A Test for the Welfare-Partnership: Austria’s Nonprofit Human Service Organizations in Times of Covid-19

ABSTRACT

The pandemic has impeded Austrian NPHSOs on multiple levels: service delivery, income streams, costs, and human resources. To analyze the consequences, we tackle two questions: How has the neo-corporatist welfare-partnership between the government and NPHSOs passed this stress-test? What are the potential effects on the overall composition of the sector? Theoretically, we draw on social origins theory to explain the welfare-partnership in Vienna. Empirically, we analyze online-survey-data and interviews with NPHSO-executives from 2021. The results indicate that Vienna’s welfare-partnership has passed this stress-test successfully, but overall in favor of large NPHSOs, thus forwarding concentration in the sector.

KEYWORDS:

• Austrian welfare-partnership
• COVID-19
• government relations
• human service organizations
• nonprofits
• social origins theory

Introduction

The COVID-19 pandemic has engendered severe consequences for societies and economies across the globe. This is particularly true for human service organizations. Firstly, regulations around contact prevented them from providing services to vulnerable groups in the usual ways. Secondly, organizational routines were upset and staff members impacted by infections and sick leave. Thirdly, income streams from donors and market fees diminished, whilst additional costs were incurred due to safety measures. In this article, we present the results of a mixed method study conducted in Vienna, Austria, which investigates how nonprofit human service organizations (NPHSOs) were impacted by the pandemic and by the restrictions imposed by the government, how they succeeded in overcoming these problems, and how the welfare-partnership between government and private NPHSOs functioned during the crisis.

In Austria, the collaboration between NPHSOs and multiple levels of government can be characterized as a welfare-partnership (Meyer et al., 2021; Zimmer & Pahl, 2018). In many subfields, human services are provided predominantly by nonprofits and funded by government at municipal, provincial, or federal level. Some years ago, the subfield with the highest share of nonprofit workforce was mobile care (90%). Across services for the homeless and people with disabilities, nonprofit workforce accounts for around 75% of the total workforce in this field; in kindergartens and residential care, the share is about 30%. The overwhelming majority of funding for all these services comes from public sources, predominantly based on performance contracts, e.g. 54% in residential care, and 62% in nonresidential human services (Pennerstorfer & Schneider, 2022). Altogether, such funding patterns are typical for a welfare-partnership model, though in terms of the employment in the third sector, Austria rather resembles the social-democratic model (Neumayr et al., 2017). Still, as social politics is primarily a responsibility of the provincial governments, this welfare-partnership is framed differently in each of the provinces.

Since the outbreak of COVID-19 in March 2020, Austria has experienced four waves. The Austrian federal government reacted with four hard lockdowns: in March/April 2020, November/December 2020, January/February 2021, and November/December 2021. These periods saw most shops, kindergartens and schools close, with working from home strongly advised; in between these periods were weeks of less severe restrictions. Overall, however, businesses, nonprofits, and public agencies could not maintain their usual level of operations from March 2020 to February 2022, i.e. for almost two years. Our study refers to summer 2021, when three waves had already hit the country.

In response to the pandemic, the Austrian federal government provided a fixed-cost subsidy (a “nonprofit fund”) for NPOs, beginning in the early stages of the pandemic and ending in 2022. Initially, this fund was planned to complement a fixed-cost subsidy granted to businesses. Eventually, however, subsidies for all kinds of nonprofits were more generous than those for businesses, covering not only fixed costs such as rents, energy and interest rates for all liabilities, but also including an additional subsidy of 7% of the overall income in 2019, for maintaining infrastructure for service delivery. All of these payments, however, were capped with the total loss of income as compared to 2019. Overall, in excess of 750 million euros was disbursed to the nonprofit sector; around 130 million euros of this went to NPHSOs.

The creation of this fund marked a watershed in the relationship between government and nonprofits. Beyond its mere financial dimension, this constituted the first legal regulation actively acknowledging the Austrian nonprofit sector – previously merely an academic and political term. It also indicated the federal government’s responsibility for nonprofits, beyond the distribution of competencies across Austria’s complicated federal system. Aside from the particular relevance of the nonprofit fund in this regard, the pandemic additionally empowered many NPHSOs in Austria. For instance, the Austrian Red Cross, as well as other emergency relief nonprofits, played a crucial role during the crisis, both with COVID testing, and supply and distribution of vaccinations.

