the provincial government's cuts in income assistance and legal aid have created additional pressures and increased service needs: "As more people are cut off income assistance therewill be more unemployed and a greater need for support services; however, most support services are losing and funding programs." There was also a great deal of confusion on the part of clients about the in creasing complexity of forms that they are required to complete before accessing services. As a result, service providers are required to spend more time assist ing their clients in completing these forms: "Clients are becoming overwhelmed with the paperwork theymust do to apply for disability funding. They are lost, depressed, and overwhelmed with the bureaucracy." Moreover, itwas noted that some funding is "based on diagnosis rather than on an organized, integrated team approach to service delivery."When families are given funding directly,we may be increasing their stress by asking them to choose from "an array of services." Itwas observed in one focus group that theprovincial government is decreas its size by simply cutting the safetynet and expecting volunteer organizations ing to pick up the slack. There is a perception on the part of most of those in the focus groups that the social safety net has disappeared or is disappearing. Some participants noted that therewas "mean-spiritedness" in theway government is currentlydealing with social problems. Itwas stated that thegovernment is giving people theminimum amount to survive, attributing failure to individual clients, and decreasing the ability ofNPOs to advocate for theirclients. In addition, there is a move from an individualized approach towhat was described by one participant as a change to a "one size fits all" model. Such an approach does not recognize people as individuals with individual needs and challenges, but treats a homogenous group. "We are going from a boutique to aWal-Mart," participant. them as said one On a positive note, however, some agencies report that increased demand may have to do with factors such as better law enforcement, bettermedication, 78 Burnley, Matthews, and McKenzie community members identifying needs, more partnerships/referrals,and fewer stigmas attached to the issues. Professionalization In terms of employment issues, most agencies reported a change in the educational requirements of employees, either in termsof a greater need formore formal education or a need formore specialized training. The move towards increased professionalism has in part been initiated by agencies themselves, as they have identified the need to have more professional staff in order to deal with the increasingly complex issues thatclients are presenting. Professional credentials have also been required in order to respond to issues of confidentiality and risk management. Government accountability requirements have also led to increased professionalism, as accreditation is increasingly a factor in gaining government contracts. Funders observed thatdeveloping appropriate technology and recruiting and retaining skilled staffare challenges forNPOs. With respect to volunteering, the "professionalization" of the nonprofits has led to a reconfiguration of the role of volunteers and a decrease in the range of volunteer opportunities available. Fewer and fewer volunteers are engaged in actual service delivery. Increasingly they play a more supportive role in the board members, fundraisers, or assisting with clerical/office organization?as tasks. In some organizations, the formalization of volunteer programs has re duced the numbers of volunteers because of increased requirements (e.g., criminal record checks, firstaid, insurance, etc.). Unions may also have had an effect in decreasing the use of volunteers. At the funder focus group, questions were raised about themost efficient use of volunteer contributions. Voluntary activity is seen as valuable in providing an abundance of social capital, but funders commented on possible overlaps in services. Linkages between agencies need to be improved in order to develop a cooperative rather than a competitive model. While there is an appreciation for the contribution of volunteers, there is recognition that appropriate methods for recruiting and retaining volunteers are needed. In particular, there is a need to retain volunteers who are skilled in technology. Funders also note that it is challenging to try to establish "dollar values" for thework of volunteers. Impact on Board Members In survey responses, themajority of agencies indicated that they had no in crease in the number of directors on their board, but almost half (14) reported increased difficulty in recruiting board members. The recruitmentof board mem bers is an ongoing challenge formany organizations. Boards are increasingly Devolution of Services 79 includingmore professionals and business people. While focus group participants spoke of the importance of including non-profession al swho are passionate about the cause, they stated that there is less opportunity for such people to become in volved on nonprofitboards. Instead, organizations are looking for skilled volunteer board members: lawyers to "protect them" from liability issues; chartered accoun tants to help themdeal with financial issues; people from thebusiness community to help fundraise. Participants also suggested that theboard's responsibilities have become very political, and that thereneeds to be a training forboard members to gain awareness and understanding of government policies, funding practices, and thepolitical climate. Board member participants at the focus groups noted that theirboards have had to assume a stronger leadership role in the context of current funding pres sures. The job of a board member has become more demanding and they face pressing challenges as "volunteer employers" at a time of cutbacks, lay-offs,and "bumping." As one Board Chair stated, "It isn't fun any more." Government funders commented thatboard members would benefit from a better understanding of fundingmechanisms and constraints, and a better under standing of their accountability as board members. They agreed thatNPOs are becoming more businesslike, which might result inboards developing a "corporate mentality." Questions were raised about how tomaintain interestand passion of board volunteers, whether thework was becoming too bureaucratic and corporate, and about how to acknowledge the value of volunteers. Accountability to Funders Some staffand board members of NPOs stated that their focus has shifted from theiraccountability tomission statements and clients to a focus on ensuring accountability to funders. Some considered that thegovernment accountability re quirements diminish theirflexibility indealing with clients. One executive director stated thatvoluntary agencies are becoming "agents of thegovernment."Many are concerned that they are broadening their services in order to get contracts rather than tomeet the needs of theirclients. Focus group participants stated that funders are settingmuch more rigorous reporting and accountability requirements. However, there is not a concomitant recognition of the costs of increased administration that are necessary to "dot the /'s and cross the f's" of the accountability measures" and "chase the funding." There is an ongoing workload challenge inmeeting the needs of the clients and fulfilling the specific requirements of government funding. Itwas observed that the government awarding these contracts does not display the same level of ac countability that it requires from theNPOs. One participant commented that the provincial government's emphasis on deregulation and accountability is contradic tory:"while government stresses deregulation, it isdemanding more accountability 80 Burnley, Matthews, and McKenzie from nonprofits." Itwas suggested that some of the very qualities thatgovernment values most in the voluntary sector?flexibility and responsiveness?are being eroded because of excessive accountability and reporting requirements. Accountability to Clients and Community Many respondents indicated that increasingly theyexperience a clash between the values of theirorganizations and the values of their funders. The mandate of many nonprofits is to provide support and advocacy for their clients, yet in order to agree to these contracts, some organizations have had to agree not to act as advocates or be political. Alexander (1999) found that the adaptation to the government contracts was negatively affecting the organizations' public service responsibility to advocate for theirclients as well. Some organizations have had to change models of practice to accommodate themandate of funders, which conflicted with the values of professional staff. Government funders are seen as dealing with problems by "trying to contain them, rather than treating them,"which creates conflicts for service providers. Providing services based on new definitions of eligibility creates tensions: "If you are on employment insurance you are eligible whereas ifyou are on income assistance you are not; this goes against the value of the organization which believes in assisting individuals who are in need of employment services." Participants commented, "the economic agenda isdriving the social agenda" and had concern about the long-term consequences of current policies regarding funding of family and child services. There was also a concern that theWellness of staff isbeing negatively affected by the clash between theirprofessional values and the government values. Some participants reported experiencing ethical conflict regarding their dependence on gaming funds, yet admitted that they could not run theirorganizations without them.With other funding decreasing, reliance on gaming has increased, yet there is also an increased competition forgaming dollars and access to these funds has become more complex. The importance of maintaining the voluntary sector's longstanding role in building and supporting community wellbeing was frequently noted. Many re spondents echoed a comment by one-participant that nonprofits are "steeped in community" and aware of the community needs, yetwere concerned that theymay not be able to compete with for-profitproviders. Similarly, Scott (2003) expressed concern that,while some large, professional organizations may flourish,many of the nonprofits thatare "rooted in communities and civic values, carrying out vital community work" might not survive thepressure ofmarket forces. On a positive note, several board members spoke of returning to theirmission statement in order to be very clear about thedelineation between core and contract services. More than one agency stated that they have had to revisit theirmission statement and refocus, considering the possibility of cutting back on programs Devolution of Services Table 81 I. Number of Agencies thatReport Changes Reported changes No. inActivities of agencies Increased administration workloads Increased staffworkloads Increased reliance on donations Changes in theway services are delivered Increased reporting to government Eliminated services or programs Reduced staff levels Increased reliance on volunteers Been accredited or currently in the process (N ? 