Is the social sector Too Big to Fail?

The collapse of the U.S. economy, and subsequent bailout of the financial sector has brought the phrase “too big to fail” into the collective social conscience. The argument goes that the economy should not be so dependent on any one company that without it, everything falls apart. It seems fairly clear in hindsight why making a handful of profit seeking financial institutions socially indispensable was a bad idea.

I wonder however if the same logic doesn’t extend to the social sector. I work with non-profits big and small, all who claim they offer critical services. They make these claims to solicit donations, but in the aftermath of Too Big to Fail, the idea that certain social sector institutions are absolutely essential might be more unsettling than moving.

In the social sector we defend agencies’ rights to create monopolies, veiled in an avoidance of duplication of services. Social sector agencies argue that there are limited funds to produce social value with. Therefore, in order to maximize social output we should avoid situations where one agency’s service offering overlaps with another. The result is regional monopolies whereby a few organizations are granted full control over a range of social services, thus manufacturing an environment where agencies can claim to be critical backbones of the social sector.

Their claims of being too big, too critical to society, to fail, are legitimated by the dogmatic adherence to avoiding duplication of services. All the praise heaped on these organizations amazingly echoes the same complaints we now have about unwieldy financial institutions. Anti-competitive social sector collusion is the backdrop for the social sector version of Too Big to Fail.

The idea of social sector organizations being too big to fail is even more disturbing considering we don’t have much reason to believe they are effective, even though their entire hegemonic reign is predicated on the assumption of maximum social impact.

Organizations that successfully convince the public they provide essential services might very well be producing more marketing miracles than Hallmark moments. In fact, I have serious doubts about most organizations’ capacities to measure changes in client indicators period, let alone asses the extent to which those changes are the result of program activities.

I recently read a report about program measurement released by the Gates Foundation titled A Guide to Actionable Measurement (non-profit consultant Gayle Gifford has a nice write up about the report on her blog). While the report provides a comprehensive evaluation strategy, I was struck by the simple advice the report offers to not always focus on measuring social impact by relating program outputs to client outcomes.

I often drink the social outcomes measurement Koolaid, but this Gates report got me thinking that  simply understanding whether clients who receive a particular service are better off or not is a logical evaluative starting point. However, the extent of our evaluation woes is so deep that even such a simple, summary data type assessment of client indicators is more elusive than it ought to be, a problem that is compounded by a social sector culture that favors non-profit monopolies.

Through monopolization a handful of organizations, rightly or wrongly, are allowed to claim credit for a community’s status quo. The anti-competitive nature of the social sector creates an atmosphere whereby every organization can claim that reduced funding or closure of their programs will lead to social disarray.

I view the problems of anti-competitiveness and poor evaluation in the social sector to be linked. Anti-competitiveness, and adherence to avoiding duplication of services, supersedes the need for serious evaluation. Evaluation is not only a tool for evaluating client progress, it is a lens through which comparison between interventions, and agencies, can be drawn.

So long as the social sector continues to espouse anti-competitiveness cloaked in the flag of collaboration, we will continue to have a sector that is not necessarily too big to fail, but is certainly too small-minded to succeed.