This article draws on work undertaken on behalf of RTI International and Pact under the USAID CAP-3D program: a report researched and written in 2012 and a series of five follow-up reports researched and written in 2013. Marta Jagusztyn is one of the lead authors. Other co-authors include Han Junkui, Shirley Lin, Cui Shicun, and Li Chunhua.
Over the last few years, social services outsourcing programs (SSO, 政府购买服务) have emerged as an important governance tool in China. Through SSO, different levels of the Chinese government are provided with a mechanism to outsource services to civil society organizations (CSOs), which are known in Chinese as social organizations (社会组织). The need to ensure a sufficient number of qualified service providers has been one reason behind recent reforms easing registration requirements for CSOs. Following a series of local pilot programs, national level authorities declared in March 2013 that new regulations allowing for easier, direct registration for selected types of CSOs will be passed soon.
Scaling up of SSO programs and streamlining of registration policies are perceived as key components of a wider policy shift towards social management innovation (社会管理创新) through which the state aims to employ social forces to help address social issues, but at the same time to bring them under increased government guidance. Social management innovation marks an important transition for all CSOs in China, but particularly for grassroots organizations that have until now functioned relatively independently of the state, not been officially registered, and been funded mostly by foreign cooperation programs. This article focuses on this subset of social organizations, which will be referred to as grassroots CSOs (民间组织).
The policy aims for promoting and scaling up of SSO in the official documents are ambitious. The Guiding Opinions of the General Office of the State Council on Government Purchasing Services from Social Actors ( hereafter, The Guiding Opinions, 国务院办公厅关于政府向社会力量购买服务的指导意见) list increasing public services, promoting the transformation of government functions, improving the utilization of social resources, strengthening public participation as well as enhancing the quality and effectiveness of public services ((The Guiding Opinions of the General Office of the State Council on Government Purchasing Services from Social Actors (September 26, 2013), 国务院办公厅关于政府向社会力量购买服务的指导意见。)). However, experience from other countries indicates that SSO does not always result in better, more accessible and responsive services. It may also have adverse effects for CSOs such as mission drift (organizations moving away from their core purpose areas with a view to securing governments funding), a weakening of their advocacy role, stifling of social innovation, insufficient competition among service providers, and increased asymmetry of power between CSOs and the state ((Salamon, L. M. (2002), The Tools of Government, A Guide to the New Governance, Oxford University Press; Productivity Commission Research Report, Australian Government , Contribution of the Not for Profit Sector, January 2010.)). These adverse effects not only weaken the third sector, but also in the long term, undermine the goal of better and more accessible social services. Scaling up of SSO thus raises important questions. To what extent can SSO live up to its aims? How will the scaling up of SSO affect the quality of public services? How will grassroots CSOs be affected as they transition to being funded by SSO? Will they be able to maintain and develop their organizational and technical capacities, as well as their capacity for social innovation or will these be weakened, as the organizations re-focus on completing the tasks specified by the government? Will the more independent grassroots CSOs be crowded out by CSOs which are closer to the government with regards to organizational culture?
The situation of grassroots HIV CSOs can provide possible answers to some of these questions. Over the last ten years, an estimated 1500 grassroots HIV CSOs have emerged in China. They have become a significant force in HIV response, often collaborating closely with local governments in service delivery. Yet the growth of these CSOs and their partnerships with the government have been spurred predominantly by funding from foreign cooperation programs. Over the last two years, foreign donors have withdrawn almost completely from funding HIV programs in China. As the large majority of grassroots CSOs in the HIV sector are unable to attract donations from individuals or companies in China or support themselves from user fees, the transition to SSO marks an abrupt shift from a system funded by foreign programs to one funded mostly by the Chinese government.. It is also a move from collaboration involving foreign-funded technical assistance to collaboration conditioned by a government partner. Important in this transition is that most of the HIV CSOs engage and are managed by members of communities affected by the HIV epidemic. These communities are generally marginalized, and their members often have low levels of formal education and social capital. Thus grassroots HIV CSOs are institutionally weak and rarely in a position to negotiate the terms of their relationship with a government agency.
