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Note: This report is available in its entirety in the Portable Document Format (PDF).
Contents
Acknowledgments
Shifting Responsibilities and the Need for Efficiency
Russia in a Regional Context
How Mature Are Russian Social Assistance Nonprofits?
with Patrick Corvington
NGOs as Contracted Service Providers, Round I
with Kirill Chagin
NGOs as Contracted Service Providers, Round II
with Kirill Chagin and Burton Richman
Conclusions and Lessons
References
Acknowledgments
This monograph reports on the pilot experience of Russian local governments contracting out to local NGOs for the delivery of social services. These pilot projects could not have been fielded without the cooperation of officials and NGO staff in a half-dozen Russian cities. So these individuals first and foremost receive my thanks.
The Urban Institute and the Institute for Urban Economics (IUE Moscow) worked with the cities and NGOs to organize the competitions, monitor how services were delivered, and assess how local government staff oversaw the contractors. At IUE Kirill Chagin was particularly responsible for this work. Burton Richman, a resident adviser, had the lead for the Urban Institute. Both have generously contributed their insights and expertise to this monograph.
The fielding of the pilot projects was supported by the U.S. Agency for International Development under Cooperative Agreement No. 118-A-00-01-00135 with the Institute for Urban Economics. The Urban Institute contributed unrestricted grant funds to the preparation of this monograph. The views expressed are those of the authors and not necessarily those of any of the institutions named.
Parts of the monograph rely on materials previously published elsewhere. I thank the holders of the copyrights for giving their permission for the use of these materials. The publications are "Russian Nonprofits as Contracted Providers of Municipal Social Services: Initial Experience," International Journal of Public Administration, forthcoming; and "Russian Social Assistance Nonprofits as Potential Contractors to Local Governments," The Nonprofit Review, vol. 2, 2002, pp. 63-72.
Shifting Responsibilities and the Need for Efficiency
A decade after the beginning of the transition to democracy in Eastern Europe and the Soviet Union it is clear that the nonprofit sector has developed remarkably in many countries in the region. Progress is especially striking in Eastern Europe (EE); on the other hand, development has been notably limited in most countries of the Commonwealth of Independent States (CIS) where liberal democracy has had little chance to take root (Anheier and Seibel 1998; Hyatt, Cooper, and Knight 1998; Kuti 1999; Nowicki 2000; Quigley 2000). Kendell, Anheier, and Potucek (2000) give a useful summary of the challenging situation today:
Characteristic features [of nonprofit sector development] have included extensive evidence of intraregional diversity in terms of organizational resources and capabilities; policy turbulence, unpredictability and ambiguity in some countries, fuelled as many national and local governments have been either unwilling or unable to provide sustained political financial support (sometimes despite symbolic or rhetorical commitment); and the exertion of powerful influence by agencies from outside the region, including foundations and EU institutions. (p. 103)
Nevertheless, the emergence of the nonprofit sector has been one of the principal hallmarks of the transition. But even in Central Europe where development has been most pronounced the sector remains on an infirm financial footing.
Another hallmark of the transition has been the devolution of responsibility for service delivery in many sectors from national to local governments (Bird, Ebel, and Wallich 1995; Freinkman, Treisman, and Titov 1999; Horvath 2000; Kirchner 1999; Wallich 1994). This devolution has generally included the provision of social assistance and social services. Decentralization has been much greater for program administration and service delivery than for program design and funding. But funding responsibility has often shifted more in reality than stated in the law because of unfunded and underfunded national mandates (Freinkman et al. 1999; Wallich 1994).1 Examples of reformed programs that assign administration to local governments include the restructured child allowance programs in both Poland and Russia and the creation of housing allowances in a number of countries that permit phasing out rent controls in municipal housing (Struyk 1996). Municipalities have some role in determining program parameters—e.g., in some countries the rate at which rents are increased in the housing allowance program—but program design is nonetheless substantially determined at the national level.
The decentralization and reorientation of government functions has required or will entail both the modification of existing local government agencies and the creation of new offices to administer programs transferred to localities, as well as some newly established programs. In Poland, for example, the decentralization of social assistance proceeded in two steps. In 1990 responsibility for many services was transferred to local governments. Then in 1999 additional services were transferred, requiring the creation of new Family Assistance Centers in each of the country's over 350 districts (Powiats) (Regulski 1999, 44).
In the Russian Federation and most countries in the Commonwealth of Independent States, the transition period has witnessed the introduction of new social services by local governments to address such problems as the care of noninstitutionalized disabled children, victims of domestic violence, and the drug business. These programs are the result of a variety of pressures: to reduce reliance on institutionalization, to move away from forced treatment of those with alcohol and drug dependencies by the justice system, and to respond positively to the demands of the newly active nonprofit organizations, or NGOs. (In this report we use the term "nonprofit organization" to refer to nongovernmental and nonprofit organizations.) While NGOs pioneered many of these services, local governments often created agencies to expand the scale of delivery.
For social services, local governments throughout the region often have the authority to determine how services will be delivered: through municipal agencies, contracting out to for-profit or nonprofit entities, or possibly grants to NGOs.
NGOs have great potential as contractors to local governments for these services. Many NGOs are now engaged in the kind of counseling, special education, and personal assistance service areas where local governments have the primary responsibility. In some countries in the region NGOs already receive grants from local governments to provide social services. But grants are more susceptible to budget cuts than the delivery of core services under contracts: In some cases the services provided through grants are viewed as supplemental and nonessential. By delivering municipal social services, NGOs could stabilize their financial base and still serve their communities.2 From the municipality's perspective, compared with grants contracts permit greater accountability and a stricter definition of services to be provided. But this is only the case if contracts are well drawn and enforceable and monitoring is undertaken by the responsible local agency.3
This monograph describes the rationale for involving NGOs as contractors in the delivery of social services, in addition to the charitable assistance they provide. Importantly, it also assesses Russian NGOs' performance to date as contracted providers in pilot programs in several cities. The description begins, in this chapter, with a brief review of the experience of governments contracting out for services and the arguments for why NGOs are well-suited as potential contractors. The second chapter compares the situation in Russia with other countries in the region along two dimensions: the broad development of the NGO sector and the extent to which NGOs providing social services have been supported by different levels of government, with both legislation and funding.
The third chapter looks critically at whether Russian NGOs are ready to take on the responsibilities of social services contracts based on site visits to 13 NGOs in four cities. The fourth and fifth chapters report the evaluation results for several pilot programs where local governments have contracted with NGOs that won competitions to provide certain services. There have been two waves of pilot programs, the second building on the experience of the first. The evaluation findings afford a basis for judging if the time is right for NGOs to press to be contractors. The final chapter offers conclusions and ideas about the type of assistance that is likely needed to foster effective contracting of this sort.
Note: This report is available in its entirety in the Portable Document Format (PDF).
1. Note that underfunding by the Russian national government initially places the burden on regional governments (Subjects of the Federation). But
the regions are able to vary their contributions to local governments' revenues through an elaborate set of negotiations. In the end, municipalities can end up bearing much of the burden of the national-level funding shortfalls. In general, underfunding occurs because of gaps in the coverage of national programs that have to be filled from local resources.
2. One must note, however, that some nonprofits have had problems remaining true to their basic missions while acting as contractors. See, for example, the discussions in Smith and Lipsky (1993) and Boris and Steuerle (1999).
3. Young (2000) reviews the alternative economic arguments for governments to contract specifically with nonprofit organizations for service delivery.
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