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The Canadian Nonprofit Sector: A Health Warning for UK Big Society
By David Evans
November 8, 2010

Under the banner of 'Big Society', the new Conservative government in the UK is looking to the nonprofit sector to increase its role in running public services. Should it take up the offer? Does Canadian experience provide a cautionary tale for those rushing to complete their funding applications?
Nonprofits to the rescue?
Faced with a huge budget deficit, government spending is to be cut to the bone, with radical cuts of 20 percent to government programs. Sound familiar? Canada in the mid 1990s? No, this time it's the UK in 2010.
For the new Conservative government, ideological belief and financial necessity have converged to require a smaller state. The Prime Minister, David Cameron, has said "we know instinctively that the state is often too inhuman, monolithic and clumsy to tackle our deepest social problems". One of his favored solutions is 'Big Society' — the government's very first policy announcement. Under its banner, power will be devolved to local communities and nonprofit organizations will have a greater role providing public services, potentially in areas as diverse as employment and probation services, education and childcare.
Cost cutting in disguise or the rebirth of local democracy? Depends who you ask. According to David Davis, also from the ruling Conservative party: "The corollary of a big society is the smaller state. If you talk about the small state, people think you're Attila the Hun. If you talk about the big society, people think you're Mother Teresa".
Nick Clegg, leader of the Liberal Democrats was equally unkind before the election: "With the Conservatives you are on your own, they talk about a big society, in fact what they want is a DIY society". After the election, and becoming Deputy Prime Minster in a coalition government, Mr. Clegg somewhat revised his opinion: "What I am discovering is that we have been using different words for a long time...liberalism, big society, empowerment, responsibility. It means the same thing".
What does it look like on the ground? It's all a bit fuzzy for now. Some nonprofits are seeing cuts to their funding at the same time as seminars are being organized to help them apply to operate government services. Concrete proposals include 5,000 community organizers (part-time and self fund-raising), a Big Society Day, a Big Society Bank and a Big Society Deregulation Taskforce.
But should UK nonprofits accept tempting sums to operate government services — whether they are new to state funding or expanding the work they already do? What could they learn from the Canadian sector's love affair with government funding?
Canadian nonprofits and government funding. An on/off relationship...with consequences
The Canadian nonprofit sector relies heavily on government funding, more so than other developed nations. The amounts have ebbed and flowed, rising dramatically from the 60's to the early 1990's, when declining economic growth caused a dramatic reduction, a trend repeated more recently, but with less severity. In the UK government funding has increased steadily since the mid '90's, but still only runs at 2 percent of total government expenditure on public services.
So what can UK nonprofits expect? Here are a few often stated characteristics of modern Canadian government funding:

a move towards contracts, rather than grants, with shorter funding cycles

a move away from general support to specific project funding (with little funding for overhead costs)

a requirement to compete with other nonprofits (while also being asked to co-operate closely with the same nonprofits)

hugely increased requirements for accountability
Canadian nonprofits have faced a range of organizational challenges as a result. Unpredictable short term funding makes long term planning much more difficult. Staff come and go with funding, making it hard to build organizational capacity. The administrative burden/cost of acquiring funding can turn your hair grey, and completing the reporting to get the money (often after the work is done) can make what you have left fall out.
Injecting money, rather than solving problems, can often create a whole set of new challenges, sometimes damaging or destroying the same organization it was meant to help. Of course funding can't come without strings attached. But if the people pulling the strings have little or no understanding of the actual work you are doing and simply judge you by your spreadsheets, something is arguably not quite right.
To keep things in perspective, we must remember that most of the 161,000 Canadian nonprofits survive with little or no government funding. A very, very small number of organizations receive most funding — just 1 percent account for 60 percent of sector revenues. But when it is important, it is really important, for example, representing 80 percent of Canadian nonprofit health sector funding.
Big questions for anyone joining 'Big Society'
Does it matter if government funding means nonprofits start to look increasingly like "cost-effective extensions of government"? After all, isn't the important thing that the job gets done? That's one view. Another is that there are real risks associated with becoming overly reliant on state funding, including:
1. Loss of the very characteristics that make nonprofits attractive to government in the first place
Flexibility, innovation, proximity to the end user — all qualities put forward to justify the use of nonprofits. But receiving funding requires standardization and professionalization and arguably points you in a different direction.
2. Loss of independence
Nonprofits can provide an invaluable perspective, based on the day-to-day life of the communities they service. But how easy is it to criticize and challenge the policies of your major funder?
Maybe in the real world of making ends meet it's about trade offs; being able to grow (or just survive) justifies putting the above to one side. Perhaps the balancing act of obtaining funding and maintaining independence is just part of the standard job description for those providing government funded services in this sector.
Whatever your view, clearly government funding does not take all your worries away if you are a Canadian nonprofit. In May of this year, Village Vibes reported the findings of Imagine Canada's Sector Monitor report that a third of those surveyed expect to have difficulty covering their expenses and twenty-five percent thought their existence was at risk.
Increased government funding. Opportunity or threat?
'Big Society' is already facing competition from 'Good Society', a concept favored by the new Labour leader, Ed Milliband. This society emphasizes things that business does not always provide: a healthy work/life balance, a green environment...even love! But maybe we won't need to worry how big a 'Good Society' should be, as both concepts run out of steam before anyone works out what they really mean. What is clear is that the virtues of community, devolution, participation and empowerment are having something of a renaissance across the UK political spectrum. Increased funding seems sure to follow.
But for all the health warnings attached, UK nonprofits will find it hard to refuse the money on offer. The challenge — just as it has been for organizations in Canada — will be to take the money whilst preserving the integrity and distinct qualities of the sector.
To follow discussion and research about the Big Society visit: www.ncvo-vol.org.uk/thebigsociety.
David Evans is a nonprofit consultant based in Vancouver. He has worked as a director with UK, European and international nonprofits and is particularly interested in appropriate education and training for the sector. David can be reached at Evansdn@aol.com or 778 883 7951, or via his website at davidnevans.weebly.com/index.html.