With another season of giving upon us, it is an appropriate time to ponder the future of America’s charitable, non-profit community. With a less revolutionary Congress and a President inclined to compromise, what is in store for the sector of our economy responsible for delivering a large portion of our nation’s social services?
The key word in this debate is devolution. No word gets closer to describing the core governing philosophy of the Republican Congress than does devolution. It is a mantra for Gingrich conservatives, the potential end of an era for New Deal liberals.
In a programmatic sense, devolution can be defined as moving programs down to the lowest governmental unit possible, as well as handing some government programs over to private, non-profit and perhaps faith-based organizations.
When it comes to the flow of tax dollars, devolution also means moving away from program- specific grants to block grants. This involves giving federal money to state and local governments and letting those governments determine how the money will be spent.
Republicans in Congress remain committed to a devolution revolution, although its scope and impact will likely be greatly scaled back. Revolutionary fever has cooled in the halls of Congress. But, if the truth be known, not much practical progress had been made toward making devolution a reality even before the 1996 elections. It is a highly complicated undertaking involving hundreds of programs and billions of dollars. Devolution will require much debate and will take many years to implement.
Make no mistake about it, devolution is coming. It might happen more slowly and be less far-reaching than many thought a year ago, but it will happen. It will happen if for no other reason than the Federal government cannot keep pace with the nation’s exploding need for social services. Of the three sectors of our economy: private, government and non-profit, the “third” sector will clearly be the growth industry as we head into a new century.
During the past year, the Lincoln Institute of Public Opinion Research in conjunction with the Pennsylvania Association of Non- Profit Organizations (PANO) has conducted both a focus group comprised of non-profit professionals and a statewide survey of non-profit organizations to learn more about their views of devolution and how it will affect their ability to deliver services in the future.
Our survey found that Pennsylvania’s non-profit organizations would like to emulate their brethren in the for-profit world and be given the opportunity to become more entrepreneurial in the way they run their businesses, but they still cling to the security blanket of program-specific funding from the federal government.
Given a choice, 65% of the survey respondents said they would prefer decentralized, competitive funding that left program specifics up to their own organization, rather than have the centralized, stable funding with strict regulations and stringent guidelines chosen by the other 24% of those offering an opinion.
The leaders of Pennsylvania’s non-profit sector also voiced healthy skepticism over the ability of the federal government to operate in an efficient manner when it comes to providing social services. Only 9% of the respondents said the federal government operates more efficiently that other levels of government.
State governments got the efficiency nod from 17% while 21% said municipal/local governments were most efficient and 25% picked counties as the most efficient level of government. Even more, 28% said no level of government could provide social services efficiently.
Despite their mistrust of government, and their desire for more flexibility, 54% said they would prefer to stick with program- specific funding rather than switch to block grants. Block grants, the main vehicle used to devolve federal funding to the states, was supported by 23% of those responding. Another 14% took an even more free market approach by supporting revenue sharing with municipalities. Letting state and local governments use their own taxing authority to raise funds was supported by 9% of those responding.
The non-profit operators are well aware (78%) of Congress’ efforts to devolve social services by moving from program-specific to block grant funding. And, while they are reluctant to move away from program-specific funding, those answering the Lincoln Institute survey strongly endorsed devolving social service programs to state and local governments and to non-profit organizations. 63% support such devolution while 26% voiced opposition. 11% offered no opinion.
Significant changes in the way they operate are expected by 23% of the non-profit organizations as Congress devolves funding for social services. Another 24% expect to be moderately affected, 25% say they will be minimally affected and 28% expect devolution will have no effect on their operations. Clearly, Pennsylvania’s non-profit sector feels it is better equipped to deliver services than any government entity. When asked if they could deliver services in their area of expertise more efficiently than government, 72% said they could while only 16% felt government could do a better job.
A similar number, 77% felt services provided by non-profit organizations were better for the long-term health of their community while 12% felt services provided by government were in their community’s best interests.
As they look to the future, non-profits expect the bulk of their funding to come primarily from individual giving (37%), from grantmaking foundations (15%) and from membership dues (15%). Government funding — federal, state and local — was expected to play a sustaining role at 33% of the organizations.
Former U. S. Secretary of Education Dr. William Bennett said of the devolution debate that “if the liberal fallacy is an abiding faith in the all sufficiency of government, then the conservative fallacy could easily become an abiding faith in the all sufficiency of non-government.”
Bill Bennett is right. As Congress and non-profits go about the task of defining the third sector’s role in the age of devolution, they must find a way unleash the entrepreneurial energy of America’s charities, while at the same time ensuring adequate services will be available to those truly in need.
(Lowman S. Henry is Chairman of the Lincoln Institute of Public Opinion Research, Inc., a non-profit educational foundation based in Harrisburg, PA.)