Voluntary Organizations and the Welfare State: Is it time for a New Paradigm?

In the last 25 years, major shifts have occurred in the position of voluntary organizations in the welfare state in many advanced industrial countries. The recession of 2008 led to widespread cutbacks in government funding for voluntary organizations, with many agencies forced to reduce staff and programs. While funding has recovered in many countries, many voluntary agencies find a drastically altered funding landscape marked by competition, greater regulation, and a heightened focus on accountability and performance. Concomitant with this development is the adoption of market-based policies emphasizing greater choice of service providers by citizens, including more emphasis on individual-level subsidies including personal accounts, vouchers, and tax credits. These different financing tools then also affect the structure of the relationship between government and voluntary organizations, affecting the extent to which government and nonprofits engage in collaborative or conflictual behavior. The role of voluntary organizations within the welfare state has also been profoundly influenced by the widespread interest in social innovation---a broad term typically referring to new programmatic strategies that integrate market principles and an outcome orientation. Many social innovations rely upon a mix of government funding, earned income through fees, and private philanthropy; thus they are often complex public-private partnerships with multiple funding streams. In the process, the distinctive niche for government funding has eroded as government funds are often pooled with many different sources of revenue to support program operations. Indeed, recent developments in government financing would seem to challenge prevailing frameworks of the government-voluntary organization relationship, particularly as they pertain to the independence and autonomy of voluntary organizations. This paper examines the evolution of the role of voluntary organizations in different welfare states, with a focus on the last 25 years. The management and policy implications of the changes in the relationship between voluntary organizations and government are detailed and analyzed. Further, these changes are placed in the context of the transformation of the welfare state in advanced industrial countries.