29) 24 22 19 17 16 11 10 10 9 or even being fully run by volunteers, if the terms of their contracts seem to be leading to extrememission drift. Surviving in a Sea of Change I indicates, themajority of agencies surveyed have experienced challenging changes over the last five years. Many agencies reported greatly increased activity levels and increased workloads that threatened their ability to provide needed services.When asked to identifythemain challenges facing their As Table organizations, focus group participants identifiedbasic survival issues related to running their organizations efficiently and maintaining the breadth and depth of services. Staff health, Wellness, morale, and the retention and recruitmentof staff present challenges, and organizations find itdifficult to provide support for their staff in a "sea of change." Competition between agencies is also of concern. The Request forProposals (RFPs) and Request forQualifications (RFQs) processes "are becoming so com plex and time-consuming that it is placing huge strains on administrative staff." The RFP process was described as systematically excluding NPOs from the dis cussions and having the potential to "bump smaller agencies out of the system." This process is seen as a competitive, performance-based business model that requires "predicting outputs when you don't have control over the inputs." It is anticipated that the B.C. bid process will be more demanding and competitive, and thatnew players will appear who have history neither in the field nor in the community. The perception of most NPOs participating in the focus groups is that the provincial government in particular is attempting to implement procedures based on an ideological shift,which would prefer themanagement of social services to reflect a business model of free enterprise and competition. Organizations are trying to balance theircommitment to a longstandingmission and organizational values against theirneed to compete for dwindling funds. Funders are requiring 82 Burnley, Matthews, organizations to demonstrate accreditation compliance, agement practices, and technological capacity. This vocabulary that replaces "service plans" with "business and McKenzie business-oriented man shift brings with it a new plans" and "communi cation processes" with "marketing strategies." These changes may, as Alexander (1999) points out, have the potential to affect relationships, possibly resulting in the alienation of long-time staffand volunteers. This potential conflict between a business orientation and nonprofit's missions and values is an ongoing theme in the research literature (Alexander, 1999; Scott, 2003). It does appear that the provincial government is increasingly contracting with for-profitrather than nonprofit agencies. One agency reported loss of fed eral funding which was subsequently awarded to for-profitproviders. This has resulted in the agency terminating themajority of its operations, although the society continues to function and oversee small projects. Participants expressed concern about the New Era agenda appearing to give preference to for-profit providers, some of whom are without history or qualifications. This concern was echoed in the follow-up interviews inwhich many participants commented on the history and reputation of nonprofits within the community. These organiza tions, possessing knowledge, skills, experience, and capacity, are run by boards that are "community-minded and committed to themission of the agency." There was a perception thatprofit,not service, is the firstpriority of for-profitagencies. Some nonprofits reported being told that they had lost a contract they had pre viously held because of qualifications; ironically, the for-profitagency thatwas awarded the contract thenwished to subcontract services back from the original agency. Developing a coll?gial relationship with funders, securing funding, finding alternatives to governmentmoney, increasing fund-raising initiatives, and becom ingmore collaborative with other agencies in the face of increased competition for funding,were presented as major challenges. Other challenges included, develop ingmeasurement and evaluation tools to justify funding and meeting the changing and increasingly complex needs of clients. Some focus group participants ex pressed the need to be forward thinking and to develop new programs, rather than remaining "safe" by maintaining the status quo. Funders also saw creativity and the development and sustaining of new ideas as challenges forNPOs as organiza tions are being contracted only forwork thatreflectsgovernment priorities. Others highlighted the challenge of empowering clients to advocate for themselves. The issue of advocacy was raised in a number of discussions, with some participants concerned that funding constraints prevent them from advocating adequately for client needs. Finally, itwas suggested that there is a need to raise the public profile of nonprofits in order to garner more support. Those who work inNPOs clearly recognize the increasing challenges in attempting to be accountable to the clients, the community, the staff,and the funders.There is a need for nonprofits tomarket Devolution of Services 83 not just theirown organizations but also the importance of thework of the sector as a whole. RECOMMENDATIONS Clearly, the individuals participating in this study believe that the voluntary sector has much to offer in providing valuable services that support community capacity. They are eager to work in partnership with government to strengthen community networks and improve community-based service delivery.Whether or not theseNPOs have the ability tomaintain theirorganizational visions, missions, and values, and continue to involve the local community in contributing to the delivery of services in the face of the continuing challenges remains to be seen. The uncertain climate of funding, the concern about clash of values, the in creased workloads, the unstable work environment for staff,volunteers, and board members are research trends that are appearing in the literature investigating the impact of devolution on nonprofit organizations (Alexander, 1999; Scott, 2003). A number of recommendations can be Increased Collaboration advanced to address and Linkages these trends. between NPOs Across all the focus groups therewas great interest in the idea of improving collaboration and linkages between NPOs. A number of people recalled a history of collaboration among local nonprofits, but therewas a perception that those collaborative efforts have decreased over the years. Some felt that scarcity of funds has led to increased competition and reduced collaboration, yet all expressed an interest in reversing this trend. During one focus group, e-mail addresses were shared with a great deal of positive motivation to come together to share informationand possibly resources. As agencies shared common concerns about theirability to cope with currentfunding pressures, thereappeared a willingness to move beyond narrow competition to a development of linkages and a consideration of the issues faced by the sector as a whole. A Body that Speaks for theVoluntary Sector Lacking a coordinating body such as a social planning council, nonprofits in Nanaimo have no voice that speaks for the sector as a whole. Representatives from funding bodies and from thenonprofits themselves identified theneed for an organization that could identify issues, communicate with government, provide coordination advocate and connection for the sector between as a whole. organizations, increase partnerships, and 84 Burnley, Matthews, and McKenzie At the follow-up meeting held with participating agencies, some participants stated that they were "too caught up in survival" to have time to think about developing another organization. Many said theirday-to-day focus was on survival. "Why would we create anotherNPO organization to coordinate our funeral?" was the gloomy question raised by one participant. Nonetheless, therewas general agreement that therewas a need tohave a larger,collective voice to representNPO interests (e.g., a President's Club) thatmight meet monthly to discuss issues of common interest.The establishment of a broad-based Social Planning Council was seen as a potentially useful vehicle for increasing partnerships and communicating with government. Improved Relationships Between NPOs and Government Funders Our respondents reported tensions and challenges inmaintaining good re lations with government funders. It is in the interestof both parties tomaintain effective working relationships based on clear communication, respect, and mu tual support.The federal government's Accord with theVoluntary Sector attempts to address this issue. One of the purposes of theVoluntary Sector Initiative is to support the sector by providing itwith a strongervoice to express common needs, streamlined government rules and regulations, more opportunities to engage in public policy development, and increased access to new technologies, training, and research. However, participants observed a lack of respect toward the staffof NPOs. individual reported that, aftermany years of working under a particular contract, she was informed of the termination of the contract by means of an e-mail, which was read to her over the telephone. Government contracts often One require professional qualifications, yet staffmembers are not paid as professionals nor, with 30-day contracts, do the contracts provide the kind of job security that professionals may find elsewhere. This ismaking itmore and more difficult for organizations to recruit and retain professionals in theirorganizations. Organizations need early input into changes in funding practices and in com munity governance processes. Participants indicated that in the past few years there has been little consultation on the part of the government with regard to cutbacks in contracted tion as being "This services. Some participants described the funder's is the contract. If you don't like it,we'll posi go somewhere else." The provincial government's decision to implement a community governance approach to child welfare followed the core review of service implemented by the Liberal government. Although therewas a degree of community input into the core review process, therewas little communication with organizations or the public when the