Using the example of the HIV response in Yunnan province, this article describes the experiences with SSO and identifies the factors that may determine the outcomes of SSO scale up in the HIV sector and its impact on CSOs . Yunnan provides good material for such a study; due to the severity of the HIV epidemic, numerous grassroots HIV CSOs operate at varying levels of organizational capacity in the province. Moreover, SSO pilots in Yunnan started early. By mid 2013, we identified 38 grassroots CSOs which were funded directly from county and city government budgets in Yunnan. In May 2013, the Yunnan provincial health bureau initiated a provincial-level SSO program by approving project proposals of 33 organizations totalling one million RMB (roughly USD 163,143).
The article first describes the scope of grassroots CSO contributions to HIV response to date and analyzes several aspects of previous and emerging models of collaboration between the government and CSOs. It then presents recommendations for the scale up of SSO so as to better enable effective service delivery, policy learning and social innovation. It draws on a series of earlier research and advocacy reports which were based on a literature review, 39 interviews at national, provincial and city/county level with officials, practitioners and CSOs and two surveys conducted in July 2012 and April 2013 with 129 and 103 Yunnan CSOs, respectively ((We used several CSOs contact lists to construct the list of CSOs interviewed for the studies and we believe we have been able to reach almost all HIV CSOs that were operating at the moment of the studies.)).
Grassroots HIV CSOs in Yunnan province
Grassroots CSOs are important contributors to the HIV response in Yunnan. Despite the unsteady funding situation during the time of our research, we were able to identify 129 and 103 CSOs operating in the province in 2012 and 2013, respectively. These organizations employ a sizable workforce. Organizations interviewed in 2013 declared that 1343 people worked or volunteered for them, with 304 putting in 30 hours of work a week or more.
Over the last ten years, grassroots HIV CSOs in Yunnan province have engaged in a variety of activities, mostly funded by foreign cooperation programs. Activities ranged from basic outreach services, to more complex services such as the facilitation of self-help groups, provision of psychosocial or livelihood development support, sector-building activities such as supervision, mentoring and training of smaller organizations, evaluations, policy studies and local policy advocacy. These grassroots CSOs serve all of the major groups affected by HIV. Out of 99 organizations who responded to the 2013 survey, 68 reported providing services to People Living with HIV (PLHIV), 36 to People Who Inject Drugs (PWID), 18 to Men who have Sex with Men (MSM), 15 to Commercial Sex Workers (CSW) and 9 to the general population.
Grassroots organizations shoulder a significant share of the workload in delivering basic HIV services at the community level. For example, according to the 2012 survey, 63 organizations provided regular management and follow-up service for PLHIVs in partnership with local health authorities. Of this number, 44 report having serviced 100 or more PLHIV over a period of a year. The three organizations with the largest coverage in the province reported serving more than 1,000 PLHIV.
Many health officials we interviewed have said that they are overburdened with tasks and that grassroots organizations play an indispensable support role. Their importance seems to have been behind the early outsourcing pilots in Yunnan province in 2012, which were started despite the lack of overarching provincial or national level policy guidelines. At the time, Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) funding for grassroots CSOs had been frozen, making it impossible for them to provide services, unless funding from the government was made available through SSO.
Grassroots HIV CSOs vary widely with regards to their organizational and technical capabilities and level of independence. Based on data collected in the surveys, we have divided them into three types ((The typology is explained in full in the reports this article is based on. To develop the typology we drew on the classification initially developed in the Independent Assessment of Civil Society Organizations Capacity Needs for a Scaled up Response to HIV in China, a report published in May 2011 by Non Profit Incubator (NPI), The International HIV/AIDS Alliance, and The Technical Support Facility for Southeast Asia and the Pacific.)). We found 15 Volunteer Groups (VG), which are loose groups of individuals from affected communities performing work without organizational structures and under the close supervision and guidance of public health officials. The most numerous type of organization is the Community Based Organizations (CBOs) which have basic organizational structures, and some management capacity to make decisions on their work and strategic priorities. We identified 78 CBOs among the HIV CSOs in China. The NGOs are the most sophisticated with regards to organizational structures and have considerable experience and technical expertise in HIV response. We found five such organizations in Yunnan province. Most grassroots CSOs operate in just one location, but eight reported having several sites in one prefecture and four reported several sites across the province.
