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| Path: Main Street : Resources & Library : Research Articles : Feature Article |
Lessons learned in a nonprofit world: Are we trying to reach targets or clients?
By Teresa Ierullo
December 22, 2008
Let's say you get funded and rewarded based on the number of clients who get jobs, but the dilemma is this: do you only take clients that have a chance at employment success instead of the hard-to-serve clients who won't help you to meet your targets?
In this issue of Lessons Learned, we explore the challenges nonprofit organizations face in trying to be accountable to both funder and client, which are not always in alignment with each other. We interviewed Lynn Eakin, author of the report We Can’t Afford to Do Business This Way, to find out about her lessons learned. Enjoy, and let me know what you think of the topic!
CharityVillage: How did the administrative burden of nonprofits get to this current point where you say, "We can’t do business this way"?
Lynn Eakin: In the early 1990s there was a shift that occurred from funding agencies to deliver services, to purchasing services from agencies. In other words, a move to the business model. That was the root of it all. They’re using business methods to provide what is not a business service. And it’s that misfit that has distorted the interplay between the funder, the agency, and the client.
CV: Can you explain the difference between "funding agencies" to "purchasing services"?
LE: You used to have an annual budget; you projected what you could do with it, and how many units of service you could buy. But you had some flexibility within your budget to say, "You know, I really want to put more money into this or that." You would still have to ask the government, but they would say, "Great, let’s try." So it was an interchange, an interactive accountability that happened. Then, during the cutbacks to eliminate the deficit, [the government] decided they would purchase those services they wanted. And to make sure it was done right, they would specify what services would be, and over the years that just got more and more extreme. The problem is the programs are pretty prescribed, sometimes telling us what books to have on the shelf from people in governments who aren’t program people anymore. They don’t even design them, but they’re not interactive. The clients are left out because they can’t tailor them to the client group, much less the individual who may have special needs.
CV: Is there an inherent conflict when an organization has multiple accountabilities? For example, being accountable to a higher authority (government, funders) as well as the needs of their clients?
LE: Oh, for sure. You’ve always had the funders who want certain levels of service or certain units of service, and then you had the agency with its mission and what it is trying to accomplish, and then you’ve got the clients, who perhaps have additional ideas about what they want from the organization that might or might not line up with what the government wants to fund and what the agency wants to deliver and what the client wants. In the best of all possible worlds those all line up, but often they don’t, particularly between the government and the agency. When I talk about funding not keeping up with costs, if you were a business you would have reduced or cut your costs, but that didn’t happen in the social agencies. They typically cut back on salaries; they "jimmied" around with staffing and costs; they essentially ate themselves up from within to maintain their services. The sector has been significantly underfunded; what other sector can you underfund? In fact, they’ve probably had a 25% attrition spending reduction since 1995. Since 1995 they haven’t had cost of living. So you had more than 25% reduction in their purchasing power and in no way have they cut 25% of their service delivery. What they’ve done is reduced management; they’ve stressed here and they’ve stressed there and they’ve depressed salaries to a significant extent. Government has come to rely on the determination of the sector to deliver service.
CV: How can organizations avoid placing most of their focus on the more powerful authority (funder/donor) instead of the client, especially when they rely on that funding to exist?
LE: Before they switched to contract funding, there was a push to be more accountable to their clients; to ask whether they liked the service; ask them whether the service is what they expected; to engage them in service feedback. That has been largely lost with the funder coming in and saying this is what I want you to deliver and the funders have not been looking for client feedback by and large. And they [the funders] are not interested in having client feedback shape programs; they haven’t used this as a significant leverage designer for services. So, to the best of their ability, senior managers manage the funders to free up the time for staff to deal with the clients. They maneuver their organization to try and interact with clients in the best way possible, notwithstanding the donor. But you have to be careful because you have to meet the accountability standard. All organizations that receive government funding are in a position of responding to their funders. Because of the way it’s currently structured, [organizations] have to be accountable to the government for service, and the government doesn’t require as a component of that service that the client be particularly consulted. For example, job placement. Is that the job the client wanted? Whose need is that meeting? Is it the government’s need for the client to be placed or is it meeting the client’s need? Who knows?
CV: How do you avoid "accountability bias"? That is, inadvertently pushing a client toward one program/service over another in order to meet targets?
