Nonprofits Warn About For-Profits

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By Amy Bracken

Are for-profit companies fit to serve youth? A group of the nation's top nonprofits issued a warning last month that they need to be watched more carefully.

The executive directors of the top 18 social service recipients of United Way funds issued a statement of concern about "the profitization of social services." The statement warned of the conflict of interest inherent in for-profit human service facilities, and presented a list of suggested restrictions on for-profit institutions contracting with government agencies.

Signers included the executives of the Girl Scouts of the USA, the Boy Scouts of America, Camp Fire Boys and Girls, the Child Welfare League of America, Girls Incorporated, the Alliance for Children and Families, and Big Brothers/Big Sisters of America, the YMCA and the YWCA.

The restrictions focus on three concerns:

  • Quality of service - which would be addressed through professional standards, outcome monitoring, profit limits and reinvestment formulas
  • Consumer rights - protected through grievance mechanisms, an ombudsman program, treatment requirements, diverse providers, consumer choice and customer satisfaction monitoring.
  • Accountability for public funds - insured by preservation of consumers' relationships with community providers, community participation, and allowing fair competition between for-profits and nonprofits.

"We want to make sure that there's a level playing field," says Eden Fisher Durbin, director of public policy at the YMCA of the USA, stressing the importance of "quality control measures that everyone abides by."

The restrictions aren't going over well with for-profit providers like Thomas Jenkins, vice president and chief operating officer at Pennsylvania-based Cornell Abraxas, the juvenile division of Cornell Companies.  "What they talk about is leveling the playing field. Well, that's exactly what Abraxas did," he says.  Jenkins was vice president of the nonprofit Abraxas for five years before it was taken over in 1997  by Cornell Corrections, a for-profit provider of institutional, pre-release and juvenile services. Jenkins says competition between youth-serving agencies jeopardized Abraxas' survival, so it looked for a strategic alliance and found one with Cornell. Since then, Jenkins says, Abraxas's mission has not changed while its quality of service has improved.

Some high profile cases of negligence and abuse in for-profit correctional facilities in recent years have raised public skepticism about such institutions. But Jim Irving, president of Youth Services International, Inc., a subsidiary of the for-profit Correctional Services Corporation, contends that for-profit institutions are no more prone to abuse than public or private non-profit agencies. "It will be an issue for any facility in the country," he says.

Gordon Raley, president and CEO of the D.C.-based  National Assembly of Health and Human Service Organizations (to which all 18 organizations backing the statement belong) sees the potential for abuse in any private agency that contracts with the government. "If someone has an interest in keeping the beds full because they get reimbursed on a per-bed basis," he says, that administrator  "might act differently," either consciously or unconsciously. But Raley adds that incentives not related to service quality may be stronger at for-profits: "The difference between a for-profit and a nonprofit is that a for-profit really does have to ask that question: Will it be profitable?"

Father Fred Kammer, president of Catholic Charities USA, who spearheaded the initiative, hopes the statement will elicit discussion and debate among private social service agencies. "The ideal end result," says Kammer, "would be that those who are funding these programs" would build the group's recommendations into their regulations and contracts with providers.

Contact: Catholic Charities USA (703) 549-1390,