Earlier work focusing on the effects of the pandemic suggested severe disruptions in NPHSO funding structures. In Israel, for example, organizations faced plummeting philanthropic donations, whilst dealing with increasing demands for their services (Pitowsky-Nave, 2022). Findings from the United States suggest that earned revenues were significantly reduced within the first wave of COVID-19 (Johnson et al., 2021). This fraught situation also led to managers facing dilemmas between stabilizing their organization’s finances and laying off staff (Rosemary et al., 2022).

In our empirical study, we ask two questions: How has the neo-corporatist welfare-partnership between the government and NPHSOs passed this stress-test? And what are the potential effects on the overall composition of the sector? Our empirical sample of NPHSOs (see Figure 1) represents the diverse spectrum of fields of activity and provision of services in Austria: care and assistance for people with disabilities represents the biggest field in our sample (47%); the fields of labor market integration and prevention of violence, the smallest (14% and 6% respectively).

Figure 1. Fields of NPHSO activity (N = 106).

55% of the NPHSOs provide services in just one field of activity (“single service providers”); 18% can be classified as “dual service providers,” and 11% as “triple service providers.” 12% of the NPHSOs are “multi service providers,” offering services and care across at least four, and as many as seven, fields. Finally, 4 of the total 106 NPHSOs (4%) can be designated “omni service providers,” tackling all 8 fields of activity surveyed.

Theoretically, our study is underpinned by social origin theory (Salamon & Anheier, 1998), which again draws on the theory of welfare regimes (Esping-Andersen, 1996). Against this backdrop, we assume that larger organizations might have been better supported by public funders, since they are more crucial for maintaining the welfare level in various service fields. Additionally, they are better prepared for an external jolt such as the pandemic, due to organizational slack (see, for nonprofits in particular, Bowman, 2007; Meyer & Leitner, 2018), and due to professional risk management.

We structure this article by outlining our theoretical framework and further information about the context of our study below. After briefly describing our method, we subsequently present our findings on the effects of the pandemic on NPHSOs in the Vienna region. Finally, we discuss these findings, and the limitations of our study, as well as suggesting some avenues for further research.

Theory and context

Inspired by the notions of Gosta Esping-Andersen (1996) about the character and role of welfare states in modern Western societies, Salamon and Anheier’s social origins theory (SOT) of nonprofit sector development (1998) advanced our understanding of the commonalities and differences between nonprofit sectors by selectively amalgamating various socioeconomic theories in a reflected way. The core proposal is that nonprofit sectors differ mainly in size and funding source, with the crucial role of NPHSOs relations to government. Accordingly, Salamon and Anheier distinguish four civil society patterns: liberal (low reliance on government funding and a large nonprofit sector, low public welfare spendings), social-democratic (high public welfare spending, but low government funding for a small nonprofit-sector), corporatist (high pblic welfare spending and government funding large nonprofit-sector), and statist (low public welfare spending, low government funding, small sector). Amongst all these fields of activity, the social service sector plays a crucial rule in this model. Firstly, NPHSOs are pivotal for the size of the nonprofit sector and for the share of employment; secondly, as public funding of NPOs is rarely documented in national statistics, the SOT models apply public social expenditures as a proxy.

SOT aims to explain why different nonprofit patterns develop: depending on the ways in which conflicts between the working classes, middle classes, rural peasantry, and landed elites played out in the 19^th and 20^th centuries, different nonprofit patterns emerged in response. SOT has generated a large amount of sometimes controversial but fruitful academic debate (such as by Evers & Laville, 2004; Ragin, 1998; Richard & Young, 1998; Wagner, 2000, to name just some of the most influential). Salamon and Sokolowski (2017) generalize SOT, clarifying that whilst power relations between different socioeconomic classes have shaped the nonprofit sectors, governments are also conceived as actors in power relations, not merely representing other classes.