framework and timelines for Regional Councils was being planned. The dearth of information,direction, or consultation from government about the Devolution of Services proposed new 85 governance structure was seen as yet another indication of a lack of respect for the organizations with which government is contracting services. On the other hand, itwould also be helpful if thoseworking in the voluntary sector had a good understanding of the pressures and constraints experienced by their funding partners.At the follow-up session held with agencies participating in this research, participants expressed frustration that their input to government funderswas not considered seriously, and theyproposed that furtherinquirywas needed to understand the thinking of "the bureaucrats and adhocrats." One ini tiative thatmight help in this regard is a new program jointly managed by the University of Victoria's Centre for Public Sector Studies (CPSS) and Carleton University's Centre forVoluntary Sector Research (CVSRD). The Policy Intern ships and Fellowships Program is designed to provide opportunities for the senior staff of voluntary organizations to spend up to 10 months as a visiting fellow in a federal government department, or for federal governments to send a public servant to work in a voluntary organization. The purpose of the initiative is to develop policy knowledge and experience thatwill benefit both partners in the development of public policy for the voluntary sector. Broader Debate about the Role and Future of theVoluntary Sector In many discussions, reference was made to the ideology behind changes in government funding patterns and the suggestion offered that there needs to be broader debate about the futureof the voluntary sector.Writing about vibrant is Executive Director FoodShare, civil society organizations, Field (1999)?who Metro Toronto?points out that administrative issues in the third sector will be very different in the next decade depending upon what social options are chosen. Do Canadians oppose the downloading of government functions on to the third sector? Do Canadians support the view of theFraser Institute that there should be as littlegovernment as possible and reduced taxes so thatpeople can buy social services directly fromprivate providers? Or can the thirdsector operate as a stable partnerwith government and the private sector? These are questions that require serious and broad debate and discussion. In many discussions, the contributions of nonprofitswere noted as provid ing value to the community in terms of increased participation and improved social networks. It is difficult tomeasure quantitatively or qualitatively what is theprecise value of citizens spending hours volunteering, participating in commu nity decision-making, and becoming aware of social issues. But, using Putnam's (2000) definition of "social capital" as applying to "features of social organi zation such as networks, norms, and social trust that facilitate coordination and cooperation formutual benefit" (p. 67), we can assume that the participation of Nanaimo's communitymembers on nonprofit boards represents significant social capital. 86 Burnley, Matthews, and McKenzie A Need for Further Research It has been challenging to gather and compare data for this research because of the differences between agencies in gathering and storing information. It is difficult to draw conclusions about the impact of changes in funding because of the lack of social indicators and benchmarks for comparison. The current initiative to create a social development strategyforNanaimo will provide a benchmark for a subsequent study to use in the analysis of the impact of funding cuts. At the follow-up, itwas noted that itwould be helpful to acquire the client's point of view on the services they require and receive within the current environ ment. Certainly theirperspective as the receivers of services would broaden our understanding of the effects of current contracting activities. Itwould also be informativeto ask staffand volunteers involved inNPOs why, given the pressures they face, they continue to do thiswork. The level of fatigue experienced by those working in nonprofit agencies was mentioned again and again. As Scott (2003) observes, "People, both paid and volunteer, are stretching themselves to the limit tomeet the new challenges and yet remain faithful to their mission and to the citizens and communities towhom they feel responsible. But how long can this go on?" (p. xv). The trends in volunteering will bear watching. Will community members choose towork with nonprofit agencies thatare beset with financial uncertainties, workforce tensions and shortages, along with increased demands for service, or will they choose to offer theirvolunteer services in less troubled settings?Current research indicates thata significant factor in the decision of people to volunteer is theirbelief in the efficacy of theiractions, theirbelief thatwhat theydo can make a significant difference (Martinez and McMullin, 2004). Given the climate that is emerging, volunteers at nonprofit agencies such as those described in this study may begin to question the importance of theirefforts. ACKNOWLEDGMENTS This paper is dedicated to Peter F?rstenau, without whose vision and en thusiasm, we would not have embarked on this research. His untimely death was a great loss to the project, yet his spirit inspired us throughout our work. This research is funded by a grant from theNon-Profit Sector in Canada Research Program, a Joint Initiative of Social Science and Humanities Research Council of Canada and theKahanoff Foundation. That support is greatly appreciated. We owe much to the assistance of our advisory committee: Lee Mason, Alison Millward, Steve Amett, Robin McQueen, Kate Burns, and Val Massy. We would also like to thankDavid Good, Gilda Good, Vic Murray, Rod Dobell, Sharon Manson Singer, Liz Pam Callahan, Hammond-Kaarremma, Botterill, Lenore Marilyn Adrianne Erin and Dennis Silvestrone. Dartnall, Dennison, Aspell, Devolution of Serv ices 87 REFERENCES J. (1999). The impact of devolution on nonprofits: A multiphase study of social service and Leadership, 10, 57-70. organizations. Nonprofit Management of Child B.C. Ministry and Family Development (n.d.). Service Plan Summary. Online: Alexander, Brock, K. L. (2000). Sustaining a relationship: Insights from Canada on linking the government and third sector. In Proceedings of thePapers Presented at theFourth International Conference of the International Society for Third-Sector Research (ISTR), Dublin, Ireland. Field, D. (1999). Administration Issues in the Third Sector: Building Vibrant Civil Society Organiza tions. Voluntary Action and Organization inCanada: The Last Decade and Beyond Symposium. Online: of Canada/Voluntary Government Sector Joint Initiative (1999). Working Together: A Gov ernment of CanadalVoluntaiy Sector Joint Initiative. Online: WorkingTogetherEnglsih.pdf .A., and McMullin, S. L. (2004). Factors affecting decisions to volunteer in nongovern Martinez, mental organizations. Environment and Behavior 36(1), 112-126. Putnam, R. D. (2000). Bowling Alone: The Collapse and Revival of American Community, Simon & Schuster, New York. Rekart, J. (1997). The Transformation of the Voluntary Sector: From Grassroots to Shadow State, The Social Planning and Research Council of BC (SPARC), Vancouver. s New Funding Regime on Nonprofit and Scott, K. (2003). Funding Matters: The Impact of Canada Voluntary Organizations, Canadian Council on Social Development, Ottawa, Canada. Online: Voluntary Sector Initiative Canada (2003). Taking theAccord Forward: The First Report toCanadians on Implementing an Accord Between theGovernment ofCanada and theVoluntary Sector. Online:
Crisis is Civil Society: Changing and Challenging Times in Nonprofit & Grassroots Organizations Dr. Jerry Hinbest Vancouver Island University October, 2017 Devolution  Defining devolution: – Offloading, downloading, marketization, hollowing out, decentralization – In short – Neoliberalism in the sector  New expectations with the shift from grants to contracts: – ‘In-kind’ contributions – Partnerships, levered funding – Deliverables & evaluation 1 Neoliberalism  Defining Neoliberalism: – A set of political and economic policies associated with classical ‘liberal’ economic theory, emphasizing free enterprise, competition, reduced role of the state – a laissez-faire approach.  Characteristics: – – – – – Rule of the market – competition Reducing the role and size of the state Shift from ‘community’ to ‘individual’ responsibility Deregulation Privatization Key Themes Accountability Capacity Mandate Drift Competition Complexity 2 Key Themes Accountability Capacity Mandate Drift Competition Complexity Theme One Accountability Compliance Capacity to whom? Mandate Drift governmentality Competition Complexity 3 Theme Two Accountability Resources Capacity Turnover Mandate Drift Off the desk Competition Complexity Theme Three Accountability Capacity New priorities Mandate Drift Standardize Competition Incremental Complexity 4 Theme Four Accountability Capacity Mandate Drift Local partners Competition Collaboration Complexity Umbrellas Theme Five Accountability Capacity Mandate Drift Competition Many funders Complexity Innovation 5 Theme Six For clients Advocacy For policy Legal limits Tensions Stability vs. Growth Service provision vs. Innovation Partnership vs. Competition Local responsiveness vs. Funder priorities Client-centred vs. Standardized Inclusion vs. Exclusion from decisions 6 Evaluation Inclusiveness Multiple Roles Dialogue, Deliberation & Democracy Evaluation Theme One Participatory Inclusiveness Multiple Roles Local wisdom Long-term Dialogue 7 Evaluation Theme Two Inclusiveness Multiple Roles Multiple hats Leadership Dialogue Evaluation Theme Three Inclusiveness Multiple Roles Dialogue Bridging role Contingent 8 Context of Nonprofit Evaluation  75% of nonprofit organizations do evaluation.  Over 50% of program funders expect nonprofit organizations to conduct evaluations.  Only 8% of nonprofit organizations hire consultants to help with their evaluations.  About 15% of nonprofit organizations use volunteers, including academic supports. Some Key Issues  The nonprofit sector is a laboratory for innovation – But much of that innovation is lost because of:  Arcane funding rules (repeat / core / short-term)  Risk averse proposals – more chance of funding  Competition among agencies – promotes secrecy  Loss of dialogue among agencies / innovators  Agencies change activities & mandates to meet performance expectations of funders  Evaluations focus on few indicators and ignore the key innovations – learning is lost  Evaluations end up in a drawer 9
