Governments, Community Organisations and Civil Society
    -- A Beginners Guide To Dissection Of A Golden Goose

    by Garth Nowland-Foreman

    Garth Nowland-Foreman is a consultant in social policy and voluntary organisation management based in Christchurch
    This is his paper to the 4th Working for the Common Wealth Conference. Derry, Northern Ireland, 23-27 September, 1996


    There have been many changes in Aotearoa/New Zealand in the last decade. These have been broadly consistent with what have been called structural adjustment policies which have been implemented in many countries across the world. In this paper I will focus on just one (relatively small) area of change - the relationship between government funders and voluntary and community organisations.

    This change is relationship is often referred to as the shift from grant-making to purchase of service contracting. However the shift contains many facets, including for example :

    a shift in resources to iwi and Maori-run services;
    a shift from a submission-based model to needs-based planning;
    a reduction in government grants to voluntary organisations;
    increasing competition for private funds and volunteers (including from public entities such as schools, hospitals, fire brigades, police); and
    increasing demands on voluntary organisations - as a result of increased unemployment and poverty, and reductions in direct government services or assistance.

    A number of these changes involve important and desirable principles (for example, funding for results rather than interfering in budget line items, addressing inadequate resources for Maori services, distributing available resources in a fairer way, etc). However, the sudden swing from benign neglect to shaking the voluntary sector by the neck surprised and disturbed many voluntary organisations. With no negotiated tahitanga, the opportunity for building a durable basis for co-operation - let alone partnership - was lost. Many of the changes are also more apparent in the changed rhetoric than in reality.

    Contracting for social services is both a major change and nothing new. Much of the analysis of purchase of service contracting is just as relevant to other forms of financial transfers between governments and voluntary organisations. However, there are significant differences of degree. Contracts are more likely to:

    be in response to government rather than community initiative;
    be more specific in their service requirements, and
    involve increased counting, accounting and (occasionally) accountability.

    In this context it can be seen as a critical step in a long term trend of tighter government controls over voluntary organisations. In other research I have identified a commonly occurring pattern in the development of government funding relationships across many OECD countries - especially the anglo-celtic countries. I suspect there are also some common features with the development of many OECD-based donor organisations - despite the stronger partnership rhetoric. Briefly, five (largely) sequential stages can be identified:

    (1 ) donations to worthwhile organisations (list approach)
    (2). program grants in response to submissions (submission model)
    (3). program grants allocated through some form of service planning (needs-based planning).
    (4). tendering for contracts to undertake specified services (purchase of service contracting)
    (5). funding to individuals to purchase services from accredited providers (vouchers) or the market (cash allowances).

    Viewed separately each of these stages represents an important step forward from the previous funding "technology". For example the introduction of formal submissions - while later berated as favouring areas with the best submission writers over those with the greatest needs - was an important development in opening up government funding to a whole range of new voluntary organisations.
    Each of these stages also had the seeds of the next stage already embedded in it. For example once government took it upon itself under needs-based planning regime to identify and define need it is a short next step to expect that government should begin to identify and define the types of service responses it considers appropriate. And once that is done a tender specification is virtually written. Whether or not formal tenders are sought the government funder soon begins to conceive of itself as "purchasing" services from voluntary organisations.

    One Australian researcher identities the shift away from voluntary and community organisations being regarded as autonomous representatives of the community and towards being treated merely as convenient conduits for public services - "little fingers of the state" or what an English researcher calls a "shadow state apparatus".

    It may easily be seen as a natural process of evolution or sophistication of funding technology - in parallel with the increasing sophistication and development of increasingly complex technology in industrial societies. However it is important to recognise that as in any other field technologies are not value-free. Choices are being made at each step of the process. Overall as we move down this continuum there are certain in-built features that are packaged with the technology. For example

    there are increased administrative or overhead costs for voluntary organisations
    there are increased transaction costs (for the funding transaction) for both voluntary organisations and the government funding bodies
    there is an increasing emphasis on the initiative coming from government determined priorities and a diminution of the importance of the initiative of voluntary organisations
    there is a shift in the locus of control from voluntary organisations to government funders
    there is an increase in the risks to which the voluntary organisations are exposed (and a resulting decrease in government funder exposure)
    there are increasing expectations on and requirements for voluntary organisations to behave competitively.