In this article, we focus on Vienna’s NPHSOs. Throughout the course of history, different configurations of power relations and path dependencies have shaped the nonprofit sector in Austria into a hybrid between the social-democratic and the corporatist nonprofit model (Maier et al., 2022). With a share of around 7% of nonprofit employment and around 26% of GDP public social expenditures, Austria adopts a dualistic pattern between a social-democratic and a corporatist nonprofit regime (Neumayr et al., 2017).

In Vienna specifically, the municipality has positioned itself as a social-democratic stronghold since the 1920s, partly in stark opposition to the conservative, Christian-democratic countryside. Vienna’s municipal government implemented trailblazing reforms in education, healthcare, and social services, and Vienna’s strategic plans continue to invoke “past strengths that are related to recent developments and present/future political endeavors.” (Brandtner et al., 2017, p. 1088). This has resulted in a governance that applies many structural forms of new public management (NPM) without ever approaching privatization, and a city administration that remains anchored in a legalistic-bureaucratic Continental European tradition (Brandtner et al., 2017, 1081).

This tradition has also shaped Vienna’s human service sector in a particular way. The Fonds Soziales Wien (“Vienna Social Fund,” FSW) was established as an agency of Vienna’s municipal government responsible for funding various types of social services, thus shaping the portfolio of Vienna’s welfare system. For the elderly, for example, FSW’s portfolio covers nursing and care at home, day-care centers, and residential care. For people with disabilities, the FSW provides early support for children, school integration, vocational training, workplace integration, and assisted living. For the homeless, FSW supports day centers, overnight shelters, and transitional accommodation. In addition, FSW offers services for refugees and people struggling with debt: “With tailor-made help that is affordable for all, it supports some 107,000 residents of Vienna annually in coping with their everyday life, contributing to improving their quality of life as well as that of their family members” (https://www.fsw.at/p/english). FSW is thus a perfect example of Vienna’s hybrid city administration, fostering structures developed by New Public Management (NPM) but keeping core elements of the legalistic-bureaucratic model (Jancsary et al., 2017; Polzer et al., 2016). FSW has become the predominant funding agency for an overwhelming portion of the social services field in the city of Vienna, thus being the dominant funder for around 170 NPHSOs currently.

Given this specific context, we investigate how Vienna’s welfare-partnership model performed in the pandemic. Overall, we assume that organizational size matters; we assume that centralized public agencies, such as the FSW, but also the nonprofit fund established by the federal government, prefer to cater to larger NPHSOs, since they favor interaction with similarly structured and professionalized organizations. Hitherto, there has been some empirical support for public funders preferring larger organizations; this however originates mainly from the US, i.e., from a wholly different nonprofit regime (Gazley & Brudney, 2007; Bowman, 2007; Suárez, 2011). We assume that organizational size has helped NPHSOs to handle the crisis for three reasons. Firstly, they are better endowed with various forms of slack, e.g. financial slack and HR slack (Meyer & Leitner, 2018). Secondly, due to their professional management being superior to that of smaller organizations (Horvath et al., 2018; Suykens et al., 2022), larger NPSHOs are better at utilizing public financial support, but are also more resilient and prepared because of their professional risk management (Beasley et al., 2005; Young, 2009). Thirdly, we assume that organizational homophily motivates public agencies to support larger organizations rather than smaller organizations (Sapat et al., 2019). After briefly introducing our method, we will describe whether our preliminary and mainly descriptive data supports these assumptions or not.

Methods and data

For this study, we have garnered quantitative data from an online survey, as well as qualitative data from a set of interviews. We obtained access to the organizations through cooperation with FSW, which supports some 107,000 residents of Vienna with social services planned, mediated and financially supported by the FSW, on behalf of the City of Vienna. Together with around 170 partner organizations, FSW aims to create a dense social network, and to ensure that all Viennese citizens can feel socially secure and well cared for in their city.