FUNDING MATTERS: The Impact of Canada’s New Funding Regime on Nonprofit and Voluntary Organizations Summary Report Katherine Scott Canadian Council on Social Development in collaboration with the Coalition of National Voluntary Organizations Voluntary Sector Copyright © 2003 by the Canadian Council on Social Development. All rights reserved. No part of this report may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, or by any information storage or retrieval system, without permission in writing from the publisher. The Canadian Council on Social Development (CCSD) has undertaken this project in partnership with the Coalition of National Voluntary Organizations (NVO). The research was commissioned by the Working Group on Financing, under the auspices of the Voluntary Sector Initiative (VSI). The research has been supported financially by the Government of Canada through the Voluntary Sector Initiative. The analysis, views and opinions expressed are those of the author and do not necessarily reflect the position or policies of the NVO, the VSI, or the Government of Canada. National Library of Canada Cataloguing in Publication Scott, Katherine Funding matters : summary report / Katherine Scott. Also issued in French under title: Le financement, ça compte: rapport sommaire. The complete report is available in an electronic format. Includes bibliographical references. ISBN 0-88810-519-3 1. Nonprofit organizations–Canada–Finance. 2. Charities–Canada–Finance. I. Canadian Council on Social Development II. Title. HG4027.65.S36 2003a 361.7’63’0971 C2003-903382-1 Summary Report Funding Matters: The Impact of Canada’s New Funding Regime on Nonprofit and Voluntary Organizations Canadian Council on Social Development 2003 2 Summary Report Funding Matters Preface he erosion of the financial capacity of nonprofit and voluntary organizations has prompted particular interest and reflection on the part of the sector and its funders. Divergent funding policies, regulations and practices work singly or in combination to facilitate — or hinder — nonprofit and voluntary organizations in pursuit of their missions. Recent trends in funding, however, appear to threaten the continued viability of the sector. Much organizational time is now devoted to chasing short-term sources of funding, often at the expense of the organizations’ mission and core activities. T The primary objective of this study is to document the changing funding landscape in Canada and to assess the impact of these changes on the financial capacity and longterm sustainability of nonprofit and voluntary organizations. Through our study, we hope to bring to light the challenges and opportunities that nonprofit and voluntary organizations across a range of sectors face in trying to fulfill their missions. This is the Summary Report of the Funding Matters project. The Final Report is available in English and French on the CCSD website at Canadian Council on Social Development The Canadian Council on Social Development (CCSD) has undertaken this project in partnership with the Coalition of National Voluntary Organizations (NVO).The research was commissioned by the Working Group on Financing, under the auspices of the Voluntary Sector Initiative (VSI). The research has been supported financially by the Government of Canada through the Voluntary Sector Initiative. Summary Report Funding Matters 3 A Warning and an Opportunity he capacity of the nonprofit and voluntary sector to fulfill its important role in Canadian society is being undermined and eroded by new funding strategies that are intended to increase accountability, self-sufficiency and competition. T A study by the Canadian Council on Social Development (CCSD) in collaboration with the Coalition for National Voluntary Organizations (NVO) describes the emergence of a new funding regime for the nonprofit and voluntary sector and warns of serious challenges for the sustainability of a cross-section of organizations. The instability of the sector threatens the future of a diverse range of social, health, cultural, recreational, environmental, and other not-for-profit community services for millions of Canadians. The findings are based on a series of focus groups held in different regions of the country and attended by more than 100 nonprofit and voluntary sector organizations, as well as roundtable discussions with funders and interviews with key informants, responses to a written survey of nonprofit and voluntary sector organizations, in-depth case studies, and a review of other research. The sense of alarm expressed by the nonprofit and voluntary sector community stems mainly from how organizations are funded. Many organizations that survived government funding cutbacks of the 1990s are financially fragile because they are now dependent on a complex web of unpredictable, short-term, targeted project funding that may unravel at any time. The study was done for the Working Group on Financing, a subgroup of the Capacity Joint Table of the Voluntary Sector Initiative (VSI). The VSI is a joint effort by the federal government and representatives of the nonprofit and voluntary sector to strengthen the sector’s capacity to meet the challenges of the future. The purpose of the study was to identify current sources and mechanisms of funding for nonprofit and voluntary sector organizations and to explore the differential impacts affecting sustainability. The study found that on the funding side: • Funders are adopting an increasingly targeted approach to funding. THE INSTABILITY OF THE SECTOR THREATENS THE FUTURE OF A DIVERSE RANGE OF SOCIAL, HEALTH, CULTURAL, RECREATIONAL, ENVIRONMENTAL, AND OTHER NOT-FOR-PROFIT COMMUNITY SERVICES FOR MILLIONS OF CANADIANS. Canadian Council on Social Development 4 Summary Report • There has been a marked shift away from a core funding model, which funds organizations to pursue their mission. The new model is project-based and is characterized by contracts that give funders increased control over what the organization does and how it does it. • Funders are reluctant to fund administrative costs that cannot be directly tied to a project or a program. • Funding is being provided for shorter periods of time, and is increasingly unpredictable. • • Funding Matters Recognizing that organizations are coping with current realities in a variety of ways and with differing levels of success, the study has identified some worrisome trends: • Volatility – As organizations struggle to diversify their funding sources, they can experience huge swings in revenue. This volatility undermines an organization’s stability and its capacity to provide consistent, quality programs or services, to plan ahead, and to retain experienced staff. • A tendency to mission “drift” – As organizations scramble to qualify for narrowly prescribed program funding or to win government contracts, some are being pulled away from their primary mission which is their long-term purpose and the source of their credibility in the community. • Loss of infrastructure – With the move to project funding and the tightening of restrictions on administrative costs that are covered by funders, some organizations are losing their basic infrastructure. They are becoming a series of projects connected to a hollow foundation. • Reporting overload – Many smaller organizations are losing heart as they face yet another round of short-term contracts, short-term hiring and letting-go of program staff, all the while pursued for multiple reports from multiple funders with multiple forms and requirements. • House of cards – Because funders now often require financial or in-kind contributions from other sources, the loss of one contract or the end of one partnership agreement can bring down the whole interlocking structure. A service that is thriving one year can collapse the next. Organizations despair of arrangements in which funders will Reporting requirements have increased. Funders are increasingly requiring organizations to make joint submissions with project partners and to demonstrate that they have secured funding from other sources (financial or in-kind contributions) before extending their support. No one disputes the right of private donors to allocate their money as they see fit, whether it involves individual or corporate giving. The study describes concerns in some quarters about the trend among private corporations to replace donations with sponsorships. But the major, over-riding concern is about the new funding strategies of governments, the largest funder of the nonprofit and voluntary sector in Canada. To be clear, the participants in this study were generally supportive of the stated motives of funders to increase accountability, support partnerships, promote diversification of funding sources, and foster efficiency and innovation within the sector. However, the study found a major disconnect between the stated intent of funding reforms and the consequences of these changes for nonprofit and voluntary sector organizations across the country. Canadian Council on Social Development Summary Report Funding Matters not commit until other funding partners are on-side, the last one standing being the preferred position. • • Advocacy chill – When organizations must cobble together projects and partners to survive, being seen as an outspoken advocate on behalf of one’s client group can be regarded as too risky, despite the justice of the cause. You do not want to have your name in the media when your next funding submission comes up for approval. Advocacy organizations have been effectively marginalized over the past 10 years. Human resource fatigue – People, both paid and volunteer, are stretching themselves to the limit to meet the new 5 challenges and remain faithful to their mission and to the citizens and communities to whom they feel responsible. But how long can this go on? The strength and resolve of those involved in nonprofit and voluntary activity are still strong. But the cracks that are appearing in the sector deserve attention before they become major fractures. There is a real and timely opportunity to modify funding strategies and reverse their unintended consequences. The funding trends and their consequences are discussed further below. But first, we outline what the nonprofit and voluntary sector looks like, and what kinds of organizations this study included. The Nonprofit and Voluntary Sector efining the nonprofit and voluntary sector is not a straightforward task. Studies are gradually putting together a picture of the sector, but it is still incomplete. The lack of information is due in large part to the fact that only recently has it been regarded seriously as a “sector” at all. The Voluntary Sector Initiative (VSI) represents a major step forward in this regard. D The VSI describes the sector as comprised of “self-governing organizations that exist to serve the public benefit, generate social capital but do not distribute