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Nonprofits need ‘relational-contracting’

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John P. Borrillo

Anyone who has ever worked in a nonprofit social-service organization that receives most or all of its funding from government contracts knows the words “routine audit” can set off a panic.

For the emphasis on “measurable outcomes,” to the detriment of everything else, has altered the nature of the work we do, and has seriously compromised the quality of services we provide.

Instead of organizational-development assistance and training to improve services, we have been beset by ever-growing demands for more documentation and paperwork.

It is ironic, but of little comfort, that few government-issued social-service contracts are actually dropped for any reason other than lack of funding on the part of the public agency issuing the contract, least of all for unsatisfactory performance.

And it is of no comfort at all that the same demands are turning the public schools into testing factories.

The problem, I have come to believe after working in the field for many years, lies not in the practice of government contracting services out to nonprofits or in attempting to track outcomes, both of which are worthwhile goals, but in the way these contracts are written, negotiated and managed.

The outcomes-only  model is based on a faulty analogy, namely, that the “products” of social-service organizations are observable and comparable in the way other kinds of public services are, services whose results are captured in crime statistics or the number of fires in a given area or the observed pieces of uncollected garbage on the street.

Social services are not, and cannot be, like that.

One alternative might be a contracting model that has been developed by, among others, Elliot Sclar, a professor of urban planning and international affairs at Columbia University and author of You Don’t Always Get What You Pay For: The Economics of Privatization, a model known as “relational contracting.”

In relational contracting, blind competition is replaced by open collaboration within networks of providers; “arms-length” bidding by competing organizations  is replaced by cooperation between government and stable alliances of providers in what has been popularized as the public-private partnership.

The idea is to replace the quasi-adversarial contracting system that is now in place with one based on common goals, information sharing and technical assistance, recognizing that the most productive relationships develop over time in an atmosphere of professionalism and trust.

A contracting system that both improves services and maintains accountability through partnership and accommodation will require a significant shift in attitudes and policy, but it already happens in highly professionalized fields like medicine.

Why not in social services?


John Borrillo teaches in the master’s program in public administration at the School of Public Affairs at Baruch College.

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