SMD - Society for Manitobans With Disabilities

The Society for Manitobans with Disabilities

The Society for Manitobans with Disabilities (SMD) is one of the largest voluntary organizations in Manitoba and the largest serving people with disabilities in the Province. More than 35,000 people throughout Manitoba receive services from the Agency.

Ours is a cross-disability agency that provides a wide range of services to all age groups. Professional staff deliver services from a number of regional offices throughout Manitoba. Staffing includes occupational therapists, physiotherapists, speech-language pathologists, audiologists, social workers, vocational evaluators, library technicians, community development specialists, teachers, electronic technicians, communications staff and others.

We are a member of the national Easter Seals/March of Dimes National Council (ESMOD) and have alliances with sister agencies in each province.

SMD's mission is:

"To promote the full participation and equality of persons with disabilities by providing a full range of rehabilitation services and by facilitating the development of a receptive and supportive environment."

Historically, we have been serving people with disabilities in Manitoba for almost 50 years. Originally established as the Society for Crippled Children in 1950, there has been a continual expansion of the agency's mandate over the years. SMD now serves people of all ages in all parts of the province.

We maintain our formal accountability to funders, consumers and the public in a variety of ways including but not limited to: Annual Reports, Annual Meetings of members and open election of directors, preparation and distribution of audited financial statements, annual charity returns, consumer based program advisory committees, open board meetings, program evaluations, regular meetings with funders and client satisfaction surveys.

Introduction

After reading the report of the Panel, Helping Canadians Help Canadians: Improving Governance and Accountability in the Voluntary Sector and after participating in consultative sessions regarding the report, SMD is submitting a written brief in order to address some key concerns. We believe that certain of the Panel’s recommendations, if implemented, will have the unintended consequence of further weakening the voluntary sector and placing voluntary organizations, already operating at a disadvantage, at even greater disadvantage.

We believe that the Panel’s report:

1. Addresses the wrong drivers or issues and responds at the wrong level (focuses its recommendations on the micro rather than the macro level) and in so doing fails to address the real issues. The result is that the Panel ends up victimizing rather then helping the sector;

2. creates an uneven playing field between the private, public and voluntary sectors to the disadvantage of voluntary sector organizations;

3. fails to appreciate in a substantive way the nature of the environment in which voluntary sector organizations operate and the characteristics required to be effective in this environment.

We believe that implementation of the Panel's recommendations must inevitably result in a decreased willingness and ability, on the part of voluntary sector organizations, to take risks, engage in innovative programming and compete with the private sector for devolved government programs. We see the recommendations of the panel fostering characteristics in voluntary sector agencies which are antithetical to survival; in other words, building a better dinosaur which, in the current environment, is nonetheless doomed to extinction!

Issue #1 The Real Drivers

What are the concerns that have led the Panel to its conclusions?

It is our belief that the recommendations reflect a micro approach and accordingly must be intended to address micro issues. From reading the report, we believe that the Panel may be responding to concerns about specific agencies and their alleged mismanagement. We believe that the voluntary sector faces major challenges today, but we think the real issues, which have not been addressed by the Panel, are at the macro level.

We believe that the real issues about which the public is concerned include:

• system fragmentation, leading to a proliferation of agencies, role confusion and resulting inefficiencies;

• duplication of administrative costs;

• increasing competition in fundraising;

• the high costs of fundraising and the perception that too much of their donations is spent on raising money rather than on direct service;

• difficulty in gaining access to services.

We do not believe that the Panel’s recommendations have addressed these concerns.

We believe that system fragmentation is the core issue and that both its causes and its solutions lie at the macro, not the micro level. It is the failure of governments and other funders, to adequately play their role as managers of the system, which has led to this fragmentation. Yet the Panel’s recommendations, rather than calling governments to account for their own failure to manage, appear to "blame the victim". We believe that alliances between, and mergers of, voluntary organizations can, in some cases, address these concerns and strengthen the organizations themselves. We commend to you the work of the Alberta based Muttart Foundation in providing the necessary funding for charitable organizations to merge. We would also support such initiatives from locally based organizations such as United Ways, Social Planning Councils and community foundations.

