The upside of a very down time is that the grifters, clowns and neo-Nazis currently laying waste to American government and our international reputation are (accidentally, to be sure) illuminating longstanding structural weaknesses that have facilitated the damage they’re now doing.
One of those weaknesses is a result of the so-called “privatization” movement–especially as that movement co-opted organizations in the nonprofit sector. When I was still on the university faculty, that co-option was the subject of several of my academic publications.
The privatization movement overall was a response to the belief that government agencies don’t do anything well. (The people who criticise “bureaucratic waste” somehow never notice that similar problems with redundancies and “red tape” are present in any large organization, public or private…) The results of that anti-government bias have been profound–vouchers that send tax dollars to private, mostly religious schools that demonstrably don’t perform any better than the public schools, and the delivery of a wide variety of social services through not-for-profit organizations.
There are several problems with “contracting out,” the practice of paying businesses and nonprofits to provide government services.
With respect to nonprofits, one problem is “mission creep.” Mission creep occurs when a nonprofit organization has become dependent on government dollars, and the government program that they’ve been delivering ends. If the government is launching a different program–one that isn’t really consistent with the nonprofit’s mission–the organization will often contract to provide that service, despite the mismatch with its mission, in order to keep the dollars flowing.
When government benefits are delivered through nonprofit organizations, there is also a significant lack of transparency. Citizens are typically unaware that they are benefitting from a government program. (Remember the guy who shouted “keep your government hands off my Medicare at a Congressman? That was a rather extreme example…)
More troubling is the substantial research showing that the practice of contracting with for-profit and nonprofit organizations to deliver government services “hollows out”–erodes–important government capacities. In addition, managing and monitoring a contract with an outside provider requires skills that differ from those needed in most government work. Those skills are frequently lacking, increasing the potential for waste (and worse).
The practice of contracting out also masks the growth of government. Delivering services through private or nonprofit entities doesn’t shrink the public sector–it governmentalizes the private sector. Private contractors are a significant portion of the “true” federal workforce, with some studies suggesting that their number exceeds the number of direct federal employees.
Then there’s the state action problem.
In the American legal system, the difference between public and private action matters. Public or state action is action taken by a unit of government. The Bill of Rights restrains only government, so it is important to know whether a particular act was public (i.e. governmental) or private. Government cannot insist upon random drug testing of its employees, for example, although a private employer may legally do so. Public schools cannot insist that students pray, but private schools can. Government cannot ban books, discriminate against women or Wiccans, or deny citizens due process of law. Under certain circumstances, private organizations can do all of those things. The distinction between public and private is absolutely central to American constitutional law and the idea of limited government.
Contracting out can make it difficult to distinguish private from public activity. On the one hand, if a city buys computers or pencils from a private company, that vendor shouldn’t suddenly be considered part of the public sector. But what happens when the city or state engages a private company or nonprofit organization to deliver services that had previously been delivered by government employees? Can the private company engage in practices that would be unconstitutional if the government did them?
All of these issues preceded Trump. But his administration’s efforts to stamp out anything our mad would-be king considers “woke” or “DEI” or critical of him has uncovered a previously unrecognized threat. When nonprofits are dependent on government dollars, they either bend the knee or lose critical funding.
In addition to threats to revoke the tax exemptions of disfavored organizations, the administration has paused distribution of federal grants and loans. Though courts stepped in to block some actions, those initial freezes caused fear and planning uncertainty. Other administration actions have included halting previously-appropriated funding for environmental, health, and community programs, which indirectly hurt nonprofits dependent on those grants.
We need to put “rethinking government contracting” on our list of items to address once we eject the Keystone Kops who are running amok in Washington.
Excellent article, Sheila!
We call them P3s (Public-Private-Partnerships). And what you described is the private prison industry, schools, healthcare, and the entire Silicon Valley project.
The other form of nonprofit abuse is how billionaires are allowed to conjure up nonprofits to manipulate our government under innocuous-sounding names while writing off donations.
The regulations on government are one reason for this shift, and the other is that private industry is included in economic measures and can gain access to funding vehicles that the government can’t touch. Oh, and thirdly, the revolving door with government almost always included “corporations” where politicians go to line their pockets when they “leave public life.”
The CIA basically was the founding entity of Silicon Valley for the precise reason that Congress would not endorse or fund projects like Palantir. If they got caught doing what Thiel does to make a fortune, they’d get crucified by what legitimate press we have left (which isn’t much). By contracting with a private corporation, they can circumvent laws and get exactly what they want.
p.s. My continuing research into Charlie Kirk’s murder has an intricate weaving of public and private corporations that are used to hide their trail. Private corporations don’t have to reveal their owners and funders, while Form 990s for nonprofits do. Although, thanks to our corrupt politicians, even those lines are blurred now. Much of this change can be achieved by the two existing parties and the IRS, but since they benefit from the blurry lines, neither will.