Despite their considerable contributions to HIV response, very few grassroots CSOs have been able to obtain legal registration that reflects their non-profit status. None of the GVs, only one of the CBOs and four out of five NGOs were registered with the Civil Affairs bureau at the time of the 2013 study. Even though many lacked legal status, the majority have been working in close informal partnerships with local governments. All the VGs and several CBOs are practically managed by government officials, while the remaining CBOs and NGOs usually deliver their services jointly or coordinate their activities with the government. Interestingly, we found several cases of successful policy advocacy activities by CBOs and NGOs in which they were able to effectively change the policies and practices of local governments. This advocacy was in most cases done through non-confrontational strategies, gathering and providing evidence and skillfully organizing various stakeholders around the issues in question.
Over the years, networking among CSOs has grown in Yunnan. In 2013 we were able to identify two networks of organizations that were coordinating their service delivery work. Several CBOs and NGOs have emerged in Yunnan as providers of services, such as training, mentoring, grant management, monitoring and evaluation, etc, to organizations with less capacity.
One unique and important actor in the ecosystem of HIV organizations is the Yunnan Association of STI & AIDS Prevention and Control (YNSAA). A registered association formed by retired public health officials, YNSAA is a registered CSO with an organizational culture and connections with the government system that differentiate it from grassroots organizations. YNSAA is perceived by the provincial government as a bridge organization and has acted as an umbrella organization making sub-grants to CSOs in Yunnan province under several international assistance programs, including the GFATM.
Lessons from the pilot SSO programs – the growing need for genuine innovation
Under the previous system where grassroots CSOs were funded mostly by international donors and not fully recognized by the state as legitimate partners, effective structures and models for constructive collaboration between state and CSOs failed to develop. CSOs most commonly functioned either in isolation from the state or as extensions of the public health bureaucracy. The division of roles between the government and grassroots CSOs was often ambiguous. Not all programs provided sufficient assistance to CSOs to improve their capabilities and coordination mechanisms were often lacking ((For an assessment of situation under GFATM programs see the Independent Assessment of Civil Society Organizations report.)).
Introduction of SSO at scale provides an opportunity for experimentation and innovation to improve collaboration between the state and grassroots CSOs. However, from what we have seen so far in Yunnan’s HIV sector, the specific mechanisms and tools used in SSO policies and practices imitate earlier, often problematic, practices. Not only does this perpetuate the structural issues observed earlier, but also these practices are often not appropriate for the new funding and governance structure of SSO programs. Following is a discussion of seven issues that we think need yet to be addressed in an innovative way, if the benefits of SSO are to be fully realized.
1. Local level SSO policy design promotes the traditional, top-down, hierarchical mode of management. The CSOs are usually treated as extensions of the public health bureaucracy. The organizations that received SSO funding were mostly less developed VGs or CBOs managed closely by local government staff. In some cases, the management by government was so hands-on that the services were in reality outsourced to individual CSO staff, rather than to an organization. This approach ensured that the local government maintained full control over the CSO’s work but overlooked the efficiency gains that can result from purchasing services from more developed NGOs which are able to manage projects on their own, especially if the organization’s contract covers several sites.
Moreover, under SSO, grassroots CSOs are expected to deliver only the basic services and adopt the government’s working approaches while doing so. A review of types of services that health authorities outsource to CSOs leads one to believe that the government does not value the special insights that CSOs have into community needs or their ability to develop innovative solutions that might contribute to policy. CSOs will not be able to innovate if only basic, standardized services are purchased by the government and if the payment is based simply on the outputs.