    Far too little attention has been paid to these consequences as the new funding technologies have been implemented.

    The rhetoric and the reality of the funding relationship in Aotearoa/New Zealand mainly slips back and forth between the second third and fourth stages - at times with contradictory requirements within in the same government funding body or even within the same funding programme. For example "contracts" are entered into for a whole service but only a part-contribution is made. This has perhaps been the single greatest source of irritation and frustration for voluntary and community organisations.


    This has opened up questions about the fundamental relationship between voluntary organisations and government. While voluntary and community organisations are private (like private sector businesses) and not-for-profit (like public sector departments). they are neither mini-bureaucracies nor failed commercial enterprises. Often however they are treated as if they are. Everyone else thinks they know better and (sometimes with the best intentions in the world) want to make the voluntary sector into their image.

    At times voluntary organisations are berated into becoming more business like - ironically just at the time when many in the business world are discovering the (commercial) advantages of becoming more community minded - for example with the growing emphasis on cause-related marketing and the crucial role of intangible 'assets' like people and values. For example the US management guru, Tom Peters, from perhaps the world's largest firm of management consultants, McKinsey and Co, prefaces his research on what makes successful companies In Search of Excellence, (1982) with the summary, "This book, if it is anything, is about caring and commitment."

    At other times voluntary organisations are cajoled into being more accountable to government (for government funds) when what is really meant is becoming more like government - in their recruitment practices, in their accounting procedures, in their record-keeping, in their service eligibility criteria, in a standardisation of the way in which they operate, and so on.

    Voluntary organisations are a unique way of social organising based on values of:

    independence (freedom of association)
    altruism (concern for others), and
    community(collective action).

    What makes community and voluntary organisations unique is that they are as much about participation as provision; as much about citizenship as service. The voluntary sector can provide an outlet for the expression of community concerns, advocacy for clients or members, an opportunity for people to give to others (time, money and other resources), and a place to work for change. They are 'voluntary' because people have voluntarily come together.

    They are an essential part of the fabric of civil society. A sector that has arisen from the community to help overcome alienation and market failure cannot be remade along either bureaucratic or market principles without destroying its essence.

    One major voluntary organisation with a long history in Aotearoa/New Zealand has documented how the progressive implementation of the contracting regime led it to focus more clearly on the formal service outputs" of the organisation. This in tum has led to identified efficiencies as it "began the task of becoming a more efficient and effective business-like organisation". In four years it:

    built up its internal management systems and controls
    strengthened its planning, budgeting, monitoring and reporting systems
    paid attention to income diversification seeking out trusts, corporate sponsorship and sale of goods and services
    began to diversify and separately cost its different "products"
    Iooked at its different client groups and began to target these differently
    re-organised so that 30 affiliated but separate organisations became a unitary organisation with a flat management structure
    reduced overhead costs
    produced ten per cent extra hours of service for the same money, and
    moved to a totally paid workforce, cutting the number of counsellors and tutors by 75 per cent.

    At the same time these changes were not without their costs:

    significant capital of the organisation had to be invested in computer systems to generate information for reporting and financial control
    many hours are spent in writing grants and sponsorship applications for small sums of money ($5-10,000)
    the organisation has found itself trying to span discretely different "market niches" -providing services to low-income people (two-thirds of its clients are outside the workforce or on low incomes), but also trying to attract corporate purchasers to cross subsidise services
    there is a constant focus on financial 'break-even' which welfare oriented staff find uncomfortable, and
    there are insufficient resources to do research and development tasks, especially to test effective outcomes.

    Perhaps most poignant, "community involvement" has been totally replaced by professional management. The agency found that lay people giving 3-4 hours a month could no longer manage complex organisations. The organisation recognises that the reduction in opportunities for citizen participation in local voluntary organisations will effect the web of belonging and commitment to others - what has been called by some the social capital -- which underpins community life.

    Further, the previous benefit provided by the organisation of education and training a number of local people as counsellors and tutors, whose expertise was shared in the wider community, has been lost. As a very focused service provider, it is no longer a training ground for the greater community benefit. The organisation can no longer assist women, who gained valuable experience and prepared for workforce re-entry, through voluntary work. As the organisation observed in its Annual Report, "The user pay philosophy often swamps organisations that have an influence beyond their service delivery."