FSW provided contact data for all partner organizations at that time; in total, we were able to address 168 organizations. The survey period ranged from 1 June to 14 June 2021, resulting in 106 responses, and 64 fully answered survey questionnaires, with a respective response rate of 38.1%. Of the respondents, 78.1% were managing directors, or members of the executive board. The organizations in our sample represent 30,567 paid employees (average 288.36/median 86) and 27,465 volunteers (average 259.10/median 4), with 35 organizations having less than 50 employees, 42 having between 50 and 259 employees, and 29 organizations more than 250 employees. Thematically, the questionnaire was structured along five sections, covering questions about 1) organizational demographics, 2) organizations’ service areas, 3) the impact of the COVID-19 pandemic on various organizational dimensions, 4) the particular impact on economic and financial aspects, and 5) the measures taken by the organizations to cope with the effects, and which external support lines they used to do this. After checking for missing data and internal consistency, all descriptive, univariate and bivariate analyses were conducted in IBM SPSS 28.

Additionally, we conducted a series of qualitative interviews, with the intention of underpinning the quantitative findings. In total, we draw on ten interviews with managing directors from Viennese NPHSOs in the corresponding fields of care for the elderly, people with disabilities, and the homeless. These interviews lasted between 33 and 54 minutes. Nine interviews were conducted via an online conferencing tool; one interview took place in person. Eight interviewees had already been interviewed a year previously (see also Meyer et al., 2021). Hence, we covered the effects of the pandemic on the respective organization in the last 12 months, i.e. between the first and third waves of the pandemic in Austria. All interviews were transcribed to allow adequate analysis. We used a combination of inductive and deductive coding to analyze the data; this allowed for integration of data-driven and theory-driven identification of themes (Fereday & Muir-Cochrane, 2006). In particular, we focused on financial implications, the use of governmental support measures, and to what extent they mitigated the effects of the COVID-19 pandemic.

In addition, we analyzed distribution data of the Austrian federal nonprofit fund. To this end, we used publicly accessible funding data¹ in our analysis, allowing us to match the payment sums with a public list of FSW-funded organizations² and analyze them. We also employed a set of anonymized funding data, including information on beneficiaries’ locations and activity sectors for our analyses. Up to the end of August 2022, 752,941,860 euros had been disbursed to 23,465 organizations across the country. The smallest amount paid out to a single organization was 22 euros, while the largest was 5,840,425 euros. Beneficiaries received 32,089 euros on average, with 50% of them obtaining up to 7,586 euros per organization. Furthermore, we analyzed the distribution data of three different sub-groups of nonprofit fund recipients: organizations in Vienna, NPHSOs in Vienna, and FSW-funded NPHSOs.

Findings

We analyzed how COVID-19 had affected NPHSOs’ activities, funding, and reactions according to organizational size. We grouped our sample into small NPHSOs, with less than 50 employees; medium-sized NPHSOs, with between 50 and 250 employees; and large NPHSOs, with more than 250 employees. Table 1 shows the main characteristics in terms of the number of clients, employees, volunteers, and fields of activities, as well as the revenue, and the funding structure in 2019 and 2020.

Table 1. NPHSO characteristics according to organizational size (number of employees).

	Small NPHSOs (< 50 employees)	Medium-sized NPHSO	Large NPHSOs (> 250 employees)
n	45	35	26
Number of clients – median (min; max)	156 (0; 16,000)	245 (57; 5,000)	5,000 (350; 230,000)
Number of employees – median (min; max)	14 (0; 46)	108 (50; 250)	520 (280; 5,000)
Number of volunteers – median (min; max)	4 (0; 285)	2 (0; 200)	21 (0; 6,000)
Fields (sectors) of activity
single service provider	75%	63%	36%
dual service provider	18%	11%	24%
triple service provider	5%	23%	8%
multi & omni service provider	2%	3%	32%
n	28	14	19
Revenue 2019 (median)	€ 857,294	€ 8,840,000	€ 26,521,865
Revenue 2020 (median)	€ 635,127	€ 8,700,000	€ 26,120,000
n	32	25	20
Average funding structure 2019 (average trend in 2020)
Donations	14% ($\downarrow$)	4% (→)	2% (→)
Public subsidies	45% (↑)	15% (↑)	34% (↑)
Public service contracts	32% (↑)	62% (↑)	57% ($\downarrow$)
Earned income	6% ($\downarrow$)	1% (→)	5% ($\downarrow$)
Others	3% (↑)	6% (→)	2% (→)

The “typical” small NPHSO in our sample serves 156 clients (max. 16,000), employs 14 people (max. 46), engages 4 volunteers (max. 285), and operates in one single field of activity (75%). The median revenue amount was 857,294 euros in 2019 and decreases to 635,127 euros in 2020. Public subsidies were the main funding source (45%) in 2019.