Recommendations:

1.1 Governments and other funders should actively foster the creation of larger units of service delivery as a means of addressing system fragmentation. Voluntary organizations should be encouraged to pursue alliances and mergers as a means of increasing efficiencies, reducing fragmentation and making services more accessible.

Issue #2 A Level Playing Field

We believe that the Panel, in calling for a greater emphasis on accountability in the voluntary sector, to the exclusion of the public and private sectors, is fostering an uneven playing field. We believe that to focus calls for increased accountability and transparency on the voluntary sector, without applying the same requirements to the other sectors, will serve to reinforce the attack on voluntary organizations from those who view us as "special interest groups".

Why is the voluntary sector being singled out at this time? Where is the demand for accountability from the private sector?

Federal and provincial governments have provided two major tax benefits to voluntary sector organizations - income tax exempt status for non-profit organizations and, for those that also qualify as charities under the Income Tax Act, the ability of donors to reduce their personal or corporate income taxes by making charitable donations. The Panel has noted that in this sense, charities are "subsidized" by taxpayers, through foregone revenue as well as through direct funding and private philanthropy.

The Panel has suggested that in a fair exchange for this, voluntary sector organizations should provide the public with increased accountability and transparency.

We believe that it is wrong for the Panel to single out the voluntary sector for such treatment. If the receipt of public subsidy were the rationale for such treatment, then we would insist that the same standard be applied to both public and private sector organizations in receipt of the benefits of the taxation system.

Private sector corporations benefit from the taxation system in many ways including deductions from taxable income and tax credits. These "tax expenditures" do not require the same level of accountability as government expenditures in support of voluntary sector agencies.

Private sector corporations also benefit from direct grants and interest free loans from governments. For example, Pratt and Whitney, one of Canada’s largest aerospace firms and the largest non-governmental beneficiary of federal government support, received a $147 million interest free loan from the Government of Canada in 1997. In August, the company announced it would eliminate 900 jobs by the end of 1999 because the federal government’s financial commitment was "insufficient to allow us to stay fully competitive."

We think that Susan Phillips has addressed these issues well in her paper entitled Redefining Government Relationships with the Voluntary Sector: On Great Expectations and Sense and Sensibility, prepared for the Round Table on the Voluntary Sector. She notes that there has been an attack on the legitimacy of the voluntary sector, especially in its representative function, coming from two main sources. First, a new populism, which posits that the only legitimate third party representatives are elected officials, political parties and legislatures and secondly, the attempts of governments to dismantle the welfare state.

We believe that singling out the voluntary sector, that sector of Canadian society in receipt of the least amount of government support (after the public and private sectors) for increased accountability will only strengthen the hand of those who wish to reduce the autonomy of voluntary organizations.

As we noted above, we believe that the public is concerned about perceptions of duplication of service, competition among voluntary organizations and difficulty in gaining access to services.

Recommendations:

2.1. Requirements for accountability and transparency should be implemented in such a way as to ensure a level playing field for all organizations which receive tax dollars - public, private and voluntary;

2.2. Common standards of accountability and transparency for all organizations in receipt of tax dollars should be developed in consultation with the sectors involved;

2.3. Standards for accountability and transparency should be implemented on a sector by sector basis, with greatest priority given to that sector in receipt of the greatest amount of tax dollars. Reporting requirements should increase with the amount of funds received.

Issue # 3 The Nature Of The Environment

The current environment impacting on the voluntary sector is characterized by:

• constant and rapid change in the structure of the socio-economic system, relationships between members of the system and the rules by which they relate which continues to blur sectoral boundaries;

• decreasing capacity to provide service as a result of public sector cutbacks and/or increasing competition in charitable fundraising;

• increasing demands from funders for business like behaviour without a corresponding willingness to create a business like relationship;

• increasing emphasis on output/outcome based funding combined with increasing controls over inputs and throughputs leading quite naturally to an erosion of the role of volunteer boards and increased difficulty in recruiting volunteer board members;

• increasing scrutiny from funders and donors with a corresponding resistance by voluntary sector organizations to assume risks to credibility, performance and revenue.

