Community development activities in the context of contracting.

Rawsthorne, Margot

Background

Contractual arrangements

During the 1990's Australian governments, at all levels, moved to contractual arrangements with community sector organisations providing human services. In line with international trends, these reforms were influenced by new manageralism, most notably the separation of purchaser (government) and provider, funding agreements specified in terms of outputs and/or outcomes, and contractually defined performance monitoring (Lewis 1999; Langford and Edwards 2002). These reforms were actively resisted by many community sector organisations, particularly peak or representative bodies (ACOSS 1996; ACOSS 1999). This resistance reflected a belief that contractual arrangements were inappropriate in the human services and was likely to adversely affect the community development activities of community sector organisations (Sawer and Jupp 1996; Nyland, 1993; Ife, 1997). For the purpose of this paper 'community development' is understood as an umbrella term for strategies aimed at social change and addressing inequality.

In a contractual environment governments were thought unlikely to 'purchase' community development activities such as participating in needs identification and policy development, acting independent of government, undertaking long term prevention and development work, advocating for disadvantaged groups, networking and collaboration activities and local accountability (ACOSS 1996; Ife, 1997). The outcome of community development activities remain difficult to measure and some feared the use of 'performance measures' would focus attention on quantifiable outcomes to the neglect of other outcomes (Melville, 1998).

During the 1990's there was a great deal of work undertaken that identified a significant number of potential negative impacts of contracting on community sector organisations (ACOSS 1996; ACOSS 1999; House of Representatives Standing Committee on Family and Community Affairs, 1998). There was particular concern (HRSCFCA, 1998) expressed about the impact on smaller organisations and those operating in rural or remote locations. The potential negative impacts identified included:

* The positioning of community sector organisations merely as 'service providers' rather than partners with government in solving social problems;

* The erosion of organisational autonomy and a consequence drift of mission and purpose

* A loss of flexibility and innovation in community sector organisations as governments specify the nature and distribution of services

* The loss of functions previously undertaken on the basis of generic funding but not specified in service agreements, in particular advocacy, community development and gap-filling in local service networks

* A loss of cooperation and collaboration between organisations in an increasingly competitive inter-organisational ethos, and

* Greater control being exercised by funding agency and a focus on accountability to the department rather than to the community.

The importance of community development activities

Taken as a whole these negative impacts have the potential of significantly diminishing the ability of community sector organisations to participate in community development activities. Concurrent with the shift to contractual arrangements, there has been renewed interest in the community's role in social life, social wellbeing and social capital (Dixon, 2003; Putnam, 1993; Winter, 2000). This has, at least in part, been a response to the loss of legitimacy of political processes and an effort to reinvigorate active citizenship (Woodward 2000: 236). Renewed interest in community development processes are part of a drive to make democracy more vibrant through active citizenship and participation in local issues (Woodward, 2000: 233). In the UK efforts to reinvigorate active citizenship were seen as a response to the public policy legacy of the 1980's and 1990's of increased individualism, fragmentation and embedded poverty, which collectively threatened civil society (Blaxter et al 2003: 131). It could be argued that Australia has a similar legacy (Pusey, 2003).

Community sector organisations through their community development activities, in the view of some theorists, play a 'central role' in the generation of social wellbeing and strengthening democracy (Putnam 1993; Murphy and Thomas, 2000). In fact, Putnam argues that a decline in voluntary activities and organisational membership will be associated with a decline in social capital (Putnam, 1995). Symptoms of low social capital include crime, vandalism, personal isolation, racism, age divisions and violence (Lane and Henry 2001).

