EVOLVING MODES OF SERVICE DELIVERY

In the United States, public services are increasingly delivered through networks of public, nonprofit, and private agencies. Approximately 88,000 government units (U.S. Census Bureau 2002) and 1.4 million nonprofit organizations (Urban Institute 2006) are currently operating in the United States. Federal, state, and local governments account for about 30 percent of the nation’s economy, and nonprofits account for about 8 percent. Nonprofit organizations are not only growing in size as a percentage of the economy, but they are also increasingly working with government agencies to deliver a variety of public services.

The nonprofit sector encompasses a diverse set of organizations, from small neighborhood associations and local arts organizations to multibillion-dollar hospitals and universities. Of the 1.4 million nonprofits, about 300,000 are registered with the Internal Revenue Service as 501(c)(3) “public charities,” a category that includes most arts, education, health care, and human services organizations; many of these are actively involved in providing public goods and services. The major charities reported raising about $1 trillion in 2004, about 25 percent from charitable contributions. More than 65 million individuals volunteered for nonprofit organizations in 2004 (Urban Institute 2006).

Apart from religious institutions, the largest number of nonprofit organizations provide human services (including relief organizations like the Red Cross and humanitarian organizations like Habitat for Humanity). Many nonprofits produce complex goods or services—health care, education, performing arts—that are difficult to judge in terms of quality. Further, many of the goods and services provided by nonprofits are paid for by persons other than the recipients. A donor to “Save the Children” might be an affluent North American, for example, while the recipient might be a child from a less developed nation. Because there is no profit motivation, nonprofits are not governed by the same contractual discipline of the private market and are valued most for their trust and reputation rather than for price or profit.

Nonprofit production of goods and services often serves as a “complement” to public production, supplementing or replacing government efforts to redistribute goods and services. Nonprofits also have lower labor costs (because they rely on lower paid personnel and volunteers) than government agencies and thus, arguably, might be more efficient in providing certain goods and services than government. They may have more flexibility and be able to make use of service charges and fees to partially cover costs—something government may not politically be able to do. For these reasons, government agencies are increasingly relying on nonprofits to share public duties and responsibilities.

Public-Private Partnerships

Public services in the United States are increasingly delivered through multiagent and multisectoral networks, via the creation of public-private partnerships (PPPs) that require new types of governance structures and new methods to ensure transparency and accountability. E. S. Savas defines a public-private partnership as “any arrangement between government and the private sector in which partially or traditionally public activities are performed by the private sector” (Savas 2000, 4). This is a broad definition that could accommodate a variety of arrangements, from contracting-out to the use of vouchers. The types of relationships that pose the greatest challenge are public-private partnerships that are ongoing relationships between the government and the private sector in which the private organization produces a public good or performs a public service that has traditionally been provided by the public sector organization.

Public-private partnerships have existed in the United States since its founding. During the revolutionary war, the Continental Congress authorized the use of privateers to harass the British Navy. Later, much of the West was developed through a variety of PPPs, including the transcontinental railway and homesteading. The production of transportation infrastructure has often been undertaken with PPPs, from the development of private toll roads and canals during the nation’s early history up to the present Dulles Greenway—a privately financed, built, and operated toll road from Dulles Airport to Leesburg, Virginia.

After World War II, PPPs were often used in urban infrastructure projects. For example, in urban renewal projects, local governments provided tax concessions and improved infrastructure for private development in central cities. The federal government supported these projects through a variety of grant programs and tax credits.

PPPs also have been used to provide a variety of public services and have served as critical mechanisms in such important policy areas as implementing welfare reform and providing health care to the poor and elderly. At the federal level, service contracting grew by 33 percent in domestic agencies during the 1990s (Eggers and Goldsmith 2004) and has played a key (and somewhat controversial) role in the war in Iraq, with the private sector feeding, housing, transporting, and even protecting armed services personnel.

Heterarchy Replacing Hierarchy

Administrative structures in government are moving away from hierarchy and “silo” delivery of programs toward a “heterarchy” of systems (resembling a network or fishnet) that interact to meet the needs of citizens. While the exact shape of this heterarchy is currently under discussion and is far from clearly defined, it is evident that public and nonprofit organizations are moving toward a networked approach to service delivery based on coordination and cooperation among multiple organizations from all sectors. In a heterarchy or network, authority is determined by knowledge and function—through horizontal linkages rather than the traditional hierarchical form of vertical authority.

The most recent examples of leadership successes and failures during the Hurricane Katrina relief effort clearly illustrate this trend. Organizations that emphasize leadership in a networked environment performed well. For example, during the first week of the relief effort, Coast Guard crews rescued an estimated 22,000 people in Louisiana, Mississippi, and Alabama. Coast Guard Lt. Cmdr. Jim Elliot, who helped oversee rescues from Mobile, attributes the success of the effort to a unified command with states and local industries before the hurricane roared ashore. “We know how to join with other organizations to get the job done,” he said (Barr 2005). Among other factors Elliot identified as important to the coordinated response were the cross-training of employees and cross-functional teaming.