LE: There’s a lot of pressure on agencies to do this. You know, where you don’t get paid if you don’t have a successful outcome. Then you’re building in incredible screening restrictions on the agencies. If you require success, are you likely to take the client that’s likely to be successful or the client who is not likely to be successful? And what are the implications of that? That’s huge. But sometimes there’s priority given to the more serious client and so the client who isn’t "bleeding" yet doesn’t get service. It’s a huge problem because we have far too many people needing far too few services. Systemwide, what you’re seeing is the advent of centralized intake processes for the more intensive services. A single organization can’t do anything about this.
Organizations can’t push back too much. That’s the problem. In some instances you will be told, 'if you don’t want this then I’ll take it and give it to someone else'. So it’s really a systemic problem that requires systemic change. It’s not an individual organizational problem to solve, and it’s certainly not an individual problem to solve; it’s a systemic problem we’ve got.
CV: Nonprofit organizations exist to serve the community. What are the tell-tale signs that an organization has lost this purpose and exists for the purpose of the funder and meeting its targets?
LE: There are some organizations that chase all the money regardless of the purpose. They call it "mission drift", when they’ll go after the money just to stay alive. Now that might sound terrible, but it’s a terrible dilemma if you’ve got a mission and if you just switch it up a bit more you can get the funding to stay alive. For example, there was once a call for proposals for a young offender’s service to help kids integrate into communities and to run a "boot camp". But what we know about boot camps is the integration back into the community is what makes or breaks whether the young people do well or not. So, there was an organization that wrestled with whether they should run the boot camp, thinking, "If we ran it we would put our energy into reintegrating them back [into community] after the boot camp experience, and we might do it better than somebody who really bought into this boot camp stuff." In the end, this organization didn’t apply, but that’s the kind of dilemma organizations face. Is it better if we do it? They are very difficult decisions. You know, people talk blissfully, sort of derogatively about "mission drift", but when you’re out there in practice trying to cobble together something that keeps you able to help people, it’s really hard. It’s really hard to judge.
CV: You say in your report that "tremendous organizational energy is directed to meeting funder requirements." What are some strategies organizations can use to lessen this burden?
LE: That’s hard because they’re all so individual. But what I’d love to see them all doing is providing the funder with a report on how much time it’s taken to give them their information, because part of the funder’s problem is they operate by what’s called "add on" accountability, so they never take anything off. So a funder may ask, "How many native kids were served in this program?" and they’ll fire off this memo and ask the question. But they don’t spend a lot of time thinking, "What’s it going to mean to the agency to actually collect this information for us and give it to us?" I would love it if all of the agencies could tack on a little note saying, "It cost us X number of dollars to fill out this proposal!"
CV: As an industry, what can we be doing to bring the focus back to the community and clients we serve?
LE: I think we need to keep calling for more flexibility on the front line - in our reports and in our associations. We have to keep pushing, especially as we go into a recession. We will need more flexibility because there won’t be more money. One executive director was saying she couldn’t sit at a table and strike a deal with another agency in her community and say, "You do this and we’ll do this," because she had funder contracts that bound her to deliver the same services as the other agency. So they couldn’t divvy it up because they weren’t allowed to. They aren’t given any freedom to negotiate at these local tables. So even when they want to collaborate and cooperate, it’s really hard to get that kind of flexibility. We only really see this in the smaller communities.
CV: What is your best lesson learned about this issue?
LE: It’s absolutely critical that we remember charities and nonprofits are not businesses, and we should not try to be businesses because then we'll lose our soul; and it’s our soul that makes us valuable.
Lynn Eakin has been providing consulting services to the nonprofit sector since 1989. Currently, as a Metcalf Foundation Fellow, Lynn is involved in the establishment of the Ontario Nonprofit Network, (ONN) to better position the sector to address the cross-cutting policy issues it faces. She has been assisting the sector’s involvement in modernizing the Ontario Corporations Act and the sector’s response to the CRA consultation on fundraising expense guidelines. Lynn Eakin can be reached at lynn@lynneakin.com or visit her website at www.lynneakin.com.
Teresa Ierullo helps Canadian nonprofit organizations be bold enough to ask themselves the tough questions and to unearth the right direction for community-based programs and projects. She writes "Lessons Learned" bi-monthly. For more information and strategies visit www.justthefacts.ca.
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