private profit to members, depend to a meaningful degree on volunteers, involve participation on a voluntary basis, and are independent or institutionally distinct from the formal structures of government and the profit sector” (VSI, MAY 2001). The VSI notes the diversity of the sector, which includes registered charities, THERE HAS BEEN A MARKED SHIFT AWAY FROM A CORE FUNDING MODEL, WHICH FUNDS ORGANIZATIONS TO PURSUE THEIR MISSION. Canadian Council on Social Development 6 Summary Report incorporated non-profit organizations, and groups that are neither registered nor incorporated. It recognizes that many of the organizations in the sector rely on paid staff to carry out their work, but that all depend on volunteers to serve on boards of directors or steering groups for their governance. To get an idea of the size of the sector, there were almost 79,000 registered charities in Canada in 1999 (CCRA estimate). Charitable organizations, however, represent less than half the nonprofit and voluntary sector. It is estimated that there are 100,000 non-profit, non-charitable corporations in Canada, about which we have very little data. Then there are the grassroots groups – small, unincorporated, volunteer-based groups with limited financial resources. Even less is known about these groups. They have been described by one author as “the dark matter ignored in prevailing ‘flat earth’ maps of the sector” (SMITH, 1997). While revenue estimates vary, it is clear that the sector as a whole makes a significant contribution to the Canadian economy. More than 900,000 Canadians are employed in the nonprofit and voluntary sector, excluding hospitals and universities (McMullen and Schellenberg, 2002). Every year, Canadians donate an estimated one billion person-hours to voluntary activities – the equivalent of more than half a million full-time jobs (HALL, MCKEOWN, AND ROBERTS, 2001). Because nonprofit and voluntary organizations are involved so many aspects of Canadian life, the contributions of the sector to society are everywhere. The VSI notes: “The diverse multitude of organizations range from small communitybased groups to large, national umbrella organizations, all enriching the lives of Canadians in various ways.” Canadian Council on Social Development Funding Matters Nonprofit and voluntary organizations deliver services such as home care for the sick and elderly, recreation programs for children and youth, shelter for victims of abuse, or assistance to immigrant families adjusting to a new country. They enliven our cities with arts and cultural events, teach us about protecting our natural environment, promote literacy and learning, advocate on behalf of the marginalized, and monitor the quality of life of our communities, among a host of other activities. Together, these organizations play an essential role in promoting active citizenship and building bridges between communities and cultures, across regions and between Canada and other countries. This study concentrated on what have been called “public benefit organizations” that exist primarily to serve others and contribute to the general welfare (SALAMON, 1995). This approach excluded member-serving organizations, such as professional groups, consumer groups, unions and cooperatives that are primarily organized to pursue the interests of their members and are funded through membership fees. Religious organizations were also excluded from the study. Hospitals and universities were excluded as well – on the basis that they are largely controlled by governments. They are also by far the largest nonprofit and voluntary sector organizations in the sector, certainly in terms of funding. There is a huge range between the few big and many small charitable organizations. Eighty per cent of charities reported revenues under $250,000 in 1995, and 7% of them reported revenues over $1 million (DREESSEN, 2000). For the purposes of this study, organizations such as the United Way and public and private philanthropic foundations were Summary Report Funding Matters consulted as funders, rather than as members of the nonprofit and voluntary sector. The nonprofit and voluntary sector organizations that contributed their views to inform this study tended to be incorporated, with or without charitable status. They have an institutional presence, usually locally or regionally, but in some cases nationally. Some of the organizations interviewed for 7 this study started out as grassroots groups, but have evolved into more formal, professional entities. The areas of activity in which these organizations pursue the public good can be categorized under the following general headings: social services, community benefit, environment, arts and culture, health, ethnocultural activities, and recreation and sport. Financial Capacity and Funding Trends he changes that are happening in the nonprofit and voluntary sector are part of a sweeping restructuring in the organization of modern societies. The private corporation has been reshaped by globalization, technology and a host of other factors. In the 1990s across Canada and around the world, governments launched major initiatives to balance their budgets and reinvent themselves for the new millennium. T Nonprofit and voluntary organizations have been struggling to shape a new course in the face of the social, economic and political forces buffeting their sector, and to sustain their ability to pursue their mission. Financial capacity is an essential part of organizational capacity and sustainability. Building on earlier work done on the sector (WORKING TOGETHER, 1999), this study takes the view that financial capacity is not just about money in the bank. Capacity includes relationships with funders and the institutions, mechanisms and practices that enable or hinder the ability of organizations to carry out their work. GOVERNMENT Historically, government has been the most important funder of the nonprofit and voluntary sector. Direct government funding accounts for roughly 60% of total sector revenues. The largest government contribution comes from provincial and territorial governments. In addition, the sector benefits from indirect government support in the form of charitable tax credits and GST rebates – an estimated $1.5 billion in 1997-98 (TREASURY BOARD SECRETARIAT, 2000). Governments also provide meeting space, equipment, facilities and training to many organizations. MANY ORGANIZATIONS THAT SURVIVED GOVERNMENT CUTBACKS OF THE 1990S NOW DEPEND ON FUNDING THAT MAY UNRAVEL. Canadian Council on Social Development 8 Summary Report In the 1990s, in an environment of fiscal constraints, governments cut direct financial support to many nonprofit and voluntary organizations that they had funded for decades. But the changes in funding mechanisms were more profound than just cutbacks for many (although cutbacks were profound enough for some organizations to close their doors) – the relationship itself between government and nonprofit and voluntary sector organizations changed. This new relationship is reflective of a philosophy that introduced values associated with the private marketplace – competition, diversification, entrepreneurialism, innovation, focus on the bottom line – into the mix with more traditional public sector values of accountability, stability, responsiveness to clients and community, and serving the public interest. Organizations were told to diversify their funding base and become less dependent on tax dollars. A number of organizations that had traditionally received an annual government grant to support their work, which left them a degree of autonomy in directing their own affairs, lost all or most of that core funding. Instead, many were left to apply for project funding targeted to certain priority areas or to enter into purchase-ofservice contracts with government ministries and departments for delivery of specified programs. From the funders’ perspective, governments — as well as other private sector funders — are implementing mechanisms to ensure the most effective use of dollars by: • targeting funding to programs and projects that meet in this instance the elected government’s priorities and focusing on the results to be achieved; Canadian Council on Social Development Funding Matters • reducing support for administration to increase the proportion of funding that goes into programs and services; • monitoring contracts closely and requiring organizations to demonstrate that they have used the funds for the purposes intended and achieved the expected results; • encouraging groups to show how they can do business differently and do more/better with less; • reducing duplication and gaps in service and enabling more integrated and holistic solutions to complex problems by making organizations collaborate through partnerships; and • retaining flexibility to meet changing priorities in a volatile environment by avoiding long-term financial commitments. EARNED INCOME There are a number of other sources from which the nonprofit and voluntary sector can and does derive income, including memberships, donations, philanthropic foundations, the sale of goods and services, investments, commercial ventures, gaming, corporate sponsorships and others. The reliance on a particular income source often reflects the history of the organization, its community, and its primary activity. A second major source of income for the sector as a whole is fees and charges. Sports and recreation and arts and cultural groups have traditionally relied heavily on fees and charges. For other nonprofit and voluntary organizations, it is a marginal source of income. Some organizations charge fees for mission-related services (a university, for example), while others generate income through ancillary businesses such as museum shops or parking lots. Funding Matters Earned income is not an option for everyone. You have to have something to sell to make money from goods and services. If you levy charges, you need clients or members who can afford to pay the fees or buy the tickets. A commercial venture may work for some groups, while others may consider it a betrayal of their mission. Commercial activities are not without their own costs. They can divert staff energies and resources toward income generation and away from core activities. PRIVATE GIVING Private giving is the third major source of revenue for the sector. Private funds may come from individuals, private corporations, unions, foundations, or community-based fundraising organizations such as the United Way. There is a prevailing myth that voluntary activity is largely sustained by the donations of concerned individuals. This is certainly true for religious organizations, for example, and many smaller community-based service or advocacy groups. But most nonprofit and voluntary organizations pursue other