Local governments were rarely appreciative of the distinctive working style of CSOs that emphasizes participation and the building of trust with and within the communities served. As shared by one CSO representative “while we emphasize quality, the government cares about quantity.” Different approaches to HIV testing is an example of this tension. Local health authorities which outsourced this service to CSOs demanded that organizations use persuasion to get people tested quickly. But the CSOs believed that they should not be pushing people too forcefully to test. Rather, they preferred that people underwent tests only after they have been fully convinced of the benefits of testing and after they have understood their personal responsibility for their own health. While this approach of respectful, patient communication was often more time consuming, grassroots CSOs argued that it was more effective in the long term. The literature suggests this is often the case with human services, such as the one described in this example ((Wanna J., Butcher J., Freyens B. (2010) Policy in Action: The Challenge of Service Delivery. University of New South Wales Press.)). Gains in efficiency with lower quality of service are often only short term and result from trade-offs in which a reduced quality of services today can exacerbate the future needs of end users and result in higher overall costs. In the case described above, persons compelled to take an HIV test may not come back for follow-up tests since they will have been discouraged by the way they were treated earlier.
2. There is a wide consensus among both grassroots CSOs and the local officials we interviewed that the weak legal framework for CSOs is stunting the growth of outsourcing programs. The vast majority of HIV CSOs are not registered with Civil Affairs, theoretically making it impossible for them to receive funds and assume responsibilities under SSO programs.
The upcoming, new national-level regulations with regards to registration of social organizations are thus eagerly awaited by both officials and CSOs. However, many grassroots organizations were discouraged by the experiences of registration pilots in other localities in China and wonder whether the new regulations will really resolve their registration issues ((On why some CSOs were discouraged by the pilots see: Zhu Fengjun. June 12, 2012. When Can Government Buying Service Reach a Common NGO? Nanfang Dushibao 12 June 2012 (朱丰俊, 政府采购服务何时落入寻常NGO家？南方都市报, 2012年06月12日); Kuo N. and D. Shallcross (2012) The Expectations and Realities of NGO Registration: A Study of HIV/AIDS Groups in Sichuan and Yunnan, China Development Brief. Online: http://chinadevelopmentbrief.org/articles/the-expectations-and-realities-of-ngo-registration-a-study-of-hivaids-groups-in-sichuan-and-yunnan/)). First, it is not clear if regulation will be inclusive of all types of HIV CSOs. Second, small organizations are concerned that the reporting requirements for registered CSOs may be too extensive and overburden their administrative capacity.
3. Under the pilot SSO programs in HIV sector, only direct costs of service delivery were paid for by the government while service providers’ indirect or core costs such as staff salaries and insurance, office rental, office equipment, utilities and supplies cannot be included in the budget. This leads to serious underfunding of grassroots organizations. As one CSO representative has described the situation “the government looks at community based organizations as volunteers. When it comes to inputs the government thinks that the volunteers should be paid very little, that we can help them achieve great things at little expense.”
The staff of grassroots CSOs already receive very limited remuneration for the work they perform, generally below the Yunnan provincial minimum wage level, and enjoy no proper labor contract or any kind of social insurance ((Han J., M. Jagusztyn, and S. Cui, Full Cost Recovery for Social Services. RTI 2013.)). If funding available to CSOs decreases further as outsourcing becomes their main source of funds, it will become impossible for them to deliver quality services, and maintain trained staff, let alone develop as organizations. Extremely limited funding provided only for services will also, as described by another interviewee, constitute an “encouragement to fraud.” In the long terms, all these factors may potentially undermine the efficiency gains that outsourcing programs are expected to produce.
4. The government’s choice of contracting procedures used in outsourcing will be critical in determining which organizations have access to outsourcing programs. Chinese law allows for different types of contracting procedures to be used in social service outsourcing. They include: public invitation (gongkai zhaobiao公开招标), invited bidding (yaoqingzhoabioa邀请招标), competitive negotiation (jingzhengxingtanpan 竞争性谈判)，single source procurement (danyilaiyuancaigou单一来源采购) and others. Moreover, the recently issued Guidelines emphasize that all contracting should be done based on principles of openness, fairness and justice (gongkai, gongping, gongzheng yuanze公开、公平、公正原则) and announced in a timely and adequate (jishi, chongfen 及时、充分) manner.
