We pick up today with another recurring theme in Brian O’Connell’s world-view—the challenges faced by nonprofits in standing up to and advocating with government when the bulk of their funding comes from public sector agencies. As he observed in his 1996 Public Administration Review article, "A Major Transfer of Government Responsibility to Voluntary Organizations? Proceed with Caution
," this is likely too much to ask.
"Long-term government support of an agency or complex of agencies creates a quasi-governmental entity with decreasing value as an independent force," Brian noted. "By no means does this suggest that voluntary organizations that receive substantial government funding cannot still be effective representatives of their clients and causes, but if government is a very substantial source of an organization’s support, its ability to be relied upon as an independent force has to be in question."
Indeed, if you are leading a $100 million human services agency and get $95 million of your annual operating budget from government contracts and grants, it would certainly be bold if not crazy to bite the hand that feeds you. Your financial dependency works against your calling out public sector agencies and their political overseers for delayed payments and declining reimbursement rates on baseline funding levels that fall far short of your true cost to deliver to begin with.
You could of course make a name for yourself by pressing an inherently reasonable case with the powers that be and/or by going public with your complaints. However, if there are other nonprofit service providers that would be more than happy to take on the business you are currently doing with these government agencies, notwithstanding the bind that their funding levels entail, then your protests are likely to fall on deaf ears.
In the face of these market conditions, attempting to band together with other providers in order to press a collective case as a coalition is not likely to work that well. As an ED of a venerable $75 million human services agency recently told me, "We make a lot of noise, but I have never have seen some organizations in the sector say, 'No!' People will break ranks and undercut each other for the contract."
The forms of advocacy that human services nonprofits dependent on government funding for their lifeblood will engage in are thus more typically and understandably going to be limited to making the best of their own difficult situations. They will defend the funding flowing from the contracts and grants they now hold and/or position themselves to win new ones. In the business of supplying human services for the government agencies outsourcing them, as in most other businesses, at the end of the day suppliers have to operate as if their biggest customers—in this case, the government agencies—are right.
Not an easy problem to solve, this one. Brian O’Connell, as was his wont, seems to have put his finger squarely on it. Any thoughts on how human services organizations can navigate in these circumstances?