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Contracts Culture and Non-Profit Leadership

Don Macdonald, editor of ‘Innovation and Change in Non-Profit Organisations’ discusses the contracts culture and its impact on non-profit and community organisations.

With the contracts culture and outsourcing both growing, larger organisations now dominate - both private and non-profit; smaller non-profit organisations are excluded, to be included occasionally as bid candy. Contracts have grown larger, with price becoming all-important. There have been numerous incidents of dubious practice by private companies delivering outsourced contracts, even cases of fraud. Carillion, Southern Cross and others have collapsed, while two thirds of key Government suppliers are based in tax havens. All this of course poses issues for non-profit leaders in managing bidding.

I am moving house after 36 years so must sift through an enormous amount of books and papers. The most interesting paper was a presentation about outreach work by Jospehine Klein. She outlined two critical aspects to underpin this work; firstly there should be a postponement of self-definition in the work, thus the worker starts off with no pat answers but continually questions what they do. Secondly there needed to be a delay in setting goals, until the worker actually knew what problems faced the community, service users and other stakeholders. Then one should devise realistic services and goals, to be evaluated properly.

That was 1978, when I had been doing outreach work for five years for a non-profit organisation, grant-aided by two local authorities. I felt Jo's presentation made so much sense, conceptualising almost exactly what I had been trying to do. However reading it again in 2019 started me thinking that these precepts should underlie how organisations approach new projects and how non-profit leaders should initiate new projects.

I worked for some years within the public sector, overseeing funds to voluntary organisations, so have seen both sides. There were obviously disadvantages to councils awarding grants to local non-profit organisations; often incumbent organisations and those with good connections with officers or councillors were viewed more favourably. Evaluation sometimes took a back seat.

Grants for local organisations have now mostly been replaced by contracts, often allocated through competitive tender and linked to goals specified before work starts. This can be difficult for most small non-profit organisations but just normal everyday bidding for large organisations, both non-profit and private. I believe large organisations should not parachute into areas unless they have good links with those communities, or they explore in depth what real needs exist locally and what non-profit organisations and networks already operate. Unfortunately parachuting in is exactly what the contract culture encourages as it expects the contractor to know what to do before they start.

The Social Value Act (2012) required councils to consider the social, economic and environmental benefits of decisions on contracts above £170,000. But there is concern that the Act is not working well. Two in three councils were not implementing it according to a survey three years after enactment, while a House of Lords committee believes too little is being carried out to encourage commissioning based on impact, not cost. Others recommend ethical commissioning to encompass fair employment and wages, tax compliance and localism.

Small non-profit organisations and community groups can find it difficult to survive and thrive in this contract culture. Yet in a rapidly-changing world smaller organisations can be more agile and inventive, and more in touch with local communities’ needs than larger ones, if leaders are correctly oriented and trained. There was even research which suggested that most innovation in community care came from local staff. Thus smaller non-profit groups are in pole position to develop and deliver projects in which relevant and pioneering services are worked out together with the local community and service users. This does require the right responses and decisions from these organisations' leaders, who must multi-task, while prioritising different demands on their own time and on their teams' resources and also consulting all the stakeholders.

Blog by Don Macdonald

A group of non-profit leaders have written a book, in which examples of such community-based projects are described and analysed, including practical aspects of leadership and management. Don Macdonald, a trainer, trustee and former charity CEO, has edited the book Innovation and Change in Non-Profit Organisations with contributions from respected experts. These include Charles Fraser, CEO of St Mungos for 20 years, who describes the difficulties it faced developing comprehensive services for an unpopular group of clients. Community Catalysts supports local self-help groups to bring communities together and take positive cost effective action, as outlined by their CEO, Sian Lockwood, while Clore Social Leadership’s CEO Shaks Ghosh analyses how to train and support non-profit managers in an increasingly demanding milieu.

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