NFP Policy in a Time Warp

Governments need to engage with the Not for Profit sector to chart a course out of the doldrums that have largely becalmed policy reform over the past three decades, writes policy analyst at ANU, John Butcher.

The more things change, the more they stay the same I have found in unearthing a time capsule of Not for Profit research.

I recently uncovered a copy of a paper I wrote in 1988 reporting on the findings of research conducted for my Master’s Thesis at the University of British Columbia, in Vancouver Canada. This research was concerned with the impact of public sector retrenchment upon the province’s Not for Profit sector.

The paper was rejected by an academic journal on the grounds, as I recall, that it was overly descriptive and insufficiently theoretical. In that long-ago pre-internet age I did not seek to offer the paper elsewhere. Instead it sat in a box for the last 27 years.

Upon re-acquainting myself with my findings what surprised me was just how little the broad circumstances of the Not for Profit sector have changed over three decades. Just as the prejudices of academic journals continue to favour theoretical over applied research, then as now the Not for Profit sector was fragmented, economically insecure and vulnerable to mission drift.

Some observations that still ring true today follow:

In the early 1980s a "mixed economy" of social provision prevailed in which the Not for Profit and the for-profit sectors together with services and programs provided by three levels of government combined to produce a "patch-work-quilt" of social provision, beset by coordination failures and rigid bureaucratic silos. Plus ça change, plus c'est la même chose.

At that time the Not for Profit sector was struggling to cope with the flow-on effects of economic and social displacement resulting from technological and structural changes in traditional industrial sectors; declining public revenues in the face of increased demands for publicly-funded services, and; pressure upon government to reign-in public expenditures in an effort to re-invigorate the economy.

Reducing the "size" of government also undermined public sector capability. Government looked instead to the Not for Profit sector to bridge the gaps in social provision taking for granted the sector’s capacity to respond to increased demand.

The 179 Not for Profits responding to a survey undertaken in late 1984 exhibited similar characteristics to today’s Not for Profit sector: the majority of organisations were relatively ‘young’, small, poorly networked, geographically dispersed and highly variable in terms of their organisational structure and operations. To be sure, some Not for Profits had evolved into large bureaucracies with very complex organisational structures.

Although many organisations paid lip-service to the shared purposes of the sector, the increasingly competitive nature of the "philanthropy marketplace" meant that there was often a reluctance to share resources and information.

Although the term "voluntary sector" was often used synonymously and interchangeably with the term "Not for Profit sector", even as long ago as 1984 "voluntariness" had ceased to be a defining feature of an increasingly “professionalised” Not for Profit sector.

And, as its role in the delivery of publicly mandated services was “formalised” through purchase-of-service contracting the distinction between the Not for Profit sector and the state blurred in the public consciousness.

The funding base of Not for Profit organisations in the community social services space was typically fragmented making them particularly sensitive to changes in the priorities of funding bodies. Although government – provincial (State), Federal and local – provided the largest share of funding for Not for Profits, most reported receiving income from multiple sources. Most reported high levels of financial uncertainty.

Even those organisations whose funding was relatively stable, reported that increased costs and growth in caseloads steadily eroded their capacity. Others reported having to scale back their operations or close their books to new clients.

Moreover, it was accepted that the capacity of the Not for Profit sector was constrained by its dependence upon government funding and on the limitations of public fund-raising in an increasingly competitive philanthropy marketplace.

Although by the 1980s the Canadian Not for Profit sector had become somewhat marginalised as a result of the growth of State welfare systems, it was also recognised that Not for Profits represented important sources of innovation and advocacy in the field of social welfare. This is still the case.

However, even thirty years ago Not for Profit scholars realised that the Not for Profit sector was a complex organisational space – as much a collection of heterogeneous interests as it was an industry sector. In my paper I wrote:

“To some extent it is a foregone conclusion that non-government organisations, when asked about funding and caseloads will respond, respectively, not enough and too many. It has been argued, however, that if the voluntary sector did not exist the demands upon state welfare agencies would be greater than they are at present. The voluntary sector is fractious, sometimes unsophisticated and parochial, and occasionally myopic when it comes to broad questions of social and economic policy. Yet, voluntary sector services do claim their own constituencies and they do meet real needs.”  

I find the above passage as true today as the day I wrote it.

To many looking back I’m sure that 1984 seems like a very far away place of little relevance to today’s realities.

At that time my research focused on the experience of the Not for Profit sector in the province of British Columbia whose centre right conservative government espoused a "fundamentalist" free-enterprise approach to public policy.

De-regulation and fiscal restraint were cornerstones of policy and the costs of economic restructuring were effectively “privatised”, in part by transferring responsibility for social provision to the Not for Profit sector (but without investing in the capacity of the sector).

None of this would be unfamiliar to an Australian observer today. Australia has had a succession of governments just like it at all levels.

What is surprising, though, is the extent to which many of these observations – drawn from research undertaken over 30 years ago – continue to ring true today. Did we learn anything at all in the last three decades?

In Australia the Productivity Commission’s landmark 2010 study into the contribution of the Not for Profit sector provided a strong evidentiary base for policy formulation. However, such systematic appraisals of the Not for Profit sector's contribution to the social safety net have been the exception rather than the rule.

In truth, the Not for Profit policy space has suffered from decades of policy neglect. Despite government's dependence on the sector to deliver public programs and services, this is still largely a policy-free zone.

A brief flowering of policy reform initiated by the Rudd Government and carried forward by the Gillard Government proved that there was an appetite for change. The trenchant defence by the sector of these policy gains – in particular the creation of the Australian Charities and Not-for-profits Commission – showed that hard-won reforms will not be surrendered without a fight.

Governments need to engage with the sector to chart a course out of the doldrums that have largely becalmed policy reform over the past three decades. This will require investment in applied research and knowledge brokering by government and by foundations.

Academic researchers too will need to step up to the crease and show a greater willingness to collaborate across disciplinary and institutional boundaries.

About the Author: John Butcher is currently a PhD candidate in the Political Science Program, Research School of Social Sciences at the Australian National University. He has worked as a policy and performance analyst in state and Commonwealth line and central agencies. He has a long-standing scholarly interest in the relationship between the formal institutions of government and civil society. He is especially interested in the political framing of the Not for Profit sector and its role as a vehicle for the delivery of public policy. For his PhD dissertation (ANU) Butcher undertook a comparative case study of cross-sector policy frameworks in Australia, New Zealand, the United Kingdom and Canada. john.butcher@anu.edu.au