Those of us working to improve the chronically difficult relationships between government agencies and the nonprofit organizations they contract with to deliver human services clearly need a fresh point of view. Try as we might—whether we are looking at things from the nonprofit or government side of the impasse—we aren’t making much headway. It is time to admit that we are stuck with a big gap between the ideal and the reality, one that is yawning wider with the ongoing fiscal shakeout.

Consider things from the nonprofit perspective. The ideal would be that government agencies

• acknowledge the essential role played by nonprofit providers in solving social problems;

• provide funding at levels that cover the nonprofits’ full cost to deliver services;

• defer to the know-how, front-line experience, and relationships with beneficiaries that nonprofits have; and

• sustain funding and build trust and reciprocity over time such that the providers can focus on delivering for people in need instead of on contracting with and reporting to government overseers.

However, the reality experienced by nonprofits is all too often quite different, as many government agencies

• effectively take nonprofits’ commitments to their missions for granted;

• micro-manage how, when, by whom, to whom, and at what costs services can be delivered;

• persistently fail to cover the nonprofits’ indirect costs and, increasingly, their direct costs of delivery;

• treat nonprofits as providers of interchangeable commodity services through frequent RFPs that push more and more business to low-cost bidders;

• delay payments and restructure contracts to the government’s advantage in an arbitrary if not cavalier fashion that is pushing many nonprofits to the brink of fiscal ruin; and

• impose onerous and duplicative reporting requirements that have little to do with the real work at hand.

An over-simplification? Maybe—but I suspect many nonprofit executive directors reading this were nodding their heads as they did so.

In the spirit of fairness, let’s consider things from the government agency perspective. The ideal would be that nonprofit service providers

• have robust organizations that can consistently be relied upon to deliver results at an efficient scale;

• measure, document, and continually improve the outcomes they are delivering for beneficiaries;

• increase their productivity by reducing their cost to deliver results over time; and

• ensure that public monies are used for their intended purposes and scrupulously accounted for.

Here too the reality experienced by government agencies is often very different—as many nonprofits

• can’t begin to meet agencies’ support needs at anything approaching the requisite scale;

• may or may not be delivering outcomes for beneficiaries – this is usually hard to ascertain given the nonprofits’ limited capacity to measure their results;

• clamor for better contracts and more funding that covers their rising costs, notwithstanding their claims to be mission-driven and the mounting fiscal pressures that government is facing;

• marshal political and community influence where they can to force the hand of government administrators in this regard; and

• every now and then, land their funding agencies in hot water with front-page headlines about financial scandals and/or botched service delivery, thereby increasing the pressure for more top-down scrutiny.

Again, this may be over-simplifying things somewhat, but I suspect many government agency leaders are also nodding their heads as they read.

And so we are stuck, with each side pointing the finger at the other and saying, “It’s your fault!”—and reactively doing things that reinforce the dysfunction and frustration. How do we begin to break out of this doom loop?

Why don’t we start by pulling back the camera such that we can begin to see things not simply from the perspective of the government agencies and the nonprofit providers, but also from the upstream perspective of the taxpayers who underwrite the provision of these services as well as from the downstream perspective of the people who are ultimately meant to benefit from them.

Now many government agencies and nonprofits will say they already do this, that they are focused on making the best use of taxpayer dollars and understanding the needs and status of beneficiaries. But in reality this is mostly lip service. If a critical mass of these organizations were indeed taking these broader perspectives seriously, the gap between the ideal and reality sketched out above would be closing, not widening.

The fact is there are obstacles that prevent these potentially powerful perspectives from informing how government agencies and nonprofits should work together. In my next two posts, I will explore these barriers and highlight the big changes that would result—in the behavior of government agencies and nonprofits alike—were they to take taxpayer and beneficiary perspectives seriously.