Too Many Nonprofit Government Contractors Fail to Produce Strong Results

For far too long, governments have paid nonprofits to provide social services and other efforts without having any idea whether the programs have made a difference.

Whether for treatment of drug and alcohol abuse, services for the elderly, preschool programs, aid to the homeless, or efforts to help people who leave prison return to their communities, governments parcel out billions of dollars a year. Federal, state, and local officials usually ascertain that the services have been provided, but they seldom ask the more important question: Was anything actually accomplished?

It’s time that we held the providers accountable and started contracting more with groups that are getting strong results, while denying money to those that can’t prove they are achieving strong outcomes. Taxpayers need to know whether their money is being spent efficiently and effectively.

This is particularly true right now, as cities, states, and the federal government retrench and cut spending to offset large deficits. Public support for many social and educational services has also waned, in part because there are few concrete measures that demonstrate the services’ value. How can organizations expect broad support for social-service programs if our organizations cannot demonstrate tangible results?

There are some signs of change. The State of Pennsylvania announced this past spring that it was completely overhauling the way it contracts with private companies that operate 38 halfway houses in the state. Many states, as well as the federal government, have been spending vast amounts of money on huge, privately run halfway houses on the assumption that they would save money and rehabilitate inmates better than conventional prisons do.

But an unusual study by Pennsylvania officials produced startling results: It found that offenders who spent time in private halfway houses were more likely to go back to committing crimes after their release than inmates who didn’t get any help adjusting to life on the outside.

This means that halfway-house residents are more likely to cost the state additional corrections expenditures. By returning to criminal activity, they are more likely to be sent back to prison than are inmates who bypass the halfway houses.

Bottom line: The system was costing money, not saving it.

To its credit, Pennsylvania has now reconsidered its contracts with the halfway-house operators, on which it spends more than $110-million a year. From now on, payments to the companies will depend on their ability to rehabilitate the thousands of inmates they house each year.

The state corrections secretary, John Wetzel, called the old system “an abject failure.”

“The focus has been on filling up beds,” he told The New York Times. “It hasn’t been on producing good outcomes.”

That’s the essential word: outcomes. Too often, attention in government contracting has been paid to the provision of services, to making sure that rent subsidies are distributed or that addicts receive treatment to wean them off drugs or that ex-offenders receive counseling. But not nearly enough focus has been on whether these services produce tangible results.

Governments and the service providers, nonprofit and for-profit, need to be held accountable by demonstrating quantifiable outcomes.

Doing that isn’t complicated, but it will require a serious effort. We need to devise reasonable, responsible measures. Do addicts who undergo drug treatment at a private, government-financed center stay clean for a year? Does a homeless family that receives a rent subsidy and counseling get stabilized and stay out of homeless shelters over a period of time? Do former offenders who participate in a job-training program actually obtain a job and stay out of jail for at least three years after their release?

Many groups now ask such questions and have ways to track data that lead to good answers. But we need to expand the vigorous use of such measures in government contracting. States and the federal government should determine the amount awarded to a group based on its results.

Money invested in helping people leave prison and lead successful lives without resorting to crime could save states enormous amounts of money by driving down recidivism rates, and thus future corrections costs. But unless we measure the outcomes, as Pennsylvania officials did, we have no way of knowing whether programs like these work or if governments are spending wisely.

The burden is on nonprofits and businesses that provide services, as well as on the states, to demonstrate conclusively that their programs produce the intended benefits, social and fiscal.

After all, in a capitalist country, corporations are judged by their ability to generate revenue and return money to investors. But most private organizations that contract with government to provide services are not required to produce verifiable results. It’s no surprise that taxpayers view them skeptically.

We need to demonstrate that the costs of social services carry significant social and economic benefits. Companies and nonprofit organizations will have to begin using transparent, performance-based data to track their work. They will have to show outcomes that justify their expenditures.

Some companies and nonprofits will no doubt be put off by such rigorous demands. But others will welcome them. Our services can improve people’s lives and benefit communities. We can save governments a great deal of money in the long run if we divert former inmates from a life of crime or help a homeless man find a job or free an addict from the burden of drug abuse.

Those of us who provide government-financed services should not be afraid of having our work measured and judged. We want to know if we are really improving people’s lives. And we should be prepared to prove it.