In exploring social capital in four Australian settings, Onyx and Bullen (2000: 115) identified "four distinct social arenas' in which trust, proactivity in social context, tolerance of diversity and value of life are generated. One of these distinct social arenas they called 'participation in the local community'. Community sector organisations are an important site for participation in the local community (Putnam 1995; Onyx and Bullen, 1997; Cox, 1998) and are often 'deeply connected' to their community (Weeks cited in Murphy and Thomas, 2000: 155). Community sector organisations play an important intermediate role between government and communities (Maddison et al, 2004). It is only through the 'more immediate and personal connections between people and events' that government policy can contribute to the generation of social capital (Onyx and Bullen, 2000: 117). Community sector organisations are well placed to create what Onyx and Bullen call 'generalised social capital' which is tolerant and open as against localised social capital which can be 'inward-looking and may be distrusting of outsiders and intolerant of difference' (2000: 123). Community sector organisations, particularly small ones

 foster the development of a community's sense of social
 responsibility by increasing the awareness of members about social
 issues, and provide a medium through which their sense of social
 responsibility can be translated into action. (Murphy and Thomas,
 2000: 155).

For others, however, the relationship between community sector organisations, community development activities and social capital is more problematic (Cox, 1998). These claims often lack clarity and are riddled with ideology and emotion. They form part of the community sector's efforts to 'claw back' its position in relation to the state and the market (Dixon, 2003). The key concepts remain under-developed and contentious as does the actual practice of community sector organisations. Acknowledging these concerns

 [t]he overwhelming weight of research points to non-profit
 organisations playing an important part in the generation of social
 capital, and to some organisations doing this better than others
 (Lyons, 2000: 184).

Contracting and community development activities

Lyons contends that the shift to contracting has very serious implications for community organisations and communities more broadly:

 The currently favoured model has government specifying both
 services and outcomes in advance and 'purchasing' these from a mix
 of non-profit and for-profit providers. The direct impact of such an
 approach is to disadvantage and finally destroy small non-profits
 --those rich in social capital--and to persuade larger ones to adopt
 many of the corporate practices of large for-profits ... Whether
 this has further effects on the behaviour of those non-profit
 organisations has yet to be seen. The currently popular government
 model diminishes the capacity of non-profits to build social capital
 (Lyons, 2000: 187).

A number of recent research reports have given further support to Lyons argument above that the current funding model (contracting) is negatively affecting the work of community organisations, particularly peak organisations (Melville, 2003; Maddison et al, 2004). Maddison et al findings included: around 70% of survey respondents believed their government funding restricted their ability to comment on government policy; 74% believed that NGOs were being pressured to make their public statements conform with government policy; and 90% of respondents believed that dissenting organisations risk having their funding cut (2004: x). They conclude that through a range of strategies the current Federal Government has 'silenced or at least muted' dissent (Maddison et al 2004: xii). Likewise, Melville found relations between government and peaks were 'largely negative' and less than a fifth was currently 'coping well' (2003: iv). Total or partial loss of funding, increased government administration and controls of public advocacy all contributed to these difficulties (Melville, 2003: iv).

Methodology

Sample

This study was commissioned by the Commonwealth Department of Family & Community Services ('FaCS') as part of it social policy research program (2003). A random sample of 1800 grant recipients was drawn from the Department's Vendor Database, ensuring adequate coverage of a range of variables (such as size, location and program). The sample was drawn by program type with 'grant recipient' rather than organisation used as the selection criteria. It was not possible to draw out only community sector organisations from the Vendor Database, accordingly the overall sample included for-profit organisations as well. A mail questionnaire, comprising 24 closed multiple response questions and one open ended question, was forwarded to these grant recipients. A joint FaCS and SPRC letter explaining the research and detailing the steps taken to ensure confidentiality of responses accompanied the questionnaire. Either paid staff or voluntary committee members responsible for the overall management of organisations were asked to complete the questionnaires. A postcard reminder about the questionnaire was sent some six weeks later.