sources of funding in no small part because of the inherent instability of private giving. Significant revenue fluctuations from year to year make it very difficult for established organizations to staff and deliver programs, particularly over the long term, by relying exclusively on private giving. Ongoing fundraising is hard work, and organizations report increasing difficulties in recruiting volunteers for fundraising purposes and high levels of donor fatigue. Increasingly, nonprofit and voluntary organizations rely on a relatively small group of donors and volunteers who drive nonprofit and voluntary sector efforts. Summary Report 9 Other private funders involved with nonprofit and voluntary sector organizations have become, like governments, more “proactive” in their approach. A number of private foundations are more strategic or targeted in what they fund. Rather than reviewing requests for funding across a wide spectrum of activities, they are deciding on their priorities and programs, then asking groups to submit requests within those areas. Agencies like the United Way are also requiring organizations to spend considerable time and effort every year demonstrating that they have been operating efficiently and providing a valuable service to the community. The original principle of pooling charitable funds in a “united” campaign is changing in some communities where United Ways are offering donors the choice of designating their dollars for specific purposes. There is some concern that unpopular, but much-needed, services may ultimately lose out in competition with more “appealing” programs. CORPORATIONS ARE NOW MORE LIKELY TO FAVOUR ORGANIZATIONS THAT ARE IN A POSITION TO DELIVER A SIGNIFICANT RETURN, BY WAY OF RECOGNITION, ON THEIR INVESTMENT. Canadian Council on Social Development 10 Summary Report CORPORATE PHILANTHROPY Corporate philanthropy is a viable source of private giving for only a select few among nonprofit and voluntary organizations. Corporations prefer to associate with organizations that closely resemble themselves, with structures and procedures with which they can identify. They prefer short-term funding for projects, rather than long-term support for organizations (LEAT, 1995). They are now more likely to favour organizations that are in a position to deliver a significant return, by way of recognition, on their investment. There has been a major shift in corporate giving away from donations and in favour of sponsorships, where a corporate name or logo/brand or promotion of some kind is featured in exchange for financial assistance. Some nonprofit and voluntary organizations are dipping their toes into the sponsorship pool, but others are worried that being associated with a for-profit product or service will damage their reputation as a non-profit, public interest group and alienate their traditional supporters. Corporate funding has in no way made up for government cutbacks. Some critics of government funding of nonprofit and voluntary organizations contend that government crowds out private giving — that individual and corporate donors feel they give enough through their tax dollars. Research in the U.S. indicates that the opposite is true – lower government funding of nonprofit and voluntary organizations sets a lower standard of responsibility for private giving. The American research found that lower levels of state funding for voluntary organizations Canadian Council on Social Development Funding Matters is associated with lower levels of private giving, especially corporate donations (USEEM 1987, CITED IN LEAT, 1995). GAMING Gaming is an interesting illustration of how funding has changed in recent years and is worth reviewing. Many nonprofit and voluntary organizations have run bingos and other such events for a long time. This method of fundraising is labour-intensive, but has been relatively successful in many communities. Governments, however, have moved into the gaming business in a big way. Net profits from government-led gaming (or gambling) were $5.5 billion in the 1999 fiscal year, with charity-run gaming generating an additional $712 million (AZMIER, 2001). Governments have set aside a portion of gaming profits to support voluntary activities. Some provinces are distributing gaming profits through public foundations, such as the Trillium Foundation in Ontario and the Wild Rose Foundation in Alberta. Nonprofit and voluntary sector organizations apply to foundations for grants in a process much like applications for government funding. Over the past decade, gaming grants have become an increasingly important source of revenue for some groups. The experience of one community, however, illustrates the downside of this new funding trend. When one of four Ontario casinos was built in Thunder Bay, it put the existing charitable bingos out of business. There were 116 groups relying on bingo revenues, and only 11 were approved for Trillium Foundation funding. Some were turned down, and others gave up, discouraged by the complex, time-consuming application process. (“ARTS FUNDING OR SOCIAL ENGINEERING?” R3) Funding Matters Summary Report 11 The Consequences of New Funding Approaches any nonprofit and voluntary sector organizations contributing to this study made a point of saying that they understand and support funders’ goals of increased accountability, efficiency, innovation and partnership. However, there is huge variation in the relative ability of organizations to cope with the emerging funding regime. Larger organizations are much more likely to have the organizational infrastructure necessary to manage in the new, more unstable and competitive environment. Smaller organizations, including many advocacy groups, are being marginalized. M We should also add the caveat that not all funders are following the trends. Departments or agencies of the same government may take different approaches. But the trends described in this study were not confined to one subsector or type of nonprofit and voluntary organization or to one region of the country. They were pervasive and their effects are cumulative. The quotations below are all from study participants who spoke in focus groups, interviews, and case studies. VOLATILITY “Predictability. Whatever it’s going to be, you have to know what it’s going to be. To me, that’s the key.” The written survey that is part of this study (responses were received from about 50 organizations, 32 of which provided detailed financial data over time) helps to illustrate a point that was made time after time throughout the consultations – increased volatility and insecurity in the sector. It also reinforces the overall message that organizations are very concerned about how they are funded, more so in many cases than the actual level of funding. Three-quarters of survey respondents had been affected by cuts in government funding in the 1990s, and over half were affected by ORGANIZATIONS ARE VERY CONCERNED ABOUT HOW THEY ARE FUNDED, MORE SO IN MANY CASES THAN THE ACTUAL LEVEL OF FUNDING. Canadian Council on Social Development 12 Summary Report reductions in funding from foundations, individuals and others. In response, they redoubled their efforts to make up for lost revenues from one source with income from another. Almost all (93%) said they were trying to diversify their funding sources, and two-thirds reported they had succeeded. The survey found major increases in aggregate income (almost 37%) between 1997 and 2001 among those providing detailed data. Even taking into account a 2% annual inflation rate over that period, this growth is very strong. However, within this small sample, there were winners and losers – organizations that lost ground, while others gained. The overall picture is one of significant turmoil. The sheer size of income shifts is a warning sign and an important finding of this study. A “volatile” organization was defined as one where income gains or losses were 25% or more, adjusted for inflation, over the five-year period (1997-2001). A stable organization was defined as one where the gains or losses were 10% or less. Fifty-six per cent of these organizations had income swings of more than 25%; another 25% experienced relatively stable income, and the other 19% were somewhere in between. Volatility was greatest among social service and environmental organizations. What difference does volatility make? According to the study participants, it undermines an organization’s stability and its capacity to provide consistent, quality programs or services, to plan ahead, and to retain experienced staff. As one participant said: “We want to support people to make change, but we can’t commit to anyone. We never know if we will be around ... We would like to be proactive, to be moving forward, but we need consistent funding.” Canadian Council on Social Development Funding Matters “Unstable and hence unsustainable funding sources and streams are leading to difficulty in planning strategic directions and budgets.” “Being in a constant state of uncertainty causes our organization to be very vulnerable. Retention of a skilled coordinator is difficult. Too much energy is spent on funding dilemmas which takes away from growth of the organization.” A TENDENCY TO MISSION DRIFT In the past, governments provided core grants to fund organizations to pursue their respective missions. That funding supported basic core organizational and administrative costs as well as the cost of programs. The organization retained a significant degree of independence in selecting and implementing program and organizational objectives. Core or grant-based funding tended to be more predictable and to last longer than the current mode of funding. Among organizations that responded to our survey, more than half said that core funding made up, on average, less than 25% of their total revenues. With the new project-based funding model, funders are increasingly narrowing the range of organizations and organizational activities that they are willing to fund. They are limiting their focus to costs related to a given project or program (rather than the Summary Report Funding Matters organization as a whole), and extending greater financial control and administrative oversight over how the money is spent. Funding tends to be short-term, and renewal is uncertain after the expiry of the project or contract. “You are constantly having to juggle your mission and mandate to suit the funding agenda. It isn’t your funding agenda. Let’s be clear — it is their funding agenda.” There is concern in the nonprofit and voluntary sector that organizations are bending themselves out of shape to conform to funding criteria. One can debate whether the priorities of funders should be paramount. Funders pay the bills, but nonprofit and voluntary organizations are closer to their communities and pride themselves on keeping in touch with community needs. An organization that can no longer fulfill its primary mission risks losing credibility with clients and with the community. Over time, targeted funding also creates a bias in favour of more well-established organizations that have the infrastructure to pursue ever-changing funding priorities. Targeting by private as well as public sector funders may also mean that much-needed but not-so-popular programs and services will be discontinued in favour of more appealing causes that make donors and politicians feel good. Environmentalists note that it is always easier to raise money for popular causes that are easy to understand (“bears and bunnies”) than it is for more complex and less photogenic issues (such as restoring wetlands). One study participant described how clients blamed the community organization for failing them because a service had to be withdrawn when the funding ended. Another commented: “I am very concerned that the Province will be changing its method of funding us. We don’t fit any of their new programs, despite the fact that they have been funding us for 22 years.” Concerns about loss of autonomy and mission “drift” were raised frequently in the consultations. In a focus group in one small community, people talked about mission “yank” resulting from the injection of a very large project which had the effect of diverting the work of the whole community. “A big struggle — I think it is the key struggle in the sector right now — is staying true to mission.” 