The “typical” medium-sized NPHSO serves 245 clients (max. 5,000), employs 108 people (max. 250), engages 2 volunteers (max. 200), and operates in one single field of activity (63%). The median revenue of 8,840,000 euros in 2019 is ten times higher than for the group of small NPHSOs, and remained at this level in 2020. In contrast to the group of small NPHSOs, public service contracts were the main funding source (62%) for medium-sized NPHSOs in 2019.

Finally, the “typical” large NPHSO serves 5,000 clients (max. 230,000), employs 520 people (max. 5,000), engages 21 volunteers (max. 6,000), and operates across two or more fields. In 2019, the median revenue of 26,521,865 euros was three times higher than for the group of medium-sized NPHSOs, and remained at this level in 2020. As with medium-sized NPHSOs, public service contracts were the main funding source (57%) in 2019.

Shifts in funding

6 out of 18 large NPHSOs (33%) reported a decrease of service contracts between 2019 and 2021, whilst 8 out of 18 (44%) reported an increase of public subsidies for the same period. In contrast, only 3 out of 28 small NPHSOs (11%), and 2 out of 17 medium-sized NPHSOs (12%) reported a decrease of public service contracts. This shift in funding structures was also acknowledged in our qualitative data. For instance, the CEO of a large NPHSO, which specializes in sheltered workshops for persons with disabilities, explained how this shift was implemented by lowering the price paid for services:

The original daily rate model was not pursued, but that’s okay, as we now receive another form of funding via project funds. (Interviewee 7)

Overall affectedness

The comparison of the group median revenues suggests that smaller NPHSOs were impacted more severely by the pandemic: Whereas the decrease of revenues (median) between 2019 and 2020 was 1.5% for the large organizations, and 1.6% for the medium-sized ones, it was almost 25% for small NPHSOs. However, reports about the overall affectedness point in a different direction: 63% of the small NPHSOs reported very or somewhat negative effects of COVID-19 on their activities, as did 70% of the medium-sized NPHSOs, and 68% of the large NPHSOs (see Figure 2). Regardless of organizational size, two thirds of the NPHSOs reported negative effects overall, whereas positive effects of COVID-19 (even as low levels) were more likely amongst larger NPHSOs (10%).

Figure 2. Affectedness of NPHSOs’ overall activities, according to organizational size.

Figure 3 depicts the negative effects of the pandemic on three different financial areas amongst the NPHSOs investigated. Whilst 56% of small organizations, and 61% of medium-sized ones reported negative effects on revenues, more than 80% of large NPHSOs averred that they had been negatively affected. Prima facie, these reports contradict the picture drawn by the group median of revenues. However, we perceive that the overall variance in the decrease of revenues is much larger in the group of small NPHSOs – some of them were severely impacted by slumps – whereas medium and larger NPHSOs were more uniformly affected by minor revenue declines.

Figure 3. Negative effects of the pandemic on revenues, costs and donations, according to organizational size (n = 64).

In a similar vein, a more sizable share of large NPHSOs experienced stronger negative cost effects in comparison with smaller-sized organizations. 71% of both small and large organizations, as well as 79% of medium-sized NPHSOs, reported negative cost developments. This is mainly due to the obligatory preventive measures imposed upon larger providers in a disproportionate way. Finally, a more sizable share of small organizations (44%) identified declines in donations, as compared to medium-sized (28%) and large NPHSOs (24%).

Personnel management

As Figure 4 illustrates, the ways in which NPHSOs personnel management reacted was highly dependent on organizational size. More than 8 out of 10 (86%) large NPHSOs introduced remote working, whereas only half (49%) of the medium-sized and small NPHSOs were able to use remote working to address the issues caused by COVID-19. One third of the large NPHSOs offered additional training for staff, compared to 17% of the medium-sized NPHSOs, and 7% of the small NPHSOs. Only two out of the 102 NPHSOs investigated reported layoffs as a reaction to COVID-19 challenges, which represents 4% of the small NPHSOs in the sample (n = 45), and 0% of the medium and large NPHSOs.

