Dismantling the social services industrial complex


Daniel Stid argues that America has a new industrial complex, and it’s in the most unexpected of places. (ERNESTO BENAVIDES/AFP/GETTY IMAGES)
April 25, 2012

Daniel Stid is a partner in The Bridgespan Group, a non-profit organization that provides advisory and consultancy services to philanthropists and non-profits. Stid leads Bridgespan’s performance measurement practice. The following piece is the author’s opinion and does not represent the views of the Washington Post.

In his January 17th, 1961 farewell address President Dwight D. Eisenhower presciently warned of a growing “military-industrial complex,” consisting of an elaborate network of stakeholders in both private industry and government. Their mutually reinforcing interests largely insulated them from the presidents, taxpayers, and voters with alternative designs for the use of public resources. Remarking on the resulting tradeoffs in an April 16, 1953 speech before the Society of Newspaper Editors, Eisenhower observed that, “every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.”

However, an odd mirror image of this huge complex has emerged in the very “industry” that seeks to feed, clothe and otherwise meet the needs of the poor and vulnerable in our society. It’s a social services-industrial complex, if you will, one that could prove even more difficult to subdue than its military counterpart.

I am not suggesting the nation’s homeless shelters or after-school programs are equivalent to large, private defense contractors in either their influence or motives. However, according to the Urban Institute, in 2009, human service nonprofits entered into more than $100 billion worth of contracts and grant agreements with government agencies in the United States. The Bureau of Labor Statistics reported that, in May 2011, nearly 1.9 million people were employed in community and social services occupations, earning an average annual wage of $43,830.

One doesn’t have to impugn the motives of the individuals and nonprofits working in this industry to observe that, in the aggregate, they consistently behave like other industries: working closely with elected officials and government agencies to preserve the government funding that supports their work. The result is ingrained inertia that makes it harder to shift resources to programs that could provide better outcomes and do so more efficiently.

In May 2010, Jon Baron, president of the Coalition for Evidence-Based Policy, and the Brookings Institution’s Isabel Sawhill, who also sits on the board of the Coalition, observed that since 1990, the federal government has put 10 entire social programs through rigorous evaluations using the “gold standard” of randomized control trials. In 9 out of 10 instances, Baron and Sawhill noted that the evaluations found in aggregate “weak or no positive effects” for the programs being assessed, including Head Start, Upward Bound, Job Corps, and 21st Century Community Learning Centers. While some specific interventions within these broad programs were making a difference, the programs’ overall effects were negligible. The one positive exception was Early Head Start, a variant of the main program for children age 0-3. Yet the federal government continues to spend billions on these other programs each year.

The dirty little secret of the social sector is that once government money starts flowing, the nonprofits that have advocated for it and/or who are benefitting from it have a vested interest in keeping it going, even as evidence shows “weak or no positive effects.”

The Obama Administration has been working to bypass these dynamics via the Social Innovation Fund, Investing in Innovation (i3) Fund, and other initiatives to direct federal money to programs and nonprofit providers that have shown promising or solid evidence warranting more public and philanthropic investment.

These are positive developments, but they are at the margins of the federal budget, and it remains to be seen whether they will outlast the current administration. These initiatives also downplay an inescapable truth: in a time of mounting austerity, the only practical way to direct more public funding to what works is to reallocate it from what doesn’t work. But this challenges the status quo and is thus politically much more fraught.

An important departure to track is the Obama administration’s response to a legislative requirement embedded in the Improving Head Start for School Readiness Act of 2007. The administration announced in November that those local Head Start programs failing to meet research-based benchmarks for program quality will now have to “re-compete” in order to renew their contracts. The Obama administration estimates that one-third of all local programs will need to go through this process. This new approach begs the question of whether redirecting Head Start funding from lower- to higher-performing providers will result in the best use of scarce resources relative to the potential impact of other social programs on school readiness. But if this initiative is able to raise the average performance level of Head Start programs, it will be at least one small step toward untangling the social services-industrial complex.

Two features of this complex make it particularly intractable. The first is that disrupting the existing system entails tradeoffs that, while justified in terms of the underlying evidence about what works, nonetheless pull at the heartstrings of the public. It is difficult to take away contracts or grants from well-meaning nonprofits delivering what seem to be well-intended programs. And the providers and advocacy groups that stand to lose out will work hard to make sure that everyone knows of their dilemma.

Second, the social services-industrial complex runs through multiple federal agencies and then is dispersed through myriad agencies across the 50 states and nearly all of the counties and cities within them. Indeed, the bulk of social services funding decisions effectively get made at the state and local level, and this decentralization creates innumerable policy eddies in which incumbent service providers and advocates for the status quo can hold sway.

But there is one attribute that could, in fact, make it easier to bring the social services-industrial complex under control from within: the humane instinct that drives people in this field. The vast majority of nonprofit leaders and staff who advocate for and deliver human services, along with their board members and volunteers, come to this work because they want to make a positive impact in the lives of people in need. While government funding leads many of them to act in predictable ways and defend the status quo, they also hold beliefs and values that could ultimately lead them to disrupt it. As a first step in unleashing the power of these beliefs and values, those working in the social sector could admit that they have a problem – or at least a complex.

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