If not government, who?

At April’s eponymous O’Bannon Institute conference, Ellen Annala, President and CEO of the United Way of Central Indiana, urged social service agencies to seek opportunities to merge.  She decried the nonprofit sector’s needless proliferation of administration and its costs, offering her own agency as a worthy counter-example: it shares back-office functions with a number of other United Ways. 

This is familiar: every decade or so United Ways start recommending wholesale mergers to their client agencies.  A few shotgun marriages later, and–more important–when the United Ways’ own fundraising ticks up, those recommendations fade.  But if we take the advice seriously, it raises two questions: Are nonprofits really inefficient and wasteful?  And if they are, is merger the solution?

Operating nonprofits are inefficient the way poor people are inefficient: they buy toilet paper by the roll instead of the carton because they never have enough cash on hand to buy the large economy size.  And if charities "waste" money on administrative personnel like fundraisers it’s because they have to scramble for every nickel, creating a different program and writing a different application for every grant and consuming client-service time reformatting evaluative information in the hundred different ways funders–including the United Way–require.  Inefficiency is the symptom; the disease is poverty.  And its cure is for funders–including the United Way–to give each recipient more money.  Fund fewer agencies if need be, but recognize that what charities need is more money and less advice to be frugal or go out of business.

But assuming that larger nonprofits would in fact be more economical (and thus, narrowly speaking, more efficient), should we in fact be seeking to create them?  In my view, the only possible justification for having essential social services provided by anybody but the government is that community-based organizations are better able to understand and respond to community needs.  If we’re going to create city- or statewide mega-agencies, let’s create them with tax dollars.  That way at least we’ll get accountability to go with bureaucracy.  Otherwise, we’d have a system of essentially random allocation of social goods by large conglomerates based on the whims of the wealthy.

Oh, right.  That’s what we have now.



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