essay

Structure and Financing of Human Services Organizations 95

rel are time-consuming, which may delay rery of services. It is also difficult for gov- t to end a program once it is part of the nent structure. In addition, personnel res, fringe benefits, and other complex nental processes are avoided when gov- Lt contracts with an external entity to lts services.

ight of the concurrent movements to alize decision making and service deliv- le-bureaucratize and de-federalize and to

e human services, among other enter- rurchasing services from the private sector rred means of delivering social services. As

d earliet over half-52o/o-of the ser- fered by nonprofit human services agen- financed by government through grants

ltracts. These funds are a significant por-

the expenditures detailed above for family I and foster care. Adding to this is the bil- f dollars annually spent on health and services through Medicaid and Medicare,

h consumers are given the responsibility ting their own provider. old adage "he who pays the piper calls the i an apt description of one end result of rntracting arrangements. On the positive rnprofits have, as a condition of govern- mding, had to develop new management encies, including negotiating skills and rl accountability systems. Nonprofit agen- re been able to introduce new programs vices. In some cases, voluntary agencies rme into being as a direct result of the rlity of public funds to finance particular f services, such as assistance to victims of Smith, 1989). The negative byproducts of public-private relationships, however, midable. Questions about the autonomy rprofits have increasingly been raised nan, 1995), as these contracted agencies their service delivery systems to align

rblic program priorities and as the public )ecomes more vigilant in its accountabil- rirements. The consequences of contract- e been seen as so pervasive that nonprofits

have been accused of becoming agents of the state (Goldstein, 1993). The key factor in this transformation has been the growing reliance of nonprofits on contract funds, making them resource-dependent on government. (For an extensive discussion of actual and perceived effects ofthis resource dependence, see Foundation

Center, 2008; Kadlec, 2007; Kramer, 1994; Poertner & Rapp, 2007.)

Purchase-of-service arrangements have also led some nonprofits down the road of goal dis- placement. As nonprofits sought to take advan- tage of existing or new public funds, they initiated some programs that may not have been on target or consistent with their mission. The end result has been a dilemma: To what extent should the need for organizational maintenance and growth take precedence over organizational mission (Gibelman, 1995)? Such questions are less pertinent to for-profit organizations engaged in contracting because their mission is defined as profitability.

Besides their relationship with government through contracts, nonprofits are also the benefi- ciary of public policy on their behalf. For exam- ple, nonprofits benefit from government largesse in regard to special postage rates that are feder- ally subsidized. (However, a 1993 law changed the way that Congress subsidizes the U.S. Postal

Service for delivering nonprofit mail; federal subsidies are gradually being phased ouq Hall, 1998.) The Internal Revenue Service sets tax rates (typically below market rates) for computing charitable deductions for trusts, gift annuities, charitable lead trusts, and some other deferred gifts (Billitteri & Stehle, 1998). And, of course, taxpayers benefit from their ability to claim tax deductions for charitable giving in cash and kind. There is increased pressure on Congress to pass new tax incentives to encourage charitable giving, particularly at a time in which nonprofit organizations are seen as key players in solving the country's problems ("Panel on Civic Renewali' 1998). Such positive impacts of public policy further highlight the interdependence between the sectors.