NONPROFITS FOR HIRE
By Steven Rathgeb Smith and Michael Lipsky. Harvard University Press, 79 Garden Street, Cambridge, MA 02138-9983. 1993, 292 pp., $35.
For more than two decades, a debate has been raging among nonprofit service organizations on the advantages and/or dangers inherent in pursuing or accepting government purchase-of-service contracts. This book discusses the debate and seeks logical conclusions. Although it does not present solutions or a new body of knowledge that will settle the matter, it does offer a comprehensive and interesting approach to an important phenomenon: government contracting for human services.
The book is divided into three parts: "The Turn to Nonprofits," "The Contracting Regime," and "Implications for the Welfare State." The authors undertake the following continuum of subjects: how the nonprofit sector has been changed through the process of government contracting for services; how contracting has contributed to the expansion of services and brought about greater fairness and higher standards in some service areas; problems managers have as they get contracts and adjust their priorities to meet government demands; how the nonprofit sector is mobilizing to counter governmental dominance of the public/private relationship; challenging the strengths and weaknesses of claims of greater privatization through governmental contracting; and assessing the implications of governmental contracting in terms of citizenship, mobilization of political symbols, and implications for the community.
Four central themes recur throughout the book. First, government contracting for services with nonprofit service organizations has benefits and drawbacks. Second, government funding of nonprofit service agencies has a high probability of changing these agencies significantly. Mission and organizational purpose have a high potential to succumb to the chase for government dollars. Contract income has actually transformed nonprofit organizations into agents of the state (agency workers become street-level bureaucrats).
Third, government funding tends to move nonprofit service agencies away from their historical responsiveness to the community toward reflecting and accomplishing government priorities. Finally, if positive results are to be realized in government contracting, government must reform contracting procedures, invest in the nonprofits' capital needs, and allow multiple-year contracting (three to five years) with "modest profits" built in to insulate agencies against future losses. …