Cuts for Non-profits Will Affect the Most Vulnerable

The imminent retirement of up to 8,000 people from a sector numbering some 300,000 has attracted wide attention. Representative bodies and unions have spoken up about the potentially negative impact on their members and on services, while the loss of prominent figures attracts political and media attention.

There are compound inefficiences in how the State administers billions of euro in grants.

Yet there has been little or no recognition of the impact of falling public expenditure on the non-profit sector, which provides many of the services on which our most vulnerable rely.

In 2009, the latest year for which we have extensive data, there were some 100,000 workers in the sector, most in small companies employing fewer than 10. Payroll costs alone amounted to more than €3.5 billion – these non-profits are a very significant source of economic activity, not to speak of their social impact.

These figures and more are published today in a report by my company, Irish Nonprofits Knowledge Exchange that draws for the first time on the irish non-profits database, a comprehensive repository of regulatory data that we have built on about 12,000 Irish non-profits – charities, NGOs, community and voluntary sector organisations of all kinds.

The evidence shows within this diverse group of organisations, more than 4,000 of which derive half or more of their funding from the State, there are three cohorts.

One is the group closely aligned with local government – hundreds of quasi-autonomous locally-based special purpose vehicles, created to provide essential services such as citizens advice, business or community development, family support, drugs rehab, job opportunities or other services, almost fully-funded by government and characterised by governance arrangements that reflect close supervision of a government department or agencies.

The second is the thousands of non-profits working, often under service level contracts with government, in advocating for and delivering frontline services to deal with disability, disaster relief, education, health, housing, homelessness, etc. Many of these get funding from more than one government source, and most have experienced significant cuts in their funding in 2012.

The third cohort consists of “voluntary organisations”, citizen-led (more than 50,000 people are involved in the governance of non-profit companies), and motivated by a wide variety of purposes, from arts promotion to zoological research. Many are fully voluntary in their operations, and they draw funding from a variety of public and private sources.

The line between the public and the non-profit sectors has become blurred, and as the paymasters inevitably pass on cuts, the question arises, where are these cuts falling, and with what impact? How does the reform agenda affect the State’s relationships with thousands of organisations on which it depends for the delivery of critical services?

The fact is, there are compound inefficiencies embedded in the processes the State uses in administering billions of euro annually in grants. Every one of the hundreds of public grant-making bodies operates largely in ignorance of the spending decisions of the others. As the commodification of public services advances with the wider use of service-level agreements, so the bureaucracy proliferates. Each department or agency exercises its own due diligence in making payments, and has built elaborate systems to collect and store data related to the grant transaction: tax certificates, financial statements, performance reports and other compliance materials. An army of officials requisitions cheques or electronic transfers.

On the other side of the fence, there is untold effort and duplication on the part of non-profits to satisfy the manifold requirements of each funder.

More gravely, as the high tide of public spending subsides, grant-making agencies effect their savings largely by shaving percentages across the board. One hand does not know what the other is doing, and there is no infrastructure for cross-governmental collaboration in collecting policy intelligence or making strategic choices, difficulties compounded by the decentralisation of many government departments.

Savings must be found, and voluntary boards round the country sit every week, coping with the consequences for their care of financial retrenchment, which certainly includes the loss of key staff.

For the most part, these are mission-driven organisations: they are motivated by a concern for the most vulnerable in our society. They are often passionate, entrepreneurial, highly agile and responsive to the needs of beneficiaries. They usually operate on far lower cost bases than would be the case if the services were provided directly by the public sector itself.

They represent enormous value for money at a time when we must all demand that public monies achieve more with less. Far from them “depending” on State grants, we as a society depend on them to maintain the quality of all of our lives. They deserve even more and closer attention than they have had to date.

This opinon piece, first published in the Irish Times, is by Patricia Quinn, CEO of the Irish Nonprofits Knowledge Exchange. 

Read more news here about INKEx (including details of a major new report).

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