Nonprofits Dominate Social-Service Scene

Federal programs in 1960s encouraged dramatic shift

SLOWLY, steadily, with never a specific national policy directive, nonprofit community organizations have become the major providers of social services in all parts of the United States.

Although no national statistics exist, experts say that as much as 60 percent of the social service budgets of many government entities - state, county, and local - are now managed by nonprofit community organizations, many of whom are under contract with various federal agencies.

For instance, according to a University of Wisconsin report about Dane county, Wis., more than two-thirds of the $86 million budget for social services in 1991 was managed by nonprofit organizations under contract with the county.

Social historians say this extraordinary change over the last 40 years or so is evidence of a historical shift at a basic level of government, in which entities of specific services become agents authorizing services.

"The kind of system we have now," says Donald Kettl, associate director of the LaFollette Institute of Public Affairs at the University of Wisconsin, Madison, "is certainly not the product of any conscious policy choice. We have this enormous patchwork quilt of organizations out there responsible for the front lines of social service delivery, but no coordination, and nobody auditing the money to see where it comes from except the boards of the various organizations."

In Newark, N.J., the budget of the New Community Corporation, a nonprofit community housing and social service organization recently recognized as a model by President Clinton, was $85 million in 1992. Nearly 90 percent of the funds were provided by federal, state, and local government programs.

Another study revealed that between 1981 and 1987, employment in nonprofit organizations in New York State grew twice as fast as employment in the for-profit world, and three times faster than government employment.

Former New York City budget director David Grossman estimates that the amount of the 1990 state budget "allocated to and through nonprofit organizations was between $4 billion and $5 billion," about a tenth of the $48 billion state budget.

Nonprofit community-service organizations were adjuncts of governments as early as the late 1800s. Beginning in the 1960s, however, federal programs began to encourage community-based solutions to social problems because the federal government distrusted the ability of local governments. In that era of civil rights activism, the Model Cities program, the Comprehensive Employment and Training Act (CETA), Community Development Block Grant Programs, and others essentially sought to bypass local governments and empower community groups.

"Today's model neighborhood organizations," says Richard Nathan, Director of the Nelson A. Rockefeller Institute of Government of the State University of New York in Albany, "both for social services and economic development, are less confrontational and adversarial [than in the 1960s and '70s]. Those older social programs were characterized by the rise in pathology programs, that is, programs aimed at specific social problems."

Today's nonprofit organizations often provide multiple services simultaneously under contract with federal, state, and local governments. But many others continue to address a specific social problem, like drug rehabilitation, prenatal care, or a homeless shelter.

"The real problem," says Mr. Kettl, "is that the typical person served in a community doesn't have a single problem, and a person is left trying to figure out how to make the system work."

At their most effective, nonprofit community organizations grow and respond to pressing community needs. At the Center for Family Life in Brooklyn, N.Y., a 15-year-old organization that started as a family counseling agency, services now include child care, a food bank, teen centers, job placement, a sports league, and a thrift shop - as well as all aspects of family counseling. Most of the center's funds come from state and city programs.

Sister Mary Geraldine, a director of the center, says, "We are more like the old settlement house than we are anything else."

"Nonprofits usually provide a better quality of professional service," says Mr. Grossman, "and they are cheaper with less fringe benefits to pay for. Also they attract people who want more flexibility than the civil service offers, and people who respond to incentives."

Nonprofit community organizations can be poorly managed and led, adding to the complications of government rather than making services more helpful to the consumer.

"There are thieves and boobs in the nonprofit world," says Grossman, "just as there are in the profit world."

Nathan advocates the creation of a National Community Foundation, with a board of directors approved by Congress. "The purpose would be to help community groups learn management techniques," he says, "to improve their capacity to plan ahead, to organize and provide real services. The community organizations are critically important to urban revitalization."

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