13 LOSS OF INFRASTRUCTURE With the move to project funding and the tightening of restrictions on administrative costs that can be covered by funders, some AN ORGANIZATION THAT CAN NO LONGER FULFILL ITS PRIMARY MISSION RISKS LOSING CREDIBILITY WITH CLIENTS AND WITH THE COMMUNITY. Canadian Council on Social Development 14 Summary Report organizations are losing their basic infrastructure. They are becoming a series of projects connected to a hollow foundation. Administration has become a “dirty” word in nonprofit and voluntary sector funding. An organization is typically allowed to include a portion of administrative costs, such as phone or rent, in a project budget. But there are strict terms and conditions detailing what is an acceptable expenditure and what is not. Some funders will not pay anything for administrative costs. As a result, non-program functions are underfunded. These functions include things as basic to organizational survival as organizational management, human resources management, volunteer coordination, board governance, research and evaluation, and costs related to maintaining financial reserves for salary and wage liabilities, capital replacement or other contingencies (for example, when project funding is late and staff have been hired). There is no understanding (or room on cash flow reports) for activities related to staying connected to clients and beneficiaries, community members or other nonprofit and voluntary sector organizations. There is no support for organizations to participate in policy development discussions at the request of funders, usually government. “Five years ago, the money we got to deliver these government programs actually covered the costs. Now, I’m not nearly covering costs of operating the building. In reality, we’re subsidizing the government programs.” Canadian Council on Social Development Funding Matters “I think we need a dialogue and a better understanding of the whole issue of core and operating funding — with foundation funders as well as governments.” REPORTING OVERLOAD Study participants acknowledged their responsibility to be accountable to funders (as well as to their members, clients and communities), and to report on how money was spent and what results were achieved. However, the intensity of reporting requirements has increased, and concerns were expressed about how much work is required, especially from small organizations that do not have the administrative infrastructure to deal with all the paperwork. There is a sense that reporting has taken on a life of its own – that in some cases, reporting requirements have little to do with the purpose or quality of the project or program. “I see it as the government having adopted a commerce model where groups are having to prove their market relevance all the time – so you are not justifying yourself in terms of output or quality – but by simple denominators of dollars or numbers of people, which are crude indicators,” was a comment from one focus group participant. Identifying the right indicators is a challenge for both funders and nonprofit and voluntary organizations. Those involved in prevention efforts or work with very vulnerable people, for example, have difficulty with quantitative outcome measures when research shows that improvements may not show up for a long time. Enforcing rigid outcome targets established at the beginning of a project can cause problems in delivery if the targets are Funding Matters Summary Report too ambitious or they are not the appropriate targets, or if the organization is not allowed to adapt to changing circumstances. could be better spent in other areas if operational funding was stable and from all levels of government.” One of the case studies revealed how stringent controls by funders that prevent organizations from moving dollars within the same project from one budget line to another can create unnecessary failure. Funding was withdrawn from an environmental organization that could not convince enough homeowners to conduct “green” audits, instead of allowing the group to move home visit dollars to a successful storefront operation that was raising community awareness. Diversified funding also means multiple reporting requirements to different funders — usually involving separate forms, procedures and timelines. With funding beginning and expiring at different times for different projects and funders, organizations must also hire and let go program staff on a revolving-door basis or find money elsewhere to bridge salaries to the next funder or funding period. For many organizations, these requirements wreak havoc with their human resource management, not to mention their cash flow. This example speaks to another aspect of funding – there is little tolerance for risk-taking. While there is much talk about supporting innovation, there is little evidence that government funders are willing to let organizations try out something that might not work. If organizations know they will be penalized for failure, there is no incentive to risk taking a non-traditional approach. “With having to fit into specific sorts of funding pots – it really does ultimately stifle innovation. While we are expected to be creative and innovative, you have to fit into very stringent criteria.” Seeking project funding for several programs is far more time-consuming than getting a stable grant for the organization that is renewed on a reasonably predictable basis. In other words, more time and energy is required of administrators – time and energy that nobody wants to fund. “A significant amount of time is used to find sustaining funds for project grants. Time 15 HOUSE OF CARDS Partnership has become a buzz-word in the world of nonprofit and voluntary sector funding. It is becoming increasingly common for funders to set criteria that require organizations to show they are working with other partners to deliver the program or service before an application for funding will be considered. NONPROFIT AND VOLUNTARY ORGANIZATIONS ACT AS THE CONSCIENCE OF OUR COMMUNITIES... THEY REMIND US OF WHAT IS HAPPENING TO PEOPLE WHO ARE LEFT OUT OR TREATED UNFAIRLY. Canadian Council on Social Development 16 Summary Report Many nonprofit and voluntary organizations pride themselves on their ability to build strong and productive partnerships. At the same time, they are leery of “paper” or artificial partnerships that are put together for funders among organizations with no history or prior plan for working together. They also point out that partnerships are not appropriate for delivery of every program or service. It is becoming increasingly common for funders to require that an organization seeking funding secure contributions (financial and in-kind) from partners up-front before the funder will agree to participate. This may be done to discourage organizations from relying on a single funder or to promote collaboration among groups involved in similar activities. While there are certainly successful partnerships of this kind, partnership projects can be fragile. The withdrawal of one partner or the loss of one contract can bring down the whole interlocking operation because each contribution – whether it is a staff secondment or space in a community centre or cash – depends on the others. Study participants referred to this as the “house of cards” phenomenon. The environmental organization that was the subject of a case study (mentioned above) provides an illustration. At the time of the case study, the group was facing the loss of a large amount of project funding because of a freeze preventing the hiring of short-term contract staff through a job creation program. If they couldn’t hire project staff through this job creation program, funding for the whole project would be withdrawn. Project funding had raised the group’s revenues to $170,000. But a group member noted that the budget could go back to $3,000 (what Canadian Council on Social Development Funding Matters they can fundraise in the small towns and rural areas of their community) in one year. A number of study participants spoke of funders who will not agree to support a project until others have committed themselves, the last one standing being the preferred position. It is like financial musical chairs. “Everyone wants to be the last in – it is seen as the best spot. Funders want to leverage, but not to be leveraged.” “There is an issue of intergovernmental competitiveness. Very often they will withhold funding because they know if they put more in, another level of government will put less, and so you have a kind of stopgap system.” Successful working partnerships require time and effort to establish and nurture. Funders tend not to allow any funding for such time and effort. All the up-front work required to put together a joint funding proposal is not usually considered to be part of the project at all, and few funders allow for ongoing relationship-building during the course of a project. “We now have to document every in-kind contribution and on this one small project, we have 25 partner organizations and we have to have each organization fill out forms documenting their time – it has become a major administrative headache that isn’t even funded.” Funding Matters Summary Report One organization described a