Costs, Complexification and Crisis: Government's Human Services Contracting System Hurts Everyone

Abstract

Multiple government reports, news accounts from across the country, and now hard data from the first comprehensive nationwide survey of problems nonprofits experience through government contracts all point to one inescapable conclusion: while governments rely extensively on nonprofits to deliver human services to their most vulnerable residents, governments do so using a contracting "system" that is so woefully broken that it now jeopardizes public health and safety.The decisions to rely on nonprofits to provide services have sound policy, economic, and administrative justifications. Yet the convoluted, disjointed, and patch-worked laws and practices by which governments contract with nonprofits have led to nonpayment, underpayments, and late payments to nonprofits, in part because contracting and reporting processes have become excessively complex and irrational (through continual "complexification" as opposed to simplification).The Urban Institute's new in-depth study, Human Service Nonprofits and Government Collaboration: Findings from the 2010 National Survey of Nonprofit Government Contracting and Grants ("Urban Institute Study"), provides the results of the first national survey documenting the serious and widespread problems experienced by nonprofit human service providers under contract with governments at the local, state, and federal levels.1 Human service nonprofits include groups that provide essential needs such as food assistance, public safety, housing, child care, community and economic development, youth development, and more (but do not include other charitable nonprofits, such as arts and culture, education, or health care).This related Special Report by the National Council of Nonprofits provides additional context to the Urban Institute's findings. This Report explains how the contracting problems affect everyone in America, not just nonprofits. It also identifies specific practices that contribute to the problems being experienced, and proposes solutions that nonprofits, government officials, funders, and citizens can adopt to improve services, restore value for taxpayers, and benefit communities