Russian Nonprofits as Contracted Providers of Municipal Social Services: Initial Experience

Abstract

In the Russian Federation the delivery of social services to deserving population groups is mostly the responsibility of municipalities and other local governments. Services are delivered by municipal agencies. One way to inject competition into the delivery system is for local government to hold competitions to contract for social service delivery. The competitions can be open to nonprofit organizations (NPOs), some of which have been providing assistance in recent years to needy individuals and families similar to those that would be contracted. This article reports the results of an assessment of pioneering pilot competitions for the delivery of social services in three municipalities in 2000–2001: Perm, Velikii Novgorod, and Tomsk. The objective of the pilots was to determine if the local governments could hire NPOs to be service providers following a rigorous and fair competitive process and whether the selected NPOs would do an adequate job in delivering services. In general the results of these competitions indicate the extent of the challenge to improving service delivery in Russia. It seems fair to say that the competitions in Perm and Tomsk were essentially a competitive grant process where the winners were more or less free to determine the services actually delivered. On the other hand, the Novgorod competition had much more in common with a contractual procurement of social services—the competition was nominally open to firms of all legal forms and the services were well-defined. In execution, the reality in Novgorod fell far short of this model.

Acknowledgments

The findings are based on materials development in the project, “Improving the Social Service Delivery System in Russia,” jointly implemented by the Urban Institute and the Institute for Urban Economics (IUE), Moscow. Work on this article was supported by the US Agency for International Development, Contract No. EEU-I-00-99-00015-00, Task Order 800. Opinions expressed are those of the authors and not necessarily those of USAID, the Institute for Urban Economics, or the Urban Institute. The authors thank Marina Liborakina at IUE and Burt Richman and Jerome Gallagher at UI for comments on a draft. They also are indebted to the many people in the four Russian pilot cities who cooperated so generously with this assessment.

Notes

^aNote that underfunding by the Russian national government initially places the burden on regional governments (Subjects of the Federation). But the regions are able to vary their contributions to local governments’ revenues through an elaborate set of negotiations. In the end, municipalities can end up bearing much of the burden of the national-level funding shortfalls. In general, underfunding occurs because of gaps in the coverage of national programs that have to be filled from local resources.

^bA fourth city, Arzamas, participated in the project. It signed a contract with an NPO too late to be included in this assessment.

^cInitially the design in Novgorod Velikii called for the selected contractor to service part of the municipal agency's case load. But in the end this provision was changed.

^dIn Perm and Velikii Novgorod, the social service agency conducted the competition; in Tomsk it was the Subcommittee on NGOs of the External Affairs Committee; the selection panel was co-chaired by the chairman of that Committee and the Social Protection Committee.

^eFor detailed information on the contracts, see Ref.38