    Volunteers, members and trustees (under various names) are the key distinctive features of voluntary and community organisations, but all too often - despite the lip service - are regarded as peripheral attributes, if not irritating manifestations of amateurism. Ironically on other occasions these distinctive aspects of voluntary organisations are held to be invaluable characteristics of the good organisation, and attempts are made to graft them on to governmental agencies.

    It would be dangerous to idealise community and voluntary organisations and foolish to see the clients of these organisations as mere fodder for community and volunteer involvement, especially if the cost was ineffective services or waste of scarce resources. But it is equally dangerous to overlook the wider roles that a healthy voluntary and community sector can play in promoting a more vibrant and sustainable society.


    Effective governments are best at providing uniform or standardised services and entitlements on an equitable basis for all. Effective voluntary and community organisations are best able to include, motivate and involve people. They can provide individualistic services (shaped to individual needs) in a holistic way (crossing bureaucratic or other boundaries) from particularistic value bases. The values may be religious, social justice or feminist, human rights oriented or based on compassion.

    This is the spark that can make the difference in effective voluntary organisations. Their services cannot be standardised without loosing or deeply burying this spark. they are not good at equitably distributing their services to all eligible people on a standard basis. They do not fit easily into the straight-jacket of homogeneity. Governments will make the most out of the contribution of voluntary organisations when this is recognised.

    Voluntary and community organisations at times also need to better appreciate those processes that good governments can be better at: such as ensuring equal access, providing reliable, standardised services, operating with high levels of procedural fairness. We also need to hold governments accountable to consistently operate at such standards where-ever they fall short.

    In so far as it leads to better mutual understanding and greater transparency of respective obligations, the increased specification of contracting offers some important opportunities. However there are also some inherent contradictions in these very features.

    Contracting is frequently linked with themes of choice and responsiveness, but its success depends on rigid specification of funding requirements and greater control over voluntary organisations - which may undermine the very characteristics discussed above that make provision by such organisations attractive in the first place, for example: a holistic approach; flexible and particularistic; able to range across bureaucratic boundaries; lack of pressure to cream (select off easier clients); and clear focus on or commitment to clients and service goals (rather than the procedures or the paper work).

    In a major cross-country study, an American researcher found that while the various welfare states differed in the extent of their reliance on voluntary organisations, they ail share similar basic expectations of voluntary organisations as highly flexible and innovative. Yet there is also evidence to suggest that the greater the external bureaucratic controls the more likely that flexibility and innovation will be adversely effected.

    One particular implication of narrowly specifying needs under contracting has been a widespread reduction in support for preventative and community development programmes. The distinctive advocacy functions of a voluntary organisation may also be constrained through fear of loosing government funding, but this is not necessarily new to the contract regime. What is new is:

    a reduced acceptance of the legitimate role of community organisations in policy and client advocacy (especially where they are increasingly seen as agents or extensions of the-state);

    a general clarification by government funders in Aotearoa/New Zealand that government funds may not be used for these purposes and a reduced capacity for voluntary organisations to independently fund their advocacy functions (as agency funds are increasingly required to make up the deficit of tightly defined but only partly funded government priorities); and

    a more competitive atmosphere among community and voluntary organisations which undermines the traditional collaborative approaches, particularly to policy advocacy.

    Voluntary and community organisations have a responsibility to account for their effectiveness, but it misunderstands their nature (and is likely to be counter-productive) if they are treated as if they are not interested in the delivery of affordable, accessible and appropriate services with least waste of resources.

    Commercial enterprises are expected to provide a return on their capital for their owners. Voluntary and community organisations, when they are made up of people who invest their time, enthusiasm and commitment (often as well as money) expect a return in the form of satisfaction - the satisfaction of meeting real needs, of seeing quality services developed and provided, of seeing that they make a difference. If anything this makes community and voluntary organisations more likely to be intrinsically results oriented than statutory bodies merely fulfilling mandated obligations or commercial enterprises focused only the bottom line - where the services and products are mere means to an end.