governmentfunded project that required them to raise matching funding in advance. After an eight-month delay in processing the request, their matching donation dried up as their private corporate funder moved on to a new set of priorities. fragility of the natural environment on which we depend, and what members of society owe each other. Advocacy chill is silencing those voices. “Building community is no longer seen as the important goal – the whole emphasis on partnership is leading to ‘friend-raising’. ” “You become so lean, everybody today is doing what six years ago was three jobs.” ADVOCACY CHILL Funding of advocacy work is controversial. There are those who believe that no tax dollars should go to fund efforts to lobby governments and the public on behalf of certain causes or the need for services. But in the history of nonprofit and voluntary organizations in Canada, advocacy on behalf of one’s community has been regarded as part of the role of many organizations. Some organizations whose missions include advocating on behalf of the marginalized and powerless in society have found themselves out in the cold. Others are still being funded, but are keeping their heads down. People in the sector call it advocacy “chill.” When organizations must cobble together projects and partners to survive, being seen as an outspoken advocate on behalf of one’s client group can be regarded as too risky, despite the justice of the cause. You do not want to have your name in the media when your next funding submission comes up for approval. In some cases, nonprofit and voluntary organizations act as the conscience of our communities. Sometimes they remind us of what is happening to people who are left out or treated unfairly. They remind us of the 17 HUMAN RESOURCE FATIGUE People, both paid and volunteer, are stretching themselves to the limit to meet the new challenges from funders and still remain faithful to their mission and to the citizens and communities to whom they feel responsible. But how long can this go on? The nonprofit and voluntary sector tends to be treated as a poor relative of government and the private sector. The poor relative is supposed to live on less because it is associated with charity and unpaid labour (volunteers). This myth continues despite the fact that many THIS PILLAR IS SHOWING SOME SERIOUS CRACKS... ACTION NEEDS TO BE TAKEN BY PUBLIC AND PRIVATE FUNDERS TO ENSURE THAT THOSE CRACKS DO NOT BECOME MAJOR FRACTURES. Canadian Council on Social Development 18 Summary Report organizations have become more formalized, more professional, and more “business-like” in their operations, often at the urging of funders. Many organizations benefit from the commitment and skills of volunteers, but the cost of using volunteer labour is often overlooked. Capable volunteers are a wonderful resource, but organizations must have the time, energy and funding to recruit, train, organize, schedule and retain them. A 1995 study of voluntary organizations found that over 80% of those surveyed had paid employees, though not very well paid. Employees tend to be less well paid than in government or the private sector simply by virtue of being in the voluntary sector (BROWNE AND LANDRY, 1996). A more recent study also Funding Matters found that average hourly earnings and access to benefits in the nonprofit sector lag behind those in the private and quasi-public sectors. And temporary and part-time work is more prevalent (MCMULLEN AND SCHELLENBERG, 2003). Nowadays, the loyalty and stamina of staff in the nonprofit and voluntary sector is being severely tested. “Staff are working longer and harder with no compensation – burnout results, especially among those who are balancing work and family.” “I would say one of the impacts is deterioration of employee quality of life.” What Does It Matter? hat does it matter if a lot of nonprofit and voluntary sector organizations are at risk? Typically, the sector is misunderstood and its contributions to Canadian life are undervalued. Nonprofit and voluntary sector organizations deliver many critical services in communities across this land. They represent a vital piece of our social and economic fabric. They have rightly been characterized as the third pillar of our society, alongside government and the private sector. W This pillar is showing some serious cracks, and our study suggests that action needs to be taken by public and private funders, in concert with the nonprofit and voluntary sector, to ensure that those cracks do not become major fractures. Canadian Council on Social Development The people working and volunteering in the sector continue to show great commitment and creativity. And many of the funding trends that have been identified were not intended to cause harm – the motives were positive. There is a real and timely opportunity to modify funding strategies and reverse some unintended consequences. If nothing is done, the sector will continue to suffer from increasing instability and for a significant cross-section of organizations, their capacity to achieve their mission and serve their clients and communities will continue to erode. In the end, all Canadians will be the losers. Funding Matters Summary Report 19 References Azmier, Jason. Gambling in Canada 2001. Calgary: Canada West Foundation, August 2001. Browne, Paul and Pierrette Landry. The “Third Sector” and Employment: Final Report to the Department of Human Resources Development Canada. Ottawa: Canadian Centre for Policy Alternatives, 1996. Conlogue, Ray. “Arts funding or social engineering?” in The Globe and Mail, April 1, 2002: R3. Dreessen, Erwin. “What do we know about the Voluntary Sector? An Overview.” Nonprofit Sector Knowledge Base Project, Statistics Canada, 2000. Hall, Michael, Larry McKeown, and Karen Roberts. Caring Canadians, Involved Canadians: Highlights from the 2000 National Survey of Giving, Volunteering and Participating. Statistics Canada, Catalogue No. 71-542-XPE, August 2001. McMullen, Kathryn and Grant Schellenberg. Job Quality in Nonprofit Organizations. CPRN Research Series on Human Resources in the Nonprofit Sector, No. 2, January 2003. Smith, D.H. “The Rest of the Nonprofit Sector: Grassroots Associations as the Dark Matter Ignored In Prevailing ‘Flat Earth’ Maps of the Sector,” in Nonprofit and Voluntary Quarterly, 26(2): 114-31. Treasury Board Secretariat. “Preliminary Results of Statistical Research into Funding of Voluntary Sector,” 2000 (unpublished data). Useem, M. “Corporate Philanthropy,” in The Nonprofit Sector: A Research Handbook, W. W. Powell (ed.). New Haven, CT: Yale University Press, 1987. Voluntary Sector Initiative. “What is the Voluntary Sector?” FAQs. May 2001. Joint Tables. Working Together: A Government of Canada / Voluntary Sector Joint Initiative. Ottawa: Privy Council Office, August 1999. Leat, Diana. “Funding Matters,” in An Introduction to the Voluntary Sector, Justin Davis Smith, Colin Rochester and Rodney Hedley (eds.). New York: Routledge, 1995. McMullen, Kathryn and Grant Schellenberg. Mapping the Nonprofit Sector. CPRN Research Series on Human Resources in the Nonprofit Sector, No. 1, December 2002. Canadian Council on Social Development The Funding Matters project is one initiative funded by the Government of Canada through the Capacity Joint Table of the Voluntary Sector Initiative (VSI). The Capacity Joint Table, one of 7 joint tables created to undertake the work of the VSI, undertook projects in four key areas of capacity-building for voluntary organizations: • Research and Information Sharing • Skills Development and Recruitment • Policy Capacity • Financial Capacity These projects have resulted in a multitude of resources that are available to non-profit and voluntary organizations, governments, educational institutions, volunteers and voluntary sector researchers. Many of the products will be released during 2003. For more information about these projects, the joint tables and the VSI, please check the VSI website at This project was supported by funding from the Capacity Joint Table, through the Social Development Partnerships Program of Human Resources Development Canada (HRDC). The views expressed in this publication do not necessarily reflect those of the Government of Canada. Canadian Council on Social Development FUNDING MATTERS chronicles how the new funding regime for nonprofit and voluntary organizations in Canada has changed the way these organizations survive and thrive in what has become a competitive and volatile fiscal environment. This study assesses the impact of these important changes on the capacity and long-term sustainability of nonprofit and voluntary organizations. Divergent funding policies, competing regulations and labourious reporting practices are affecting the organizations’ ability to pursue key goals, and too often, an organization’s mission and core activities are being sidelined in the scramble for funding to stay in business. A final report of the Funding Matters project is available in English and French on the CCSD’s website ( A Summary Report is also available in print or electronic formats in both English and French. The Canadian Council on Social Development (CCSD) undertook this project in partnership with the Coalition of National Voluntary Organizations (NVO). The research was commissioned by the Working Group on Financing, under the auspices of the Voluntary Sector Initiative (VSI). This research has been supported financially by the Government of Canada through the Voluntary Sector Initiative.

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School: Carnegie Mellon University

Hey,Finally, i have completed the assignment. Go through it and in case of anything please alert me.Regards


The Impact of Devolution to Nonprofits
Student’s Name

Institution Affiliation



I agree that nonprofit organizations are tasked with provision of social service to the
population living in very vulnerable areas. The organizations depend majorly on funding from
the government but the funding has not been consistent for the last few centuries. One of the
crises here is funding. Nevertheless, the emergence of devolution (new federalism) and new
public management has helped in converting several entitlements and programs to secure income
into grants and has turned their responsibilities over to the states. The idea of devolution came up
after the federal government became unwieldy, over expensive and ineffective. It is true that
devolution is government services and policies are a reform movement which targets both the
nonprofit sector and the government. Devolution assumes that the effectiveness of markets and
competition value is a strategy that can help improve the performance of an organization.
Secondly, it assumes that private-sector technologies and ...

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