Figure 4. Nphsos’ personnel management reactions to pandemic and financial stress, according to organizational size (n = 102).

Financial management

In terms of financial reactions, nearly half of the large NPHSOs postponed investments to ensure liquidity, compared to 29% of the medium-sized NPHSOs, and 18% of the small NPHSOs (see Figure 5).

Figure 5. NPHSOs’ financial management reactions to pandemic and financial stress, according to organizational size (n = 102).

When looking at financial reactions, larger NPHSOs – as compared to medium-sized and smaller nonprofits – canceled investments (23%), postponed payments (9%) and opened new funding sources (14%) more frequently. Very few NPHSOs reported that they had to deploy existing credit lines to overcome the financial stresses caused by COVID-19. However, larger organizations were able to draw on more flexibility with regard to financial decisions, as explained by one respondent:

Towards the end of the year, we realized that we were in a comfortable situation with regard to liquidity, as we postponed large investments. [Laughs] […] But this came out rather well through investments that had been held back, and the funds, especially the reduced working program, I have to say. (Interviewee 5)

Federal financial support

Applications for the federal COVID-19 support programs vary across the different organizational sizes within our sample (Figure 6). Our results show that large NPHSOs, especially, applied more frequently, with 67% benefiting from the reduced working hours program, and 61% applying for the federal nonprofit fund. Approximately a quarter of medium-sized organizations made use of both of these programs, whilst 39% of small organizations applied for the reduced working hours program. Approximately 4 out of 10 (43%) of these organizations applied for the federal nonprofit fund.

Figure 6. Use of federal financial support according to organizational size (n = 65).

Interestingly, 39% of small NPHSOs stated that they had not applied for any financial support. Only 16% of medium-sized organizations and 6% of large NPHSOs did not apply for any federal financial support.

Results from the qualitative data indicate that there are multiple reasons for smaller organizations taking less advantage of public support structures. One explanation is the lack of organizational slack in smaller organizations, meaning it is simply not possible for them to assume the additional task of applying for funding in times of crisis, and to shift resources between different areas within the organization. In addition, professional and specialized support units within large organizations (such as accounting and cost management departments) helped those organizations to draw on rescue funds provided by the government, as the following statements illustrate.

Besides that, we applied, applied, and applied for funding. We’ve never before filed as many funding applications as we have in the past year, and we see the effect. It’s logical that this is the way it has to work, but this also means huge amounts of work, red tape, and efforts from our fundraising and cost-managment employees. This is something I also witnessed on the opposite side […] Meanwhile, our cost-managment consists of nine people [Laughs] who over the past few months haven’t done much apart from the jobs stated above. (Interviewee 1)

I don’t believe we ever filed that many funding applications in the past. The cost-management department is already pretty exhausted [Laughs]; they’re close to reaching their limit. I always try to create a positive atmosphere. This means, we applied for the nonprofit fund and we applied for almost 2.4 million euros, which is the maximum amount. (Interviewee 2)

With regard to the nonprofit fund: I guess the bureaucratic effort, given its set-up, regarding the past year and everything … although we’re a large enterprise with a tax consultant, again was rather difficult for small organizations. (Interviewee 4)

As outlined earlier, for the nonprofit fund we had to undergo a full audit. For the 2.4 million euros, we had to copy or scan 3,500 receipts, which kept four staff members busy over three weeks. (Interviewee 2)

Large funding agencies could also rely on respective organizational structures vis-à-vis their supported NPHSOs, as well as mutual experiences in collaborating from previous funding, which additionally made them more capable at handling the many requests associated with funding, as this statement indicates:

Yes, indeed, it should be noted that the cost-management people from FSW and ours have known each other for many years. (Interviewee 2)

These results from our qualitative study highlight the role of existing inter- and intra-organizational networks, as well as the bureaucratic efforts required to access funding in times of crisis.

The federal nonprofit fund

Overall, the federal nonprofit fund distributed over 750 million euros from its implementation up to the end of August 2022. Table 2 shows statistical indicators regarding payments of the federal nonprofit fund per organization. In total, the federal government paid out 752,941,860 euros to 23,465 Austrian organizations. Only around 10% of these nonprofits provide human services in health care, social service and education. Almost 30% of the recipients were sports organizations, almost 20% were in the field of arts and culture, and around 15% were in the field of emergency aid. Amongst the Viennese human service providers, only around 25% were funded by FSW (see Table 2).