Response rate

Five hundred and sixty one (561) community sector organisations completed questionnaires, representing a response rate of 30% (Table 1). A further 85 responses were received from for-profit organisations, however, these have been excluded from analysis for this paper. This response rate fell below what we were anticipating although was satisfactory for a self-administered mail questionnaire. In addition, calculating the response rate was more complex than anticipated. Many organisations were in receipt of multiple grants from the Department, potentially artificially reducing the response rate as they completed only one questionnaire despite having received two or more. In addition, organisations responded in relation to grants for which they were not necessarily identified in the random sample. For example, questionnaires were sent to 52 youth program grant recipients but 63 responded.

The poor response rate from childcare providers (17%) reduced the overall response rate, although as they comprise 40% of respondents their views are likely to be well represented in the findings. Correspondingly, other Program Types are over-represented compared to the random sample. Taken as a whole, however, the sample provides insight into the experiences of organisations providing a broad and diverse range of services. The diversity of organisations who responded provides opportunities to explore some of the key assertions made in the literature (Table 2). Particularly pleasing was the number of small organisations and those operating outside metropolitan settings included in the study.

Limitations

Whilst the study includes the experiences of a large number and wide range of organisations some caution needs to be exercised in extrapolating from the findings. Firstly, drawing the sample from the FaCS Vendor Database means that only organisations who have continued to receive funding from FaCS through contractual arrangements are included. In this way the study does not document the experience of organisations unable or unwilling to enter into contractual arrangements. Women's organisations, for example, have been adversely affected by contracting (Sawer and Jupp, 1996; Maddison, et al, 2004) and comprise only one per cent of respondents in the study. Additionally, nearly half of the respondents provided services in the childcare arena, which historically has tended to be less focused on community development activities or broad social justice advocacy.

Analysis

The data was analysed using SPSS 12. Descriptive statistics were used for most questions. Cross-tabulations and significance tests were undertaken for all variables. Of particularly interest was the extent to which organisation size, location and program may influence the experience of contracting. Income was used as the criteria for size rather than staff size due to the large number of organisations employing 'part-time' staff for which no hourly details were obtained (small: income <$250,000 per year; medium: income $250,001-$1 million per year; and large: >$1 million per year). In addition, some variables were subject to Cramer V tests to find the strength of association between categorical variables (such as location, size and reported stress). A full report of the findings can be found in Rawsthorne and Shaver (forthcoming).

Research findings

Participant profile

Table 2 describes some of the key characteristics of the participants in this study.

Perceptions about impact of contracting

Respondents were asked to think about their current relationship with FaCS and to indicate the level of their agreement with a series of statements (strongly agree, agree, disagree, strongly disagree and don't know).

One potential negative impact of contracting identified in the literature was the positioning of community sector organisations merely as 'service providers' rather than partners with government in solving social problems. Overall nearly two thirds of organisations (Table 3) agreed or strongly agreed that 'we are able to provide input into identifying community needs and policies'. This finding indicates that these community sector organisations believed that their ability to contribute to policy and program development through the identification of community needs has not been adversely affected by the changed funding arrangements. Smaller organisations felt more able to participate in needs identification (71.4% agreed or strongly agreed) compared to other organisations (55.0% of medium organisations and 65.7% of large organisations). This difference was statistically significant (p<.002). Organisations providing training and employment services were least likely to support this statement (8.3% agreed or strongly agreed) and also had the highest level of 'don't know' (24.0%). There was no evident difference between services by location.

Within the literature it is argued that the 'steering not rowing' shift in government's relation to policy and service delivery had the potential to threaten organisational autonomy (Nyland, 1993; Cooper, 2001; Laugher, 2002). This reshaped relationship could see community sector organisations being driven not by their own vision and purpose but by government policy and program imperatives. Table 3 shows, however, over half (58.3%) of responding organisations strongly disagreed that the new funding arrangements had diverted their organisations from their vision and purpose. This held for all service types, including policy, service support and development agencies (that is, peak organisations). 80% of these organisations strongly disagreed that they had been diverted from their vision and purpose compared to two thirds of all respondents. Given the widespread unease about the impact of contracting on peak organisations (Maddison et al, 2004; Melville, 2003; Bessant and Webber, 2001) this is an important finding. The strength of this finding suggests a high level of awareness of this potential and possibly resistance to the erosion of independence. There were no evident differences by organisational size or location. Aboriginal organisations, however, were more likely to agree or strongly agree that they had been diverted from their vision (35% compared to 17%).

