How is the recession changing voluntary sector – government relations?

How is the recession changing voluntary sector – government relations? I’m fortunate to be in Toronto taking part in a global gathering of voluntary sector (nonprofit, to use the language here) researchers, Arnova. The first day of my visit was an entire day devoted to the question: How is the recession changing voluntary sector – state relations? Run by Canada’s Queens University and the Canadian Association for Nonprofit and Social Economy Research, the first day had contributions from north America, Europe, Australia there are some differences but, to my surprise, an enormous amount of similarities. I didn’t manage to make all the first day but based on what I heard…

The global nonprofit sector: what’s happening
Warning: this is not the stuff of optimism. The commonalities across countries are:

1. The development of social finance: this is being developed in the US, Canada, Germany, Australia to name but a few. Social finance seems to be rapidly achieving the status of magic bullet amongst policy makers across the globe. Tim Brodhead, formerly CEO of a big canadian community foundation, referred to the ‘shift from the grants economy to the real economy’.

2. Cuts, particularly in anything that relates to advocacy. We no longer have a bottomless pit of money: this is the new normal. Presumably I don’t need to say much about this to a UK audience, but the ongoing ‘marketisation’ of the sector means support for advocacy is hard. Some comments I’ve heard today go further: are some policy makers asking why should the tax breaks that come with charitable status fund advocacy work?

3. A decline in public trust in charities and nonprofits. The global shift to right of centre governments has been accompanied by a hardening of attitudes to nonprofits. It felt like we were describing a shift in the concensus we’ve had in all the time I have worked in the sector, ie that voluntary organisations are a good thing. Many clearly believe they are not. Tim Brodhead again: ‘Federal government doesnt believe that there is a voluntary sector. There are citizens. And sometimes those citizens come together and form special interest groups. And these are not to be trusted.”

4. The accountability and transparency agenda. The lack of trust is in turn leading to greater demands for accountability and transparency, whether via the open data agenda, charity advisory services or greater oversight and regulation. Expect greater demands, though I recognise there is a different, deregulatory agenda in the UK (driven in part by austerity).

5. Loss of distinctiveness. There’s been much talk about the emergence of hybrid organisations, where it isn’t clear about which sector these hybrid organisations belong to or are even anchored in. One colleague (the excellent Susan Phillips) referred to this as ‘a migration to the middle’. Amidst talk of blended value and shared value, researchers are reporting back that its getting harder to identify what’s different about the sector as private and public bodies pursue public benefit and develop business models based on social and financial return.

6. Irrelevance? I’ve written and spoke at events about this before, but my biggest worry is a sense I get from some countries that nonprofit organisations in the future just might not be as relevant to social change as we currently think they are. Arnova is helping me to crystallise my thoughts here. The argument is that younger generations (the ‘millenials’) are using web based tools to organise social movements whilst those same tools enable them to have a direct relationship with individuals (the ‘disintermediation’ challenge). On the other side, social entrepreneurs identify social goals they want to make and just ignore existing nonprofits, setting up their own foundations and using their own practices. And governments just want outcomes, so will commission whoever can deliver them, ignoring notions of process outcome. And of course this is reinforced by the lack of distinctiveness – with some (Colin Rochester) suggesting the notion of a ‘sector’ is not just unhelpful, but damaging.

Time to head for the exit?
No one was suggesting the death of the established nonprofit/charity/voluntary sector. Many organisations are robust. Philanthropy levels are stable in many countries.  But I got a real sense that these difficult times are shared everywhere; they are not getting (or indeed going to get) easier. So what are the solutions? We heard a range of ideas: here’s a few for discussion, not in order of importance, and I dont necessarily agree:

1. Consolidation in the sector: start promoting – and forcing – mergers to protect the sector’s capital base. Foundations should invest in helping nonprofits rationalise and build their own effectiveness.
2. Rebuild the sector’s narrative: educate the public that we are not victorian almsgiving charities
3. Defend advocacy. In that narrative emphasise that charities and nonprofits are part of the democratic process and that advocacy is central to our mission.
4. Get the best staff. Pay proper salaries to attract the best people: end the 20% do-gooder discount. Note that current and future challenges do not require the skills and approaches that helped us in the better times.
5. Rebuild below. Focus on how we can help citizens engage with government – with an emphasis on rebuilding our own relationships with citizens and not just donors (‘reinvent your community base’)
6. Focus on social justice: inform and question policy change, challenge the idea that there is no alternative.

Diana Aviv, CEO of Independent Sector in the US, was cited as arguing that for nonprofits ‘there is a tsunami coming’ and that we are in danger of sleepwalking into it. For me, the papers I’ve been hearing at the Queens university event and at the main Arnova conference are helping to understand the nature of the tsunami. Hopefully over the next few days there will be more about what to do in response.

(My thanks to Rachel Laforest at Queens University for hosting a fantastic event! And apologies to any attendees who I may have inadvertently misreported)

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Karl Wilding Karl Wilding served as NCVO's chief executive from September 2019 to February 2021.

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