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By Siegrun Fox Freyss
Column 7: Toward More Nuanced Networking Across Sectors
The last column mentioned networks associated with contract cities. This column looks at networks that developed across the public, for-profit and nonprofit sectors. The purpose is to identify the different strengths and constraints of the three sectors in delivering services to the public as we transition from the modern age to postmodern times. The conclusion is that the three sectors work under different political and economic rules, which can be beneficial in joint partnerships, but also pose limitations.
The privatization movement that emerged in the 1980s had conservative roots. President Reagan and his supporters had a low regard for social programs introduced by the Johnson Administration under the Great Society policies. Conservatives wanted to shrink these programs arguing that they were wasteful and that communities should mobilize local, nonprofit resources when people saw shortcomings in service delivery. A problem with this argument was that little was actually known about the revenue streams of nonprofits.
Lester Salamon, a researcher with the Urban Institute, recognized the knowledge gap. He organized teams that systematically canvassed 16 cities concerning their nonprofits. The surveys identified types of nonprofits and their funding sources. It was found that charitable nonprofits, providing social and health services to the poor, received about 40 percent of their funding from government sources. Furthermore, the studies showed that donations from foundations or individuals would not be able to fill the holes left by the withdrawal of federal funds. The researchers also recognized that some of the charitable state money actually came from the federal government, which meant the states were in retreat as well and could not replace federal cuts.
Subsequent presidents continued promoting voluntary efforts, nonprofit activities and self-help through community action. For instance, President George H.W. Bush established the Thousands Points of Lights Foundation. President Clinton, to increase the number of social service providers, tried to encourage religious congregations to get more involved, a policy called charitable choice. President George W. Bush also tried to increase the number of charitable providers by allowing religious congregations, so- called faith-based organizations, to receive federal money. Apart from some provisions in the Affordable Care Act, President Obama has not introduced any major nonprofit initiative. Instead he has expressed support for existing ones, such as faith-based and neighborhood partnerships. In public works projects, governments have relied on private contractors for many years. That the partnership is presented as something new may be due to the expansion of the contract approach into social services.
The brief historical rundown shows that privatization is not solely a conservative cause any more. Liberals have also embraced it; but they prefer to use different terms such as partnerships, as demonstrated by the White House website. In general, the significant increase in research on joint projects has led to more nuanced findings. Examples can be found in Collaborative Public Management: New Strategies for Local Governments by Robert Agranoff and Michael McGuire. The authors found that the participation in boundary-crossing networks varied substantially among jurisdictions. They also observed that knowledge accumulation became an important resource for government agencies and that public administrators tended to leave networks that failed to enhance their knowledge base. Simultaneously, it was realized that networks needed to be managed to provide the expected benefits.
Brinton Milward and Keith Provan came to similar conclusions in their report “A Manager’s Guide to Choosing and Using Collaborative Networks,” published by the IBM Center for The Business of Government.
The researchers concluded that managing a network or managing in a network can “integrate the strengths and talents of a variety of organizations in the public, nonprofit and for-profit sectors to effectively address critical public problems.” The study does not parse the findings by sectors, but other research on that topic is available. I am also relying on my own observations derived from years of research on that topic; for instance, “From Policy Networks to Implementation Networks,” presented at the 2010 conference of the American Society for Public Administration; and “Who Opposes Public/Private Financial Partnerships for Urban Renewal?” published in the Journal of Urban Affairs.
When speaking of the three sectors one has to keep in mind that the entities that make up each sector are vastly different. In the government sector, the range includes small local jurisdictions, but also the federal government. The for-profit sector and the nonprofit sector are equally diverse. Accordingly, in the following, the brief summary of strengths and limits under which each sector functions is incomplete. It can only illustrate the argument that networking across sectors has to be nuanced.
A strength of the government sector is that it has the power of taxation. This makes it possible to pay for public goods from which nobody can be excluded. Governments are also tasked with providing individual goods that serve the public interest, but for which service recipients cannot pay, such as K-12 education. Limits on government spending are imposed by voters and powerful political interests.
Conversely, a strength of organizations operating in the for-profit sector is that they can provide a great variety of individual goods and services, as long as recipients are willing to pay for them. A limit on business spending is set by the need to make a profit.
A strength of entities in the nonprofit sector is their ability to raise money voluntarily, which can be used to fill gaps in services left by the other two sectors. However, demands and needs are consistently exceeding supplies. A postmodern challenge for all organizations, whether they operate in the public, for-profit or nonprofit sector, is to make optimal use of what the high-tech economy has to offer, given limited resources.
Public administrators are active in a great variety of networks some of which stretch across the three sectors. It stands to reason that not all relations lead to win-win outcomes. The issue of transparency can be a challenge. Public managers are used to working under so-called government in the sunshine principles, while for-profit corporations have the right to keep their business dealings confidential. The lack of transparency can make the government partner look bad. That is why I suggest nuanced networking. Choose your partners carefully. Of course, this advice cuts across sectors — government officials or nonprofit partners can be difficult to work with as well.
Traditionally, conservatives have embraced a “limited government” position with respect to social programs, putting a premium on networks across sectors. Liberals tend to support an activist government, with nonprofits as junior partners. In a postmodern climate, the conditions are more complex and managers are learning to approach networking across sectors carefully to achieve win-win results. Postmodern critics are more skeptical. While they support the deconstruction of mainstream public administration theory, they oppose the deconstruction of the public sector by business interests. This is a recurring theme in Administrative Theory & Praxis, the journal of the Public Administration Theory Network.