BLOG: Strategies to Stop NFPs Being ‘Hollowed Out’ by Government

Doug Taylor, the Director for Strategic Engagement at UnitingCare NSW & ACT introduces a blog series on how Not for Profits can provide Government contracted services and protect against the ‘hollowing out’ of their mission.

I’ve now worked for Not For Profits of all shapes and sizes for over 20 years and in that time there’s been a once in a generation change for the Australian Social Sector that’s unprecedented globally. It’s the outsourcing of Government services. The Centre for Corporate Public Affairs’ (CCPA 2008) survey of NFP organisations found that on average Governments provided 47 per cent of the income received and that one third of respondents indicated that they received 80 to 100 per cent of their income from Government.[1]

This has turbo-charged the growth of numerous organisations, particularly larger Not For Profits, and has undoubtedly resulted in some benefits for the Australian Social Economy. Just like the outsourcing of Employment Services in the 1990’s from the old Commonwealth Employment Service (CES), the outsourcing of government services will continue in years to come in areas like Out of Home Care, Disability and Aged Care. Despite the many obvious benefits, there are some unintended consequences and risks. In my experience most NFP Boards and Executives, if they are not careful, will lead their organisations into ‘dangerous waters’ oblivion unless they carefully reflect on the key risks and develop risk mitigation strategies.

Doug Hynd’s research for a PhD at ACU on ‘Conformity, advocacy & resistance by ‘church-related’ social welfare agencies in an era of government contracting’[2] clearly identifies these risks. Whilst it’s written for organisations that have a relationship with Christian Denominations, the principles apply to any Not For Profit that has a unique tradition or distinct mission it brings to its services that is worth preserving (one hopes that would be most Not For Profits).

Hynd identifies the greatest threat of Government contracting for Not For Profits, is the potential ‘hollowing out’ of one’s mission and the risk of becoming ‘funder determined’ resulting in a loss of identity. The great loss in this process for the Australian community is the role Not For Profits have traditionally played in advocacy, identifying emerging community needs and addressing them with new initiatives that mobilise community resources.  

These arguments aren’t particularly new because providers of Employment Services have been identifying them out for some years. Wilma Gallet crystallised this well when she asks ‘is it right to gain market share but retreat from your mission?’ [3] Interestingly Peter Shergold, a former Head of the Prime Minister’s Department and the architect of the Commonwealth’s Employment Services outsourcing, has similarly argued that there has been some loss in this process and that we need to make some changes in the future; “The relationship between Governments, public services and Not for Profit organisations needs to be based on genuine collaboration in which the social innovation of diverse approaches is positively encouraged.” [4]

In many ways this is all a moot point, we can’t push back the tide because Government outsourcing is here to stay and over the coming years many Not For Profits will take up this work and provide outstanding services.

So how do you provide Government contracted services and protect against the ‘hollowing out’ of your mission’? Hynd outlines a fantastic set of criteria for ensuring you have not ‘hollowed out’ and it’s something that’s been exercising our mind at UnitingCare NSW & ACT. Having recently joined the team, I am greatly encouraged by the appetite of the Board and my colleagues to think about the implications of this dynamic on our future strategy given we are one of the largest providers of Human Services in the state. It’s doubly important because we have a long history of advocacy, social innovation and working with local communities.

What follows in upcoming Blogs are the 3 strategies that I’ve been thinking about as I facilitate our organisation’s Strategic Planning process and mitigate against the risk of ‘hollowing out.’

About the author: Doug Taylor is the Director for Strategic Engagement at UnitingCare NSW & ACT. He has spent more than 20 years working in the social sector and is also a Board member of the School for Social Entrepreneurs, the Australian Centre for Social Innovation and the Centre for Social Impact. He tweets at @dougtayloruw and writes a blog at https://blogaworkinglife.wordpress.com

[1] The Contribution of the Not for Profit Sector, Australian Government Productivity Commission, 2010. http://www.pc.gov.au/inquiries/completed/not-for-profit/report

[2] Religion, Diversity & Governance (AASR 2014 Conference), Doug Hynd PhD Student – School of Theology, Australian Catholic University (Canberra Campus)  

[3] The Role of faith based community organisation in contributing to a civil society, Social Policy and the Contracting Era, Doug Hynd

[4] See more at: https://www.businessthink.unsw.edu.au/Pages/Risk-and-Reward-The-Evolving-Relationship-Between-Government-and-the-Third-Sector.aspx#sthash.S4hlh25s.dpuf