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: http://www.jstor.org/stable/27927948 .
Accessed: 17/10/2012 12:12
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .
http://www.jstor.org/page/info/about/policies/terms.jsp
.
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 support@jstor.org.
.
Springer is collaborating with JSTOR to digitize, preserve and extend access to Voluntas: International
Journal of Voluntary and Nonprofit Organizations.
http://www.jstor.org
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: burnleyc@mala.bc.ca;
toCarol Matthews, Centre for Continuing Studies, Malaspina University-College, Nanaimo, British
Columbia, Canada V9R 5S5; e-mail: matthews@mala.bc.ca
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,
www.gov.bc.ca/bvprd
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: http://policy.queensu.ca/sps/ThirdSector/Papers/papers/buildingvibrant.doc
of Canada/Voluntary
Government
Sector Joint Initiative (1999). Working Together: A Gov
ernment of CanadalVoluntaiy
Sector Joint Initiative. Online:
http://vsr-trsb.net/pagvs/
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:
www.ccsd.ca/pubs/2003//fm/indexl.htm
Voluntary Sector Initiative Canada (2003). Taking theAccord Forward: The First Report toCanadians
on Implementing an Accord Between theGovernment ofCanada and theVoluntary Sector. Online:
www.vsi-isbc.ca
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 www.ccsd.ca.
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 discoura...
Purchase answer to see full
attachment