Table 2. Federal nonprofit fund distribution statistics.

	Total	Vienna	NPHSOs in Vienna	NPHSOs funded by FSW
Total	€ 752,941,860	€ 239,550,469	€ 57,130,539	€ 38,327,701
% of Total Sum	100%	31.82%	7.59%	5.09%
N	23,465	2,588	288	70
% of Total N	100%	11.03%	1.23%	0.03%
Average	€ 32,089	€ 92,562	€ 198,370	€ 547,539
Median	€ 7,586	€ 13,550	€ 19,266	€ 195,544
Minimum	€ 22	€ 118	€ 626	€ 1,727
Maximum	€ 5,840,425	€ 5,840,425	€ 5,840,425	€ 5,840,425

The smallest amount paid out to a single organization was 22 euros, whilst the largest sum was in excess of 5.8 million euros. The average payout was 32,089 euros. Table 2 also shows a relatively higher share of distributed funds for the subgroups, with the narrowest group – Viennese NPHSOs funded by FSW – receiving both the highest average and median amount of funds. These organizations received a disproportionate share of the funds disbursed. Table 2 shows that NPOs in Vienna received higher funds than the Austrian average, and that NPHSOs received higher funds than the Vienna NPO average. Finally, NPHSOs seem to be particularly well-off.

The substantially lower median value hints at a right-skewed distribution over each subgroup identified, suggesting the existence of a small number of outliers receiving larger shares of the funding. In fact, further analysis of the quartiles of the payments to FSW-funded NPHSOs in Vienna shows that 45% of the respective funds were distributed to four organizations alone (Table 3). Whilst 57 NPHSOs shared one quarter of the distributed funds, the remaining three quarters of the funds were shared amongst 13 organizations only.

Table 3. Distribution of federal nonprofit fund amongst FSW-funded organizations.

% of Funds	Number of Organizations	% of Organizations	Ø Sum per Organization
28%	2	2.86%	€ 4,379,642
17%	2	2.86%	€ 2,476,439
29%	9	12.86%	€ 1,030,9634
26%	57	81.43%	€ 166,604

Comparing the different subgroups of the funds’ beneficiaries, we can identify a similar trend. Across all subgroups, more than four out of five organizations had to share approximately a quarter of funds in each subgroup (see Table 4). In contrast, three quarters of funding were distributed to around 12% of organizations.

Table 4. Organizations receiving a share of federal nonprofit funds per subgroup (sum, percentage).

	Total		Vienna		NPHSOs Vienna		FSW-funded NPHSOs in Vienna
%	∑	%	∑	%	∑	%	∑	%
28%	144	0.61%	25	0.97%	9	3.13%	2	2.86%
17%	312	1.33%	41	1.58%	11	3.82%	2	2.86%
29%	2,355	10.04%	197	7.61%	33	11.46%	9	12.86%
26%	20,653	88.02%	2,325	89.84%	235	81.60%	57	81.43%

Amongst all the beneficiaries of the federal nonprofit fund, fewer than 2% (1.94%) of organizations received 45% of the support issued. In Vienna, this share was distributed amongst 2.55% of funded organizations. Looking specifically at NPHSOs in Vienna, this share amounts to 6.95%, whilst 5.72% – equal to four organizations – were recipients of 45% of the funds distributed among FSW-funded NPHSOs.

Discussion

From an economic perspective, the nonprofit sector in general – and NPHSOs in particular – were a strong stabilizing factor during the first two years of the pandemic. Compared to the Austrian business sector, they saw fewer layoffs, and less reduction of worktime among their workforce. Thus, NPHSOs have proven to be relevant and reliable, not only in maintaining the supply of social services, but also in stabilizing labor markets and economy (Meyer et al., 2021).