A loss of flexibility and innovation in community sector organisations as governments specify the nature and distribution of services was also identified as a potential negative impact of contracting. It was thought with the move to outcome based funding those preventative or innovative programs with less tangible short-term outcomes could be less of a priority for funding bodies. The questionnaire asked respondents to consider whether contracting had impacted on their seeking and receiving grants for innovative prevention or developmental activities. Over one fifth (21.7%) of respondents did not know whether contracting had resulted in reduced funds for developmental activities whilst some 46.4% agreed or strongly agreed. The key factor in this finding appears to be nature of the organisations, with large mainstream organisations providing training and employment programs expressing strongest distress about the ability to have prevention and development work funded (60.8% of these respondents agreed or strongly agreed with this statement). Policy, support and development organisations also expressed concern about the loss of prevention funds, with 44% agreeing or strongly agreeing. Differences by service type were statistically significant (p < .001). There was also a difference by organisational size, however, this was not statistically significant. Large (50%) and medium (49.7%) sized organisations expressed greater concern about loss of prevention funds than smaller organisations (39.4%). This was the only statement in which there were evident differences between organisations operating in different locations. Those organisations operating in rural settings more strongly agreed (22.1%) than others (14.3%).

A further potential negative impact identified was the loss of functions previously undertaken on the basis of generic funding but not specified in service agreements. The literature highlights apprehension that contracting would enable greater controls by grants administrators and policy makers on organisational activities potentially hindering participation in advocacy. The ability to advocate for disadvantaged people is central to community development (Ife, 2002). Allaying these fears, well over half of respondents (70.9% agreed or strongly agreed) believed their advocacy activities had not been affected. There were no evident differences by size, location or program. However, those organisations providing training and employment services were least likely to strongly agree (12.4 % compared to 19.4%). Interestingly, ethno-specific organisations (38%) were nearly twice as likely as other organisations to strongly agree that they continued to advocate for disadvantaged people.

A loss of cooperation and collaboration between organisations in an increasingly competitive inter-organisational ethos was identified as a potential negative impact. The findings suggest the move to contracting affected collaboration between services in contrasting ways. Responding organisations were split between agreement (49.5%) and disagreement (45%). There were no evident differences by location. Once again program type appears to be influential here, with 82% of responding organisations providing financial and material assistance rejecting the notion that changed funding arrangements had led to greater competition. Training and employment services on the other hand were in agreement (67.4% agreed or strongly agreed). There also appears to be a relationship between organisational size and experience of competition for funds. The larger an organisation the more likely it was to agree that the changed funding arrangements had led to greater competition and less collaboration (agree/strongly agree: small 33.9%; medium 57%; large 60.3%). This difference was statistically significant (p<.001). This would suggest smaller organisations remain able to collaborate (and may do so out of necessity) but larger organisations are feeling more isolated from peer organisations.

The final potential negative impact explored in the questionnaire was a shift in the focus on accountability to the department rather than to the community and greater control being exercised by funding agency. Once again there was considerable diversity of opinion and experience among respondents. 68.1% of training and employment providers believed that they were now more accountable to the Department. Conversely, those providing financial and material assistance (63.6%) and policy, service support and development (64.0%) strongly disagreed with this notion. Once again, size appears to shape experience, with the larger the organisation the greater the belief that their organisations were more accountable to the Department than to the community (agreed/strongly agreed: small 43.4%; medium 57.2%; large 58.6%). The location in which organisations were operating does not seem to have affected their experiences.

Organisational stress

The questionnaire asked respondents to 'describe your organisation's response to the changed funding environment' now and initially on a scale (very stressed; stressed; neutral; comfortable; very comfortable). This question aimed to gauge respondent's perceptions of their response to the move in contracting and whether this had changed overtime.

