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Nonprofits for hire: The welfare state in the age of contracting
1738
Book Reviews
NoelwOflts for Hire: The Welfare .State [m the Age of
Contracting, by Steven Rathgeb Smith and Michael i.,ip,dcy. Harvard University 232 pp., U.S.$35.00.
Press.
Cambridge,
MA,
1993.
in the U.S., the provision of social services to the mentally ill or retarded, juvenile delinquents, rape victims, etc. has undergone important changes during the last 30 years. Increasingly. government put out the provision on contract to non-profit service organizations. Calling them "a thousand points of Light", George Bush in his 1988 presidential campaign called upon voluntary organizations to play a critical role in solving the social problems of the United States. Nonprofitsfor Hire presents an excellent analysis of the causes and consequences of the increasing reliance on such policies. Often dating back to the nineteenth century, traditional non-profit agencies were founded by the well-off to support the disadvantaged in society. As the members often shared a suspicion of government, service provision was dependent on voluntary work and private financial contributions. Combined with modest salaries, the results were often impressing. Frequently. the services were more innovative and flexible than similar public ones. During the 1960s. however, the situation gradually changed. Increasingly. non-profit agencies contracted with federal or state governments to fund their services. Politicians were favorably inclined to this change as it represented less expansion of the public sector (but not necessarily of public budgets). A guiding premise of contracting is that competition for contracts among private providers will lead to grcatcr consumer choice, more innovative services, more efficient management and a leaner government work force. Through competition for contracts the non-profit providers have been forced to adopt government norms and
standards. They have become more b~ne~-Like with a preoccupation of Liar £~cal health at the expense of flexibility and responsiveness. The material interests of nonprofits under contracting tend to reduce the ideolog:cal character of political advocacy and shift it to technical issues relating to rates, funding levels, etc. For the clients, contracting with non-profit agencies diffuses responsibility for social s e ~ . For the employee, it means lower pay, fewer benefits and less job protection than do government employment. Also, contracting tends to professionalize services because of government regulation. This is a contrast to the situation in some European countries where high levels of government commitment are associated with relatively few restrictions on professional decision making. While the authors offer clear explanations of the emergence of contracting, it is less clear to the reader to what extent contracting meets the efficiency expectations of politicians. The authors claim that market forces do not work in this area of the economy and that assessing efficiency is difficult because clear outcome measures are lacking. Nevertheless, readers would be keen on being provided with at least some empirical evidence on efficiency. Also, an analysis of how civil servants assess contracting is lacking. Funding and provision of social services are crucial aspects of the welfare state. Therefore, Nonprofitsfor Hire is an important contribution. Even for a non-U.S, reader with a background in medical services, its thorough analyses are intriguing reading. The book may stimulate thinking about reforms of social services in more social-democratic countries like the Nordic. Even if the authors primarily address American readers, anybody interested in social policy will find this book valuable.
Institute of Community Medicine University of Tromso N-9037 Troms~. Norway
Ivar Senlm KrLqtiunsen
Book Reviews
NoelwOflts for Hire: The Welfare .State [m the Age of
Contracting, by Steven Rathgeb Smith and Michael i.,ip,dcy. Harvard University 232 pp., U.S.$35.00.
Press.
Cambridge,
MA,
1993.
in the U.S., the provision of social services to the mentally ill or retarded, juvenile delinquents, rape victims, etc. has undergone important changes during the last 30 years. Increasingly. government put out the provision on contract to non-profit service organizations. Calling them "a thousand points of Light", George Bush in his 1988 presidential campaign called upon voluntary organizations to play a critical role in solving the social problems of the United States. Nonprofitsfor Hire presents an excellent analysis of the causes and consequences of the increasing reliance on such policies. Often dating back to the nineteenth century, traditional non-profit agencies were founded by the well-off to support the disadvantaged in society. As the members often shared a suspicion of government, service provision was dependent on voluntary work and private financial contributions. Combined with modest salaries, the results were often impressing. Frequently. the services were more innovative and flexible than similar public ones. During the 1960s. however, the situation gradually changed. Increasingly. non-profit agencies contracted with federal or state governments to fund their services. Politicians were favorably inclined to this change as it represented less expansion of the public sector (but not necessarily of public budgets). A guiding premise of contracting is that competition for contracts among private providers will lead to grcatcr consumer choice, more innovative services, more efficient management and a leaner government work force. Through competition for contracts the non-profit providers have been forced to adopt government norms and
standards. They have become more b~ne~-Like with a preoccupation of Liar £~cal health at the expense of flexibility and responsiveness. The material interests of nonprofits under contracting tend to reduce the ideolog:cal character of political advocacy and shift it to technical issues relating to rates, funding levels, etc. For the clients, contracting with non-profit agencies diffuses responsibility for social s e ~ . For the employee, it means lower pay, fewer benefits and less job protection than do government employment. Also, contracting tends to professionalize services because of government regulation. This is a contrast to the situation in some European countries where high levels of government commitment are associated with relatively few restrictions on professional decision making. While the authors offer clear explanations of the emergence of contracting, it is less clear to the reader to what extent contracting meets the efficiency expectations of politicians. The authors claim that market forces do not work in this area of the economy and that assessing efficiency is difficult because clear outcome measures are lacking. Nevertheless, readers would be keen on being provided with at least some empirical evidence on efficiency. Also, an analysis of how civil servants assess contracting is lacking. Funding and provision of social services are crucial aspects of the welfare state. Therefore, Nonprofitsfor Hire is an important contribution. Even for a non-U.S, reader with a background in medical services, its thorough analyses are intriguing reading. The book may stimulate thinking about reforms of social services in more social-democratic countries like the Nordic. Even if the authors primarily address American readers, anybody interested in social policy will find this book valuable.
Institute of Community Medicine University of Tromso N-9037 Troms~. Norway
Ivar Senlm KrLqtiunsen