Still, due to their working with a variety of vulnerable groups, they were at the forefront of the pandemic activity and heavily affected by infections amongst their beneficiaries as well as their employees. They were also massively impacted by policies introduced to combat the pandemic, such as lockdowns, access restrictions, and preventive measures. Against this background, we investigated how these organizations reacted to the pandemic, and how they secured their financial stability in connection with the governmental support programs to survive this crisis, and maintain operations and service delivery.

Our results indicate that NPHSO finances were strongly affected by the COVID-19 pandemic. Regardless of size, the vast majority of NPHSOs reported negative effects with regard to their overall activities. We contextualize this finding with the size of the organization and the respective interplay and partnership configuration with respect to government relations. Larger organizations were more heavily impacted by additional costs, smaller organizations by revenue slumps. Furthermore, smaller organizations drew less benefit from public support programs, due to a lack of knowledge and capacity to apply, and perhaps also due to organizational homophily.

Although the Austrian welfare-partnership generally provides equal access to its support structures, actual exploitation of these structures is dependent on organizational capacities and resources available, e.g. existing knowledge, prior experiences, and personnel, but also on available slack, created (for instance) by postponing investments, or training of staff, which is substantially explainable through organization size. These capacities and resources favored larger organizations, in terms of coping with the additional burdens imposed on organizations that drawing on governmental financial support measures brought with it. Furthermore, access to public support also relies on an established and proven partnership between NPHSOs and public funders. Overall, it suggests that support from public agencies is more readily accessible for larger NPHSOs, due to similar structures and capacities in administering the mutual requests.

Larger NPHSOs in particular changed their funding structure from performance contracting back to subsidies (see, for the adverse development in the early years of this century, Brudney et al., 2005). As this holds less true for smaller organizations, we assume that public funders and policy makers were particularly concerned about the financial survival of larger service providers, and helped them with specific subsidies beyond the funds available for all NPOs. This is unsurprising, insofar as the welfare-partnership has become more paternalistic again in times of crises.

Altogether, the welfare-partnership has passed the pandemic stress test reasonably well. The government has fully accepted its responsibility for its nonprofit partners in human service provision and beyond, as it generally did for the survival of all kinds of organizations; nonprofits, however, became privileged, and amongst these, larger organizations clearly benefited most.

This brings us to our last argument, which is also a contribution to theory development. As outlined above, there are considerable reasons for supposing that welfare-partnerships of the Viennese kind lead to an oligopoly of service providers, especially in times of crises. Even in normal times, as long as funding is highly concentrated, as is the case with the FSW, transaction cost efficiency and organizational homophily will lead to a higher concentration and larger lots (Bennett, 2017). Our findings suggest that public policies during the pandemic rather forwarded this concentration, since they tended to favor larger organizations.

Limitations and further research

Our study obviously suffers from limitations. Firstly, cross-sectional data concerning the self-reported measures (e.g. on organizational affectedness under COVID-19) merely reflects a snapshot. Therefore, we cannot be conclusive with regard to the course of the affectedness since the pandemic began. Secondly, a third of the total sample (n = 102) was either unwilling or unable to deliver current figures for their revenues, income sources, and cost. We aimed to overcome this potential distortion, however, by corroborating existing self-reported data with official data, e.g. governmental data about the nonprofit fund. Thirdly, many of our measures are merely self-reported; due to confidentiality and anonymity concerns, we could not link our survey data with the open data of NPO fund payments and other government data. Therefore, we lack objective measures of the relationship between NPHSOs’ affectedness and public support, which we can only assess on an aggregate level.

Further research, therefore, should look into the medium- and long-term impact of COVID-19 public funding on the distribution of funding sources in NPHSOs, depending on organizational characteristics, such as the number of clients, members, employees, volunteers and donors, field of activity, and the degree of managerialization. For the welfare-partnership model, at least, we hold that crises do not necessarily lead to the survival of the fittest, but rather the survival of the largest. “Too big to fail” applies to nonprofit human service providers, too.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Accessible via: https://www.informationsfreiheit.at/2022/08/16/forum-informationsfreiheit-veroeffentlicht-zahlungsempfaenger-des-npo-fonds/ [accessed 3 October 2022].

² Accessible via: https://www.fsw.at/downloads/ueber-den-FSW/zahlen-daten-fakten/fakten/gb-zahlen-daten-fakten-2021.pdf [accessed 19 January 2023].