Choosing the right contracting procedures is a challenge for local policy makers and demands a detailed assessment. Wider access and competition in contracting procedures may promote efficiency and effectiveness by taking advantage of competition among CSOs. However, the public invitation procedure is not always feasible. At the county or district level, there often is just one grassroots service provider for a particular service. Moreover, trust developed with a provider and continuity of services may also be important for local authorities. They may thus decide not to organize an expensive open bidding process when they are renewing a contract if they are pleased with the performance of the provider. At the same time, from the CSO’s perspective, the use of invited bidding can be seen as a way to limit access to CSOs that maintain a close relationship with the government.
In actual practice, in Yunnan’s HIV sector, the authorities have elected to maintain close control over contracting processes and no innovative practices in contracting have emerged so far. County, city and district level authorities have commonly used the invited bidding procedure. The contracting in the provincial-level outsourcing program has been more complex as public invitation contracting has been used. However, due to the fact that the information about the process has been closely controlled by the authorities, in reality mostly invited CSOs were able to take part in the bidding process.
5. A service delivery system based on outsourcing requires strong, capable and professional social organizations. Our surveys and in-depth interviews demonstrated that grassroots CSOs vary in their capacity levels. Different types of organizations (VGs, CBOs, NGOs) have capacity gaps in different areas, but most organizations we interviewed were willing to develop and convinced that if they are to shoulder important responsibilities for service delivery, they need to have continuous access to programs that would build not only their technical capacities in service delivery but also their overall capabilities as organizations ((For a full list of capacity gaps see: Jagusztyn M., S. Lin and C. Li, Learning to work together, Pact 2013.)). Addressing some of the gaps in areas such as resource mobilization skills, data quality, monitoring and evaluation, as well as improved understanding, communication and coordination with the local authorities are all key to the success of SSO programs.
Despite these capacity gaps currently existing in CSOs and the organizations’ willingness to invest in organizational growth, pilot outsourcing programs pay little attention to building the capacity of grassroots service providers. While some provisions were made under SSO programs to provide training to CSOs on delivery of basic services, the organizational development needs of CSOs are neither addressed by the outsourcing programs, nor appreciated by officials.
6. It is not only grassroots CSOs that need to be supported in developing their capacity.. Developing and implementing SSO programs necessitates local governments taking on new types of responsibilities and developing new sets of skills. Government officials also need to develop capacities that enable them to make SSO policies, and effectively administer them. Key capacity gaps among officials identified through interviews included: understanding of the different types of CSOs, their capacity and needs; understanding of different instruments and contracting procedures and skills to match them to appropriate services and contexts; collaborative skills, including management of diverse networks of organizations and management through negotiation and the creation of an enabling environment; developing performance measures, monitoring and holding CSOs accountable to contract goals; ensuring service quality and the satisfaction of people accessing services, as well as skills to ensure transparency and open access to information on SSO programs ((For a full list of capacity gaps identified at various levels of government in Yunnan see Jagusztyn M., S. Lin and Li C., Learning to work together, Pact 2013.)).
7. SSO pilots have not produced any good practices with regards to knowledge management and coordination among various organizations that contribute to HIV response at different levels. Mechanisms to share information as well as coordinate activities, such as regular joint meetings or digital exchange channels, seem crucial for establishing a multi-level, multi-channel public service delivery system (构建多层次、多方式的公共服务供给体系), which is put forth in The Guiding Opinions. Such fora could also serve as venues for grassroots CSOs to provide policy feedback to the government and thus contribute to policy improvements. At early stages of SSO scale up, such feedback will be especially important in helping key stakeholders learn from each other about how to improve the SSO programs.
In conclusion, the current HIV SSO pilots at the local level appear to be driven mainly by cost-efficiency and aim to capitalize on a cheap and flexible labor force, as well as access to the communities that CSOs can provide. There appears to be a strong preference for a model in which small, dependent CSOs are handpicked by local health authorities and incorporated at the local level into the government service delivery system. In this model, CSOs have few incentives, funds or technical assistance to grow as organizations. Unless this approach is revised, it will likely lead to the continuation of CSOs that are dependent on local authorities and the weakening of more capable, independent NGO-type organizations. In the medium term, the competition among HIV CSOs is likely be stifled, limiting the government’s choice of partners. The overall efficiency gains are likely to be suboptimal if local governments are closely involved in the managing of each local SSO project. In this model, SSO programs are unlikely to result in innovation or policy feedback from communities, as grassroots CSOs will have no incentive or time to engage in innovating new or improved services or collect feedback from the communities. In such a scenario, the long-term HIV response is likely to be less effective. In addition, the considerable capacity gains that CSOs have made under foreign funded projects, are likely to be quickly lost in the transition to the new system.
