This is not the days of old, and you are not the King’s Men; you exist to serve the public, the public does not exist to serve you.’
An area requiring a major overhaul in the not-for-profit sector is the relationship with funders, in particular for programs sponsored by government entities at the various levels. Not only are not-for-profit organizations treated as subordinate extensions of the government body they perform services on behalf of, but the demands imposed by funders are overwhelming thereby eroding the ability for effective service delivery.
In December 2006, the Treasury Board of the Government of Canada issued an independent report called: From Red Tape to Clear Results - The Report of the Independent Blue Ribbon Panel on Grant and Contribution Programs. In summary, government departments were making it far too complicated for not-for-profit organizations to deliver services, and these departments were to back off so more could be spent on service delivery versus administration. This was affirmed in 2008 with an Action Plan to Reform the Administration of Grant and Contribution Plans.
Needless to say, despite the Government of Canada indicating in 2013 and 2017 there has been an improvement, I have never experienced a more abusive environment than being a not-for-profit society with a funding agreement with a government organization.
Not-for-profit organizations are independent legal entities who have their own accountabilities including the Societies Acts and Regulations in their jurisdictions, Federal and Provincial/State Legislation, their Boards of Directors, and to more than just the one funder they are dealing with at that particular moment. Examples include accountability to the Canada Revenue Agency or the Internal Revenue Service, Federal, Provincial/State regulators such as those responsible for labour laws or occupational heath and safety, and in many cases, labour unions. We may have a contract with you, but we don’t work for you.
It is my opinion that many government program delivery officers and managers assume the term ‘not-for-profit’ means you are not a business therefore do not regard you as such; well, let’s get this straight, not-for-profit organizations are businesses the only difference being the lack of an investor who is expecting a financial return.
Regardless of if you are a forprofit or not-for-profit organization, when you have a contract to deliver a good or service, you establish a price for which you will perform the deliverable, you carry out the tasks to the expectations, and you get paid. If you have cost overruns, that is your accountability and perhaps you will do a better job next time; if you have a surplus, that means you will have a little extra cash to pay your shareholders or invest, or for not-for-profit organizations, to supplement one of your less fortunate programs. Even for not-for-profit entities, these are business decision which should be between the organization, their Board of Directors, and the applicable regulatory authorities.
However, government organizations have a tendency to treat not-for-profit service providers as if they are one of their departments; not only do they agree on a price and corresponding deliverable via an operating and financial budget, but they scrutinize every penny you spend and complicate the reporting of this to a state which is beyond ridiculousness. Having been a federal government Regional Comptroller who was also responsible for contracting, I can assure you this was not the situation with contracts with forprofit organizations; in fact, even when we had funding agreements with nor-for-profit societies, the department I worked for treated these entities with dignity and respect.
For those whose contracts between not-for-profit service providers and government entities are identified as cost recovery, at very least make reporting financial results simple. Program Officer John Doe from Government Department X may have thirty contractors delivering the one and only program John is administering using the one spreadsheet or portal with the one schedule of reporting, but not-for-profit manager Jane Smithers has thirty different programs each with different requirements, templates or portals, and timeliness to report. All of this on a 10% administration fee.
This leads us to the argument these are not service contracts rather they are grants, contributions, letters of agreement, memorandums of understanding, or other such nomenclature. Substance over form – regardless of what you call it, what is it really? As an example, grants are for onetime projects such as a specific event or initiative, they are not for a 24/7/365 program which you run year after year such as operating a homeless shelter; this is a service contract.
The question I can hear already is ‘how do we hold you accountable for the taxpayer’s money?’ The same way you do it for any other contract you enter: you solicit and review bids, determine if the price is reasonable, then you ensure the services are performed to the agreed level and quality for that given amount.
This in no way lets the not-for-profit organization off the hook for service delivery results, anymore than allowing a forprofit organization get away with substandard work. You still have a contract with clearly established deliverables, and these must be achieved to the required standard.
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