3.1 The Blurring Of Boundaries

Increasingly there is a blurring of boundaries between the public, private and voluntary sectors. This is caused in part by a variety of factors:

• increasing involvement in commercial activities by voluntary sector agencies seeking alternatives to lost public sector funding and/or increasing constraints on charitable fundraising;

• increasing involvement in commercial activities by voluntary sector agencies seeking to regain some of that elusive autonomy lost to increasing control by public sector funders;

• increasing efforts by the private sector to expand market share and profits by "privatizing" what has heretofore been publicly funded services, i.e. capitalizing on governments devolution of service. To quote from the brief submitted by the Ontario March of Dimes,

  Based on the scant information that is provided, perhaps it is equally valid to suggest that the private sector be kept out of areas of business that non-government organizations have always been involved in, in order to enhance the sustainability of the organizations in their communities. The private sector has managed to turn formerly "charitable activities" into economic enterprise, but the charities are challenged not to do likewise, i.e., market products, sell personal care services, create retail outlets for the wares of clients and consult with management expertise."

• increasing involvement by all sectors in new configurations of service through partnerships never before envisaged including public-private, private-voluntary, public-voluntary relationships.

Take for example, the field of corrections. Correctional institutions were, until recently, all publicly operated. Now some Canadian provinces are experimenting with jails operated by private companies. Parole services are still provided by the public sector. Yet probation services and crime prevention services may be provided by either the public sector or by voluntary organizations. And all of this may change by next year, as governments continue to devolve services.

Homecare services are another example. Manitoba has a public home care system, so provincial government employees deliver some home care services. The provincial government is experimenting by allowing a large American multi-national company to deliver home care services in some parts of Winnipeg. Yet other home care services are delivered by voluntary organizations such as the Victorian Order of Nurses. In other provinces, home care is delivered by a combination of private companies and voluntary organizations. In Ontario, the provincial government has established the organizations mandated to co-ordinate (and ration) care.

The blurring of boundaries is not only the result of the voluntary sectors involvement in commercial ventures, but as stated by the Ontario March of Dimes, is equally the result of private sector encroachment on turf formerly occupied by the voluntary sector!

The combined result of these forays into uncharted territories is, as noted on page 6:

• system fragmentation;

• proliferation of agencies;

• role confusion;

• difficulty in gaining access to services.

No wonder the public is concerned!

3.2 Decreasing Capacity

We agree with the Panel that the "sector’s infrastructure has been significantly weakened. We agree with the Panel in stressing that the accountability of the voluntary sector and its capacity is connected. The Panel has noted that "capacity building is a vital first step toward increased accountability and improved governance." and "accountability requires effort, but it also necessitates capacity".

Funders are calling for "increased accountability" from the voluntary sector. At the same time as they are demanding more frequent and detailed reporting of inputs and outputs, funders are providing less funding for the administrative costs to produce these reports. In fact, funders have increasingly placed ceilings on the administrative costs that they will fund, thus making it even more difficult for voluntary organizations to comply with the reporting requirements demanded of them.

3.3 Increasing Emphasis On Output/Outcome Based Funding

As noted by the Panel, governments and other funders now require voluntary organizations to develop and use outcome measures. While we agree that measures of outcome are important for the voluntary sector, their use in the current environment creates several problems: firstly, they require expertise in evaluative research, as well as staff time and technology, which governments and other funders are usually unwilling to fund. Additionally, other funders including individual donors, foundations and corporations do not want their donations used to fund administrative and infrastructure costs. Secondly, funding on the basis of output/outcome measures combined with a competitive approach in the delivery of human services creates a system in which "efficiency" is seen as the primary goal. In such a system, voluntary organizations must demonstrate through a competitive bid process that they can be more efficient service delivery agents then other voluntary or private sector organizations. Such pressures will lead to lower standards of service and to "creaming", that is providing service to those most likely to succeed rather then those in greatest need!

Zimmerman and Dart make this point and quote from the work of John Raulston Saul in stating that:

"Saul’s argument also states that the market is essentially and literally ‘anti-social’ because it is based on self-interest rather than disinterest. In the long term, it is ‘self destructive because (it) cannot take seriously the long-term view or the wider view, both of which are dependent on a measure of public good’ (Saul, 1995, p. 33). The long-term or wider view of the public good is the raison d’être for many of the educational, social service, health and cultural arms of the charitable sector. Doing business ventures that are short term in outcome and in measurement could not only be damaging to the core of the work, they may inadvertently overtake the mission. Because of this, goals and success benchmarks proposed by the commercial mindset map onto the charitable sector only in a highly problematic way."