In an alternative scenario, the introduction of SSO programs at scale can help improve the quantity and quality of services, bring about innovative solutions, build more trust and strengthen the synergies between the authorities and the non-profit sector, as well as mobilize communities to fully take part in the HIV response. For this scenario to take place, current governance arrangements should be refined under SSO programs to give grassroots CSOs full play in delivery of HIV services under the leadership of the government. The following recommendations may help to achieve this goal:
Registration of grassroots CSOs should be promoted and enabled, but in a way that responds to the organization’s needs and levels of organizational development.
SSO programs should make it possible for service providers to recover the full costs of their activities. There are encouraging practices in this respect coming out of different SSO pilots and policies in China. For example, the SSO program administered by the Ministry of Civil Affairs, in 2014 will for the first time allow for recovery of management costs ((Wang Hui, “Government “contracting” of social services should pay for “costs”, Jinghua Shibao 10 December 2013 (王辉，财政“购买”社会服务将付“成本”, 京华时报, 2013年12月10日). Online: www.ngocn.net/?action-viewnews-itemid-88874.)). Other good practices that could be adopted are provision of free office space or provision of administrative support services such as accounting. Enabling grassroots CSOs to fundraise from the public will also help sustain their work.
While the model in which CSOs act as extensions of local government under SSO may be necessary in some contexts, there is also scope for government collaboration with more developed and independent CSOs which can provide more complex services or deliver basic services over a larger area or provide services to other CSOs. To strengthen such multi-level, multi-channel service delivery systems, SSO should be differentiated and include contracts issued at different administrative levels, with higher levels issuing contracts for more complex services, such as delivery at several sites, servicing of other organizations (e.g. capacity development, monitoring and evaluation, etc) and developing social innovations. For some of these activities, CSOs should be able to determine the content of activities themselves rather than follow a strict protocol; in such cases the form of outsourcing should be differentiated to include more flexible instruments such as grants.
While different contracting procedures may be appropriate in different contexts, whenever appropriate a public invitation bidding should be conducted. Regardless of the type of contracting procedures used, clear rules about access to information about the selection procedure should be imposed and monitored. The rules should specify where information needs to be published, how many days in advance, what information needs to be published, what are the procedures for inquiry during the selection process, etc. Ideally, one website per province could serve as a one-stop shop for information on all SSO in HIV sector.
Development of CSO capacities should form an integral part of SSO programs. In addition to CSO incubation programs, there should also be programs aimed at supporting the needs of more developed and experienced organizations. Numerous capacity development materials and expertise developed under foreign cooperation programs could be used for learning programs for grassroots CSOs.
Government officials involved in SSO policy design and execution should also receive support in building their understanding and skills for SSO. This should include improving their understanding of CSOs, and CSO culture and working styles. Training of government officials by CSO staff about CSOs or joint training of government officials with CSO staff would help improve understanding between the government and CSO sectors.
Performance assessment and evaluation will be crucial for success of SSO scale up. This should happen at the project level with each service provider, but also at the program level to see which aspects of SSO schemes function well and which ones should be improved. When tensions between different approaches to service delivery emerge, evaluation will help to establish which methods of service delivery are indeed most effective in the long term.
Establishing multi-stakeholder coordination and sharing mechanisms would help generate learning, and promote innovation and coordinate services at different levels.
The author would like to thank the U.S. Agency for International Development/Regional Development Mission in Asia, based in Bangkok, Thailand for its support for the studies that informed this article. The author’ s views expressed in this publication do not necessarily reflect the views of the U.S. Agency for International Development or the U.S. Government.