Opinion: The Not For Profit Sector – The Politicians Dilemma Tuesday, 9th March 2010 at 2:09 pm
Les Hems, Director of Research at the Centre for Social Impact
The Productivity Commission’s report on the Not for Profit sector has provided much food for thought for politicians, while they contemplate howthey can best utilisea sector that has vast economicand socialsignificance.
Not for Profit organisations(NFPOs)employ 8%of the paid workforce, and contribute $43 billion to Australia’s GDP.NFPOsmake a significant contribution to Australian society in the fields of social services, health, education, arts/culture, sport/recreation, housing, and environment. The interest to politicians is obvious as these activities are closely aligned with the main calls on the tax purse.
Given this close alignment of activities it is unsurprising that a third of the Not for Profit sector’s revenue comes from Government ($26 billion).An astute politician might interpret this as a greatdeal–someone else is doing the work and for every dollar spent you get three dollars of value.In fact, the deal looks even better if addin the$15 billionwage equivalent of the 4.6 million un-paid volunteers.
So why arepoliticiansnotbeating a path to the Not for Profitsector’sdoor?
This situation is comparable to the situation in theUnited Kingdomin 1996,New Labour– whilst in opposition – utilised a similar report as the basis forits successful election manifestowhich included thestraplineof“Building the Future Together”. Instark contrast the incumbent Conservative Governmentused“Rules of engagement”as theirstrapline.
The instrumental use of the Not for Profit sector wasvery muchin tune with Tony Blair’s “Third Way” –theNew LabourGovernment pursued partnership solutions in preference to traditional state and market approaches. During ten years of New Labour Government the Not for Profit sector doubled in sizeand benefittinggreatlyfrom a similar multiplier effect.
The New Labour command structure andthearmy offreshfoot soldiersincludedpeople who had worked and volunteered for charities and community organisations.Such grounded knowledge and confidence in their Not for Profit sector partnersresulted inthe New Labour Governmentrecruitingsectorleaders to drive new spending programmes.
In contrasttheProductivity Commission(PC)reportfocuses onsignificant“known unknowns”when consideringNFPOs.Governments are notoriously reluctant to spendtax payers’money on things they know little about– theyneed evidence to justify public expenditure.ThePCrecommendation to developa frameworkto systematically measurethe contribution and impact ofNFPOstherefore seemseminentlysensible.
ThePCalso concludedthat the existing regulatory frameworkfor the Not for Profit sectoris ineffectiveandrecommends the establishment ofa national Registrar,an Office for Not for Profit Sector Engagement, and a Centre for Community Service Effectiveness.It is difficult to argue against the purpose anddesired outcomes from theserecommendations however twenty years experience as a researcher ofNFPOsand public policytells me that poorly designed top down approaches will notbe successfuland will create new barriers to partnership andthat ultimatelythe Not for Profit sectorwill not achieveits full potential.
The learning from the UK – both the successes and the mistakes – needs to be carefully considered and understood in the Australian context.Firstly,NFPOscherish their independence both from the state and the marketplace. They are the voice for many communities, and put the needs of the people they serve high above the demands of Government.They should therefore be treated as equal partners when Government is exploring solutions to social problems. They should also be treated like a good and trusted friend – thetype of friend that youlisten to when they are criticising you.
If consulted,NFPOscan help shape public services to deliver higher quality and more efficient services.Therefore Government has to develop effective ways of engaging and consulting with NFPOs.This dialoguehas the added benefit of contributingsignificantly to the development of the knowledge base.
Secondly,NFPOsmake unique and distinctive contributions because they can harness and combine resources which are not available to government agencies and business. This means that the standard metrics used by Government and businesses are inadequate. For example,manyNFPOsbenefit greatly from the guidance freely provided by professional people and “experts” that sit on management committeesand often invest some of their own wealth, how do you measure the value of these volunteers? The measurement frameworkfor NFPOswill have to be much more sophisticated than thatcurrentlyused forGovernment and business.
Theoverarching learningthereforeis about partnership and notusingmaster and servantapproaches.This suggests that the PCrecommendationsshould bepursued using aprocess of“co-production”– where theknowledgebase is built on researchwithand notonNFPOs– and whereregulatory mechanismsproactively involveNFPOsand all their stakeholders.
Whilst it is important to learn from other jurisdictions it is also important to acknowledge thatevery country is different and perhaps most importantly that technologyand human behaviourchange very rapidly.Both the knowledge base andanew regulatory frameworkcouldbe built using the latest web and information and communication technologiesthat encourage engagement, interaction and co-production.
The challengeforpoliticiansto chew over at Sunday brunchis therefore howto rapidly gain the knowledge they will need to partner with the Not for Profit sector and exploit the multiplier effect that the Not for Profit sector offers Government.Thetask is made a little easier when you see the number and quality of thepeople and organisationsthat contributed to the PC report– includingmanyresearchers and universities. An astute politician may therefore look to these as a trusted go-between to develop knowledge anda mutually beneficialpartnershipwith the Not for Profit sector.