For more than 20 years, my research in private and nonfederal organizations was mostly funded by the NIH. Throughout, the govt agency held us grantholders– in a sense contractors doing research on behalf of the govt– to regulation in terms of hiring, salaries, and many other ways as if we were govt employees. At times there was conflict between NIH requirements and those of our institutions, state governments, and professional policies. We were acutely aware of the strangling effects of bureaucratic excess!
Thanks for the clarity of this warning.
Of the examples identified, the Catholic/Christian takeover of schools has the most consequence. Additions to the substantial problems listed when private entities usurp government function, schooling presents more issues – (1) There is reason to believe the schools of religionists create right wing voters comfortable with authoritarianism. Ignoring subtle and overt indoctrination, the political arm of the bishops, Catholic Conferences, have in place sophisticated voter mobilization systems and the Church’s right wing activists like Steve Bannon employ geofencing of the churches for GOP messaging. (2) There is evidence that the religious are more susceptible to hoaxes, conspiracy theories, etc. (3) Religious schools contribute to tribalism which defeats the goal of democracy for a pluralistic nation. (4) Right wing churches like the Catholic Church, many large Protestant sects and, the orthodox Jewish sect overtly discriminate against women and put women’s lives at risk. Those institutions when talking about the value of life will not identify the statistic, women are 13 times more likely to die due to pregnancy complications than abortion. (5) Libertarians who ultimately want all tax funding for schools to cease are supplementing money for private schools to make them more attractive to students. New Orleans lost its last public school a few years ago. Privatization will equate to no funding for education. Last year, Sen. Mike Rounds, a GOP Catholic proposed elimination of the US Dept. of Ed.
The band width for positive constructive public-private partnership is a healthy constructive discussion, especially framed by Sheila. Every non profit executive engaged in public partnerships should first take a deep dive in “Sheila’s class”. The YMCA is the largest provider in the nation of after school care driven by local governance. There is little else as ‘sacred’ when parents entrust their children to the care of another in context of a local private non profit partnership with independent public schools. It is and should be a never ending discussion in public forum.
There once was a day when non-profits were mostly staffed by volunteers with a passion for the mission and directed/advised by volunteer business/government leaders who wanted to make a difference. Nowadays, “corporatism” has made over many into bureaucratic entities.
I try to tamp down my anger then, a provocation like Harvard’s
‘’Journalist’s Resource’’ makes it to my radar. Consider that the Harvard School of Education (independent from the self-appointed group that prepares the “…Resource”) received big bucks from school privatizer Bill Gates. The
“…Resource” has info about the topic of school choice. The research of various scholars are listed but oddly, I don’t find a statement about a journalist’s need to tell the public who funds the faculty’s grants. Secondly, if I’m not mistaken, the religious sect takeover of schools didn’t make it to the “Resource” until a very brief listing in a revision the summer of 2025. Thirdly, I fear the substantial issue of civil rights exemptions for religious schools, delivered by the conservative Catholic SCOTUS, didn’t make the cut for inclusion.
On a positive note, I now better understand why the heavy lifting to shift the national narrative from truthiness (charitably speaking) has proven necessary.
Btw-a report prepared years ago by Bellwether, a group funded by Gates, made recommendations as to how to advance school privatization in the south. A recommendation was to approach churches.
Lester
To confirm your point, Catholic Labor reported Catholic organizations are the nation’s 3rd largest employer. Two-thirds of Catholic charities revenue is from the government.
Norris
Based on the SCOTUS ruling in Biel v St. James Catholic school, if the Young Men’s Christian Association wanted to discriminate against one or more of the civil rights protected classes, would you speculate that the courts would confirm the legality of the decision?
If there is interest in the Biel case, which account you read may influence your view. Biel’s view, as I understand it, was that her loss of job was a result of disability (breast cancer diagnosis).
When lawyers attempt to link court decision precedent to arguments in current cases, inferences are made?
The AI generated answer to the Google query – was the Biel v. St. James Catholic
School case about disability- provides a summary.
One of my pet peeves!
Thank you for raising the issue!
In the federal sector, inherently governmental services are not to be contracted out. The problem with that is the regs don’t specify what is inherently governmental and what isn’t.
Heather, some of those regulations that researchers found unbearable resulted from critical acts on the part of a few researchers. I’m afraid that any error made by publicly funded researchers is a threat to all such research. When we got disclosure of the Tuskegee Institute studies on syphilis, where no treatment was given, so they could watch the progression of that disease, it became clear that we had to regulate human studies. The next big thing was the death of Jesse Gelsinger, who died in a study he wasn’t qualified to be in. These bad actors make it hard for everyone.
We are all subject to the whims of Congress and the President.