Public-private partnerships: Is there a role for nonprofits?
December 22, 2003
By Louise Chatterton Luchuk
There is lively discussion - both for and against - public-private
partnerships (referred to as P3s) in Canada. Proponents will tell you
that in an increasingly competitive market, new ways of financing projects,
building infrastructure, and providing services must be found. Read
a local newspaper and you'll see plenty of examples: how will the new
recreation complex be financed? Who will be responsible for garbage
collection? Will private clinics alleviate long waiting lists? Those
arguing against P3s say that they cost more in the long run through
user fees, staff pay cuts and layoffs, service cuts, loss of accountability,
and the list goes on. However, there isn't very much talk about where
the nonprofit sector fits into the public-private partnerships debate.
For some, it's a moot point - how can nonprofits fit into a concept
defined by the relationship between the public (i.e. government) and
the private sectors? Yet, others see a bud of potential for the nonprofit
sector.
Defining P3s
Large-scale Canadian examples of P3s include Highway 407 in Ontario and the Confederation
Bridge connecting PEI to the mainland. A new P3 school in Calgary was
announced recently, and reports about two controversial P3 hospitals in
Brampton and Ottawa are in the news periodically. But what exactly is a P3?
There are two basic P3 scenarios:
- The private sector designs, builds, owns, and finances the assets
(where once the government would have) and leases back the assets
to the government for the long-term.
- The private sector operates what was once a traditionally delivered public service.
As the name suggests, public-private partnerships are cooperative initiatives
between the government and the private sector and in that sense, they
are nothing new. However, P3s take the partnership one step further by
delivering a service that the government is constitutionally obligated
to provide. This is the first part of the internationally recognized definition
of a P3. The second part is that there must be a transfer of risk from
the government to the private entity. Both elements must exist, explains
Jane Peatch, executive director of The Canadian
Council for Public-Private Partnerships. If the government would not
have provided the service otherwise, it is simply partnering and not technically
a public-private partnership. "It is a technical definition," says Peatch
"and it does not include nonprofits. We don't tend to see much activity
involving the nonprofit sector at all - so far this is emerging as a government
to business interface."
Peatch thinks that nonprofits are not a particularly good fit as a P3
partner because they do not have the money needed to finance a P3 project.
P3 market investors are typically banks, pension funds, or others that
have large revenue streams. She also points out that P3s are usually about
infrastructure, the construction of a physical asset, which is not a place
you usually find the nonprofit sector. Even when talking about education
or healthcare, Peatch clarifies that the P3 service delivery is the non-educational
or non-clinical components (e.g. janitorial or cafeteria services). Again,
not places where the nonprofit sector is typically found. While Peatch
admits that there are some areas - for instance, nonprofit daycares or
nonprofit housing - that are a "bit on the edge of P3s" her general comment
is that fitting the nonprofit sector into the public-private partnership
question is like "trying to get an egg in a square."
P3s in BC
P3s are a key focus of the British Columbia provincial government. The 2002 Budget
and Throne Speech made many references to public-private partnerships
and it seems that nonprofits may have a role to play in that province.
The Land Conservancy (TLC) of British
Columbia is a nonprofit, charitable land trust working throughout
the province to protect important habitat for plants, animals, and natural
communities as well as properties with historical, cultural, scientific,
scenic, or compatible recreational value. TLC has worked on several occasions
with public and private partners to acquire parkland. Recently they entered
into a 15-year renewable management agreement with the BC government and
are now responsible for two national historic parks. "Essentially the
province retains ownership," says Ian Fawcett, deputy executive
director, "but all other responsibilities devolve to us for managing."
Whether it's technically a P3 or more suitably defined as an example of
"partnering", Fawcett has learned a thing or two about partnerships with
the government. "These sort of partner relationships work best when they
are initiated at the community level and we bring the corporate or the
government sectors into the project, as opposed to the government wanting
something done but they don't want to pay for the whole thing." When projects
do move forward, however, government partners do not necessarily appreciate
how difficult it is for nonprofits to sustain the work in the absence
of core funding. "Forget the project - just being at the table is a lot
of work." says Fawcett. "Building up the expertise to be on an equal footing
to negotiate is tough for many nonprofits. We have lots to offer but we
need resources to bring us to the table, otherwise, we are not available."
P3 Opportunities
Ken Rasmussen places himself somewhere near the middle of the pro/con debate
about P3s. He is the associate dean of research at the Faculty of Administration
at the University of Regina. His interest in P3s is from the contractual
standpoint and, he says, from that perspective P3s may actually provide
more clarity and authority to the nonprofit sector. Government funded
contracts are traditionally short-term and that makes advance planning
difficult to do. Government contracts are also focused on the details
of how the money is spent. Rasmussen envisions that P3-type contracts
will be longer term (like the 15-year renewable agreement between TLC
and the BC provincial government) and also focus more on an agreement
of objectives as opposed to specific details about how the money will
be spent. If this is the case, nonprofits will experience less government
control and have room to be creative and make long-range plans.
But Rasmussen points out, "If government wants to move to P3s, the partnership may not result in shrinking public budgets. The money will need to be redirected to training and capacity building for the nonprofit sector so they are on an equal footing." When the government negotiates with the private sector, the latter has the negotiation power but when the government negotiates with the nonprofit sector, it is the government that holds the power. "Issues around the writing of contracts and the managing of the contract is beyond the capacity of most nonprofits at the moment and that puts them at a disadvantage," says Rasmussen.
There are plenty of examples of once publicly provided services shifting
out of the government domain. We know it is happening. Regardless of the
rhetoric, what is noticeably absent is the inclusion of the nonprofit
sector in most of the discussions about public-private partnerships. While
the sector may not technically fit the definition of a P3, it is the fastest
growing sector of the Canadian economy and deserves consideration in discussions
about the delivery of important public services. Alongside the discussions,
an infusion of financial support and training is also critically important
so that the public and private sectors can fully benefit from the collective
expertise of the nonprofit sector.
Louise Chatterton Luchuk is a freelance writer and consultant who combines
her love of writing with experience at the local, provincial and national
levels of volunteer-involving organizations. For more information, visit
www.luchuk.com.
