The UK is not alone in reassessing the relationship between the public and third sectors. Many countries are increasingly relying on not-for-profit organisations to provide a range of public services, particularly in welfare. This has led to problems of scale, funding and how services are commissioned - both for state and provider.
A recent report by the Association of Chief Executives of Voluntary Organisations assesses the state of play in Australia, Canada, France, Hungary, Italy, Japan, Portugal, Sweden and the US. It finds a "remarkable" degree of commonality in the challenges and opportunities for the sector.
How the state engages with not-for-profit organisations determines the extent to which those bodies can deliver public services. Funding is critical. In many countries, recovering the full cost of services on behalf of the state is problematic and there is low certainty of revenue due to short-term funding cycles in the public sector.
In the US, the move to fee-based funding (akin to individual budgets in the UK) has caused big headaches for the third sector, which had been used to more certainty of revenue.
Legitimacy remains a problem in a number of countries. In Portugal, while confidence in the public sector to provide social services is low and many citizens are involved in social organisations, the idea of the voluntary sector delivering services is not widely supported. France, Hungary and to an extent Italy have also resisted using not-for-profit organisations in this way. When they have let contracts, they have tended to be awarded to companies rather than charities.
As in other central European countries, the dominant role for Hungarian charities is in sports, leisure and culture; welfare makes up only a small part of their operations.
In Italy, many of the 235,000 not-for-profit organisations provide public services. The third sector employs about four million people, of whom 500,000 are paid. Since the 1980s, it has been prominent in health, education and social services systems, but even so, the private sector still provides 80% of services not covered by the public sector. Cooperation between not-for-profit organisations is weak and public servants' contracting skills low.
This resistance seems to be a result of the way services are commissioned. In Italy, contracts usually go to the cheapest bid, while in Hungary, the trend among local authorities to create state-owned not-for-profit organisations means savings for councils but hinders third-sector involvement in public services.
In Australia, Canada and the US, voluntary organisations play a more active role. They are becoming more active in Japan, and in Sweden, a coalition between the government and 90 large not-for-profits has formally agreed the role of the third sector, which may increase its contribution to public services as the country moves from a traditional welfare model to a more diverse mix of providers. For now, 85% of services are provided by the state.
As in the UK, whenever voluntary organisations become more involved in delivering public services, it raises issues of autonomy and independence and whether third-sector values are being replaced by commercialism. Funding structures can put pressure on not-for-profits to provide certain services to certain clients. For example, a charity helping disadvantaged groups to claim benefits may be paid for the number of people they get. This could incentivise the charity to focus efforts on those entitled to benefits, regardless of whether they were the people who needed most help. acevo.org.uk