Zimmerman and Dart describe this mindset as "top line thinking vs. bottom line thinking". In their terms, voluntary organizations use "top line thinking" and private companies use "bottom line thinking." They illustrate the differences between them in the following chart:

3.4 Increasing Demands From Funders For Business Like Behaviour

In addition to demands for increased accountability, voluntary organizations now try to survive in an era where, as noted by Zimmerman and Dart "corporate rhetoric permeates the sector." They state that:

"the language of the market place has put management at the centre of our organizations, corporate business at the centre of society and defined government and non-profit organizations as non-productive or burdensome".

Governments and other funders expect voluntary organizations to act in a "business like" or "entrepreneurial" fashion when, but only when, this benefits them. At the same time they continue to treat voluntary organizations as if they were incompetent. As an organization serving people with disabilities, we know that experience all too well, since people with disabilities are often treated as if they are incapable of managing their own affairs.

Governments and other funders want voluntary organizations to be "business like" when this reduces their obligation to them, but at the same time, to live in a state of serf-like dependence. It is our belief that neither of these models best serves the needs of the voluntary sector, the people whom it serves, or Canadian society as a whole. We are not merely independent contractors, as the business model posits. Neither are the federal, provincial, regional and municipal governments which fund voluntary organizations, our feudal masters.

Henry Mintzberg, in discussing the differences between public, non-profit and commercial activities has stated, "I am not a mere customer of my government, thank you. I expect something more than arm’s length trading and something less than the encouragement to consume." We think that this holds true for the relationship between voluntary organizations and their governments as well.

3.5 Increasing Scrutiny

Increased requirements for accountability and transparency beyond that currently provided constitute a form of over regulation and control which will, as an unintended consequence, create voluntary organizations that:

• have an increased reliance on government funding;

• have a reduced ability and willingness to be flexible and responsive;

• are more conservative;

• are less inclined to take risks and to innovate;

• have increased administrative costs;

• are less able to compete with the private sector for the spoils of government devolution.

These characteristics are antithetical to success and viability in the current environment.

We oppose the creation of a new regulatory body for the voluntary sector as an unnecessary additional level of bureaucracy and as the main plank in unnecessary regulation and over control. In our experience, each funder demands reporting according to its own set of program criteria. To add an additional level of reporting to organizations already overloaded with such requirements, while at the same time, constraining administrative expenditures, will hinder, rather than help, the development of strong voluntary organizations. The Panel should not recommend the creation of a new national regulatory body for the voluntary sector.

Recommendations:

3.1 The Panel should recommend measures that lead to the creation of an environment in which voluntary sector organizations can develop and maintain those characteristics necessary to meet the needs of the communities from which they sprang. These characteristics include flexibility, responsiveness and innovation.

3.2 The Panel should recommend a clearly delineated role for governments as the managers of the overall system, with an explicit responsibility to provide voluntary organizations with sufficient funding to meet their accountability and transparency requirements. Such requirements should be determined following the input of the voluntary sector and should not be significantly different than those applied to private companies in receipt of public funds (see 2.1, 2.2 and 2.3 above).

Conclusion

In addressing accountability and governance, the Panel lost an opportunity to focus on more significant issues. Continuing down this road we believe will lead to the inevitable and undesirable outcome of a decreased willingness and ability of members of the voluntary sector to take risks, engage in innovative programming and compete with the private sector for devolved government programs. We see the recommendations of the Panel fostering characteristics in voluntary sector agencies that are antithetical to survival; in other words, building a better dinosaur which, as history has shown, is nonetheless doomed to extinction. We ask that the Panel reconsider its approach and consider the issues that we have raised in this brief.

We believe that the Panel’s recommendations should be addressed not only to the voluntary sector, but also to the governments and funders whose policies have helped to create the dilemmas faced by voluntary sector organizations. Without significant changes in the relationships between governments, funders and voluntary organizations, successful change cannot occur.

We would be pleased to continue this dialogue with the Panel.