Table 4 below' indicates that the introduction of contracting was accompanied with high stress levels, although this has modified over time. Despite this, over one third of respondents remain anxious about contracting. Looking only at current organisational stress levels, two service types stand out as very stressed: organisations providing policy, support and development services (24%) and those providing employment and training services (17.8%). The high level of stress reported by policy, support and development services is not evident in the findings relating to community development activities explored above. This suggests that the source of this stress lies elsewhere. There were also differences by organisational size, with 57.5% of large organisations currently feeling stressed or very stressed compared to 41.2% of small organisations.

To further explore the issue of organisational stress a series of chi-square tests were undertaken to identify contributing factors. Stress levels were grouped as stressed (very stressed and stressed), neutral (neutral) and comfortable (very comfortable and comfortable) to ensure the tests were statistically robust. Cramer's V. tests were undertaken to establish the strength of the relationship.

It would appear that the philosophical shifts embedded in the move to contractual funding arrangements have affected organisational stress levels. For example, collaborative service delivery, networking, referral, needs identification and problem solving have been strongly valued by community sector organisations and there is a sense that new arrangements for allocating funding has undermined inter-agency co-operation. Those organisations who felt the current funding arrangements encouraged competition rather than collaboration experienced higher levels of organisational stress (Cramer's V.308 p<.001). Additionally, those respondent organisations who felt the new funding arrangements represented a shift in organisational accountability from community to funding body indicated higher levels of stress (Cramer's V.293 p<.001). The perception that contractual arrangements had diverted the vision and purpose of organisations also contributes to stress levels although to a lesser degree (Cramer's V.222 p<.001).

Discussion

These findings suggest that whilst contracting has been detrimental for some organisations, over a broader spectrum the community development activities of these community sector organisations have been affected minimally. The general trends remain consistent regardless of location, allaying earlier concerns about the impact of contracting on rural services (HRSCFCA, 1998). Similar concerns were held about the impact on small organisations. These findings suggest, to the contrary, that medium and large organisations are experiencing greater difficulties. Those organisations providing employment training services consistently expressed greater concern than other service types, reflecting disquiet about government reform processes in this arena. There is evidence that the uneven implementation of contracting across government, organisational differences in development and the specific state of relations with government shape the experience of organisations. This point to the complex ways contracting has played out in individual organisations.

These findings paint a very different picture of community sector organisations to that of other recent research, particularly the Australia Institutes 'Silencing Dissent'. This picture, at least in part, emerges from those 'who have aligned themselves with the Federal Government (through, for example, accepting contracts to deliver services)' (Maddison et al, 2004: x). It would seem unlikely, however, that none of the respondents in this study 'remained more independent and critical'. The level of resistance evident in the study, particularly by groups such as large education and training providers to people with disabilities, suggests that some form of 'settlement' has been reached by these organisations about operating in a contractual environment. It is also possible that the more positive results in this study reflect the positive efforts of FaCS in working with community sector organisations. It may also be that those organisations providing services in communities experience the tensions of a contractual environment less than peak organisations.

Whilst organisational stress levels have decreased over time there has been only a very slight increase in those feeling 'comfortable' with contractual arrangements. This coupled with the high level of uncertainty expressed by organisations (don't know) suggest organisations 'deal with' the contractual environment rather than accept it. Additionally, those respondents who consistently expressed opinions at the extremes reveal a level of resistance to the diminution of their community development activities. It may be, however, that this resistance was a moral voice--these respondents believed and hoped that they should be able to identify community needs, to advocate for disadvantage people and remain true to their vision. What is unclear from this research, however, is how this moral voice translates into the day-to-day practice of community sector organisations.

To conclude, this research suggests that the negative impacts of contracting have been less than anticipated in these community sector organisations. These organisations feel able to continue to play an important developmental role in community life, regardless of the contractual arrangements. From a social capital perspective, this is a welcome finding.