    There is some evidence that in the past government funders often made relatively small contributions and demanded a very low level of accountability - and nobody seemed to want to upset the balance. As one government official said "if we knew more, we d have to pay more". Unfortunately that proportionality has been broken in Aotearoa/New Zealand -governments want to know more and more and are willing (in many cases) to pay less and less.

    As often noted, there can be significant compliance costs involved in increasingly intrusive accountability requirements - which ultimately means that limited resources are diverted from direct service delivery. This is not necessarily a bad thing if it means more effective use of available resources. Voluntary organisations chronically under-invest in service infrastructure. One crude indicator is the employment of managerial and administrative staff In Australia, such staff make up 4 per cent of both public and private sector employees in the community services industry - compared to an all-industry average of almost three times that rate.

    Government funder accountability requirements represent just one strand in the complex web of accountabilities upon which voluntary and community organisations rest. It is important that they are held in balance and do not distort the goals and activities of the organisation. Rather than accountability versus autonomy, perhaps the issue should be rephrased in terms of how voluntary organisations can

    meet the legitimate accountability requirements of government funders,
    while also meeting the legitimate accountability expectations of other key stakeholders (such as clients and communities served, donors and supporters, volunteers and staff, board and members),
    without restricting the very qualities of flexibility, responsiveness and other values that make effective voluntary organisations so valuable in society.

    In some cases the reason that community and voluntary organisations have been so easily bulldozed into implementing funder-developed accountability arrangements - which may or may not be appropriate to what the organisation is actually aiming to achieve - is because of the absence of comprehensive and defensible accountability systems already in place. The antipathy to measurement or even documentation in many cases or even just complacency encouraged by 'easy' government funding in the past has left the gates wide open to externally imposed systems.

    In !he midst of the current threats to dissect the golden goose of community and voluntary 'organisations, there are I believe three encouraging signs that may offer a way forward:

    (1) There is a rediscovery of the value of values
    In the first and second generation of leaders of community and voluntary organisations the 'values' question can be almost irrelevant because they are carried in the founders' hearts and minds. However, the values base can become diffuse and even lost in subsequent generations of leadership without careful and deliberate nurturing.

    The pressures that many community and voluntary organisations are experiencing in Aotearoa/New Zealand has called many organisations back to their roots - to rediscover and reassert their core values or kaupapa. The difficulty is then to ensure that the values are able to come alive and move beyond the mission statement in the organisation strategic plan. All too often so-called strategic planning focuses exclusively on what will be achieved - will little attention to how it will be achieved. A simple values implementation grid (such as that attached) is one very simple tool which can greatly help organisations embed their values in all their activities.

    (2) There is an increasing recognition that what you measure counts
    If community and voluntary organisations have a vision of themselves as more than just service providers, it is important that they are explicit about what else they hope to achieve and how they will know when they have succeeded. If only some parts of what an organisation is on about are counted (such as the finances) are the only activities that are counted, there is a great risk that eventually that will begin to distort what the organisation is actually on about.

    In the case study referred to above, the organisation had not previously been explicit about its wider role in many local communities across Aotearoa/New Zealand. As a result when it restructured itself, it did not take into account these 'invisible' contributions. They were only missed once they had disappeared from the organisational fife.

    Movements such as social auditing in the United Kingdom, alternative GDP measures in the UN system, citizenship indicators in Australia and measures of social capital in North America beginning to make the 'invisible' much more visible in societies and community and voluntary organisations.

    (3) There is a trend to diversifying funding sources.
    In the short term this means more work for voluntary and community organisations. However organisations are increasingly recognising the value of weaning themselves off a high dependence on a single government funder. This may mean deliberately choosing to reduce some 'empires' and is often linked with the first strategy and rediscovering where an organisation is best able to make a difference.

    In some cases this has also meant a re-invigoration of membership organisations - linking member services with social action. In other cases it has led to strategic partnerships with business or the development of community-owned businesses. In almost all cases it has lead to an increased capacity to negotiate from a position of strength (knowing what is really important) with major funders and donors.

    Garth Nowland-Foreman
    57a Cashmere Road, Otautahi/Christchurch, Aotearoa/ New Zealand
    phone/fax: +64 3 332 8612

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