Robert Whelan, assistant director of health and welfare at the London-based Institute of Economic Affairs, has written a concise essay detailing the transformation of British philanthropy in the 20th century from a largely private endeavor to one increasingly supported by government.
Whelan’s goal is nothing less than to call into question the entire notion of “public-private partnership” on which his nation’s provision of social services for the needy is largely based (British nonprofit organizations, not unlike their American counterparts, receive 35 to 39 percent of their revenues from taxpayers. Even the National Council for Voluntary Organisations, a body that promotes voluntarism in Britain, receives 40 percent of its income from the government.)
Britain’s welfare programs generally emerged decades before those in the United States, with some unforeseen consequences. When the British government began to provide social services free of charge, privately supported charities, including “ragged schools” for poor children and housing providers and hospitals for low-income families, often found that they could not compete. For example, the Education Act of 1870 guaranteed a free elementary school education to all British children, even though most of them were already attending thousands of private and charity schools. As Whelan relates, “generosity towards charitable schools began to dry up,” and because the schools often charged parents a small fee, they lost children to public schools. A similar story played itself out when Britain began to construct its first public housing projects in the 1890s, and again following the National Insurance Act of 1911, which laid the groundwork for Britain’s nationalized health-care system, the much-maligned NHS.
According to Whelan, “If the charities were to survive they had to find a new role for themselves.” Thus emerged their role as contractors of state-funded social services, or, as one historian puts it, the “junior partner” in the welfare state. By 1934 one observer could write, “Many, if not most, important voluntary organisations are already in receipt of some form of Government assistance.” Comparable levels of funding for U.S. nonprofits would not be reached until after the launching of the War on Poverty in the 1960s.
Whelan acknowledges some possible advantages of public-private partnerships, or what in Britain has been called the “New Philanthropy.” Individual nonprofits have bigger budgets and can handle more cases, and the government probably saves money by contracting out services rather than delivering them itself. The problem is that the character of many nonprofits has fundamentally changed in the process. According to Whelan, all too many nonprofits now see their chief purpose as “to nag politicians into taking over, or at least paying for, [their] work.” Many nonprofits have lost their independence, becoming mere conduits through which the government delivers programs devised by lawmakers. Moreover, Whelan argues that the privately supported nonprofit sector, as opposed to that portion which is funded by state social service contracts, has become increasingly marginal to British life as the state has ventured into new areas to provide cradle-to-grave security.
Whelan proposes a single, drastic reform to address this situation: charitable status would be reserved only for privately supported charities. Nonprofits which receive government support would lose their charity status and be taxed in the same way as businesses. Unfortunately, he does not discuss this proposal in detail. Whelan’s proposal would thus “level the playing field,” forcing government-funded nonprofits to become either fully privately funded charities or taxed businesses that would be ineligible to receive voluntary contributions.
Following Whelan’s essay are seven short commentaries, including one by historian Frank Prochaska that describes the transformation of British hospitals from charities to state-supported institutions in the 20th century. Like the Whelan essay, it argues that many hospitals had no real choice but to join Britain’s better-funded nationalized health-care system.
The remaining commentaries are mostly critical of Whelan’s thesis. Social policy professor Margaret May writes that nonprofits and government had “a tradition of partnership” as far back as the 19th century. She notes that legislation in the 1850s and 1860s provided state support to reformatory and industrial schools, and with this came state scrutiny.
Richard Burge, an international aid expert, believes social-service contracting could be improved if government allowed nonprofits more latitude in delivering social services. Social worker Bob Holman praises Britain’s many small, privately supported neighborhood groups which address problems in lower-income communities, and calls on government to support them. Yet even he accepts (as does Whelan) the tendency of state support to cause charities to “chase what the state has to offer.” Moreover, “within contracts the statutory bodies can regulate very precisely the methods and ends of services run by voluntary agencies.”
Additional commentaries supportive of Whelan probably should have been included to provide more balance. Still, Whelan’s essay is an excellent contribution to the growing debate over government support of nonprofits and is alone worth the price of the book.
Daniel T. Oliver is a Washington, D.C.-based freelance writer.