Table 1: Random sample and response rate by Program type

Program type Random Per cent of Responses
 Sample sample from
 community
 sector orgs

Family and Community 56 3 62
programs

Emergency Relief Program 181 10 64

Youth programs 52 3 63

Disability Employment 232 12 103
program

Child Care programs 1323 70 225

Other 37 2 39

Total 1881 100% 561

Program type Response Percentage
 rate# of
 respondents

Family and Community 110 11
programs

Emergency Relief Program 35 11

Youth programs 121 11

Disability Employment 44 18
program

Child Care programs 17 40

Other 105 7

Total 30% 100%

(#) In some cases organisations received funding from more than one
program and have answered the questionnaire in relation to a different
program from that selected in the sample.

Table 2: Description of responding organisations

Program Frequency Percent

Family and Community programs 62 11
Emergency Relief Program 64 11
Youth programs 63 11
Disability Employment program 103 18
Child Care programs 225 40
Other 39 7
Total 567 100%

Classification Frequency Percent

Personal and social support 101 18.0
Childcare 236 42.1
Training and employment 101 18.0
Financial and material assistance 23 4.1
Residential care and accommodation support 12 2.1
Policy, service support and development 25 4.5
Missing 63 11.2
Total 561 100

Organisational size Frequency Percent

Small 210 37.4
Medium 179 32.0
Large 142 25.3
Missing 30 5.3
Total 56 100

Percentage of income from government sources Frequency Percent

0-25 per cent 81 14.4
26-50 per cent 50 8.9
51-75 per cent 78 13.9
76-100 per cent 122 21.7
Missing 230 41.0
Total 561 100

Catchment (More than one answer possible) Frequency Percent

Metropolitan 271 48.3
Regional 218 38.9
Rural 261 46.5
Remote 117 20.9

Target population Frequency Percent

Aboriginal & Torres Strait Islander orgs 40 7.1
Ethno specific organisations 20 3.6
Gender specific organisations 6 1.0
Mainstream organisations 492 87.7
Missing 3 0.5
Total 562 100

Table 3: Perceptions about impact of contracting

Statement Strongly Agree Disagree
 agree

"We are able to provide input into 15.4% 49.4% 6.9%
identifying community needs and
policies"

"We have been diverted from our vision 4.7% 14.9% 3.9%
and purpose"

"We are less likely to seek or receive 18.0% 28.4% 28.0%
funds for innovative prevention and
development work"

"We remain able to advocate for 19.4% 51.5% 16.0%
disadvantaged people"

"We are encouraged to compete rather 17.0% 32.5% 37.2%
than collaborate with other agencies"

"We are now more accountable to the 18.0% 34.4% 38.1%
Department than to the community"

Statement Strongly Don't
 Disagree Know

"We are able to provide input into 9.0% 19.3%
identifying community needs and
policies"

"We have been diverted from our vision 58.3% 18.2%
and purpose"

"We are less likely to seek or receive 3.9% 21.7%
funds for innovative prevention and
development work"

"We remain able to advocate for 5.5% 7.5%
disadvantaged people"

"We are encouraged to compete rather 7.8% 5.5%
than collaborate with other agencies"

"We are now more accountable to the 4.8% 4.6%
Department than to the community"

Table 4: Respondent's perceptions about organisational response
to move to contracting

Stress levels Very Stressed Neutral
 Stressed

Initially 19.8 30.1 31.0
Now 9.6 29.4 34.2

Stress levels Comfortable Very Missing
 comfortable

Initially 6.4 0.2 12.5
Now 12.3 1.4 13.0

* This paper uses the term 'community sector' to denote not-for-profit organisations who are managed by voluntary management committees whose broad purpose is to address welfare needs.

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Dr. Margot Rawsthorne is a Lecturer for Community Development in Social Work & Policy Studies at the University of Sydney.