The snakes and ladders of accountability ... - Wiley Online Library

S ~ S Phillips U ~ ~ Karine Levasseur

The snakes and ladders of accountability: Contradictions between contracting and collaboration for Canada’s voluntary sector

Abstrnd: Although governing in Canada is in transition towards a model of horizontal ”governance” that emphasizes collaboration with a variety of non-governmental actors, the contracting culture and its associated accountability regime remain a legacy of “new public management.” As part of this transition, however, contracting is being used not only as a means to control performance but also as a governance tool to guide the development of more collaborative relationships between government as a whole and entire sectors. In its relationship with the voluntary sector, the Government of Canada is caught in these contradictory trends - between the control of contracting and the collaboration inherent in a governance contract. This article first examines the impact on voluntary organizations of the very stringent federal rneasures over contribution agreements that were brought in as a reaction to crisis in 2000. The effects are found to be significant and overwhelmingly negative, imposing direct financial costs on voluntary organizations and stifling innovation. The authors then consider whether the implementation of the Accord Between the Government of Canada and the Voluntary Sector and its Code of Good Practice on Funding might mitigate the negative effects of these accountability measures.

Sommnire: S’il est vrai que le Canada s’oriente vers un modele d e gouvemance horizontale privilegiant la collaboration avec differents acteurs non-gouvernementaux, la culture d e marches (contrats) et le regime d’imputabilite qui I’accompagne n’en demeurent pas moins un legs d e la nouvelle gestion publique. Toutefois, dans le cadre de cette transition, les march& (contrats), en plus d e servir d e moyen d e con((

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Susan Phillips is professor, School of Public Policy and Administration, and senior scholar with the Centre for Voluntary Sector Research and Development, Carleton University. Karine Levasseur is a doctoral candidate, School of Public Policy and Administration, Carleton University. An earlier draft of this article was presented at the annual conference of the Association for Research on Nonprofit Organizations and Voluntary Action (ARNOVA), November 2002, in Montreal. Both authors would like to thank the public servants and the staff of voluntary organizations who so generously gave their time for interviews and provided valuable insights for this article. Helpful comments by Bruce Doern, David Good, Chris Stoney, Allan Tupper and the Journal’s two anonymous reviewers are appreciated. The research was supported by a grant to the first author from the Nonprofit Strategic Granting Stream of the Social Sciences and Humanities Research Council (SSHRC).

C A N A D I A N P U B L I C A D M I N I S T l i A T l O N / A D M I N I S T I I A T I O N P U B L I Q U E DU C A N A D A V O L U M E 47, N O . 4 ( W I N T E R / H I V E K 2 0 0 4 ) , I’F.4.51371

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trciler le rendement, sont aussi un outil de gouvernance pour accroitre la collaboration entre le gouvernement dam son ensemble et des secteurs tout entiers. Dam sa relation avec le secteur benevole, le gowernement du Canada est pris dans ces tendances contradictoires - entre le contrale des marches (contrats) et la collabordtion inherente a un contrat de gouvernance. L’article se penche en premier sur l’incidencc pour les organismes benevoles des mesures contraignantes imposees par le gouvernement federal relativement aux ententes de contribution introduites pour fairc face a la crise qui a sevi en 2000. Ces impacts sont a la fois considerables et des plus nkgatifs, imposant des frais de financement directs aux organismes benevoles et suffoquant l’innovation. Les auteurs cherchent ensuite a determiner si la mise en application de l’accord passe entre le gouvernement du Canada et le secteur benevole et son Code de boMes pratiques de financement pourraient attenuer certains effets negatifs de ces mesures d’imputabilite. In Canada, as elsewhere, the process of governing is in transition from “new public management” (NPM),which relied heavily on contracting-out, market-based policy tools and governmental control, to a model of horizontal “governance,” which depends on collaboration with non-governmental actors, a wide variety of policy tools, and works mainly through networks rather than hierarchies. The key to effecting this transition lies in redefining government’s relationships with its non-governmental partners and developing appropriate mechanisms for sustaining constructive relationships with them. This is by no means a smooth evolution, and it is in the state’s relationship with the voluntary/non-profit sector - which has a greatly expanded role in service delivery but which is often seen to be less than an equal partner - that the vestiges of the old and the innovations of the new models of public administration collide. Although the Government of Canada did not embrace NPM to the same extent as many other countries, it did expand contracting-out of services and shifted the basis of funding to voluntary organizations from unconditional grants for operations to conditional project-based funding governed by contract-like ”contribution agreements.” As a policy instrument, contracting necessarily gives government the controlling hand in its relationships with third parties because it sets the terms of contracts and the requirements for performance and has produced under NPM what M. Powers calls an explosion in accountability and auditing.’ In terms of accountability, Canada went further than most countries under NPM and imposed very stringent approval and reporting requirements on contributions and contracts after the crisis in Human Resources Development Canada in 2000. This accountability regime is a legacy of the older, NPM model of governing. While it implemented these very restrictive accountability measures over voluntary organizations, the federal government began a five-year collaborative process to enhance its relationship with the voluntary sector. This resulted in “An Accord Between the Government of Canada and the Volun-

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tary Sector,” “A Code of Good Practice on Funding” and “A Code of Good Practice on Policy Dialogue,” under which both sides made commitments as to how they will interact and work together - in effect, establishing a kind of contract with each other. These ”governance contracts” could be seen as a manifestation of the transition to horizontal governance. The federal government is thus trying to do two seemingly contradictory things in its relationship with the voluntary sector: be a collaborator and partner, on the one hand, and hold a tight rein over performance contracting, on the other. Can the two coexist, or does the control exerted by the accountability regime undermine attempts at collaborative relationships? To what extent can the new governance contracts serve as a means of modifying the accountability regime if it is a source of serious tension in the relationship?

The strict accountability measures curreritly in place are overwhelmingly focused on control and on denionstratirzg that the rilles, particularly those related to financial reporting, h a w been followed. There is little scope in the reginzefor accoiintability as learning

This article explores the contradictions inherent in contracting and collaboration. It first examines the impact of the tight federal accountability regime, implemented in 2000, on grants and contributions to voluntary organizations. The effects of these accountability measures have been reported anecdotally by representatives of the voluntary sector but have not been systematically examined.* Our study attempts such an investigation. Our analysis is based on intensive interviews with senior staff of twentynine voluntary organizations that have received grants or contributions from two major federal granting departments over several years, and with seven public servants (including several program officers) or voluntarysector leaders who have key governmental responsibilities or sector-wide perspectives on the issues of funding and accountability.3 To illustrate the magnitude of the costs of accountability borne by voluntary organizations, we present a case study of a national organization in receipt of typical project funding from a federal department, in which the real costs incurred by the organization in meeting the requirements of accountability, beyond what might be considered “normal” costs for a project of around $60,000, are calculated. The analysis reveals that the effects of the accountability regime on voluntary organizations are significant and overwhelmingly negative - imposing direct costs on them and affecting their willingness to take risks and opportunities to be innovative. But, the contracting regime, and its associated

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accountability measures, is only one side of the story of the changing relationship between the federal government and the voluntary sector. The policy instrument of the contract is evolving, we argue, from a management to a governance tool, in that contract-like instruments, such as the accord, are being used to frame relationships between government as a whole and entire sectors. In the second part of the article, we consider whether the accord and the codes can be effective mechanisms for addressing the n e p tive effects of the tight accountability requirements surrounding the contracting culture.

Contracting and accountability: the legacy of NPM, with a Canadian twist As a policy instrument, a contract is a reciprocal, legally binding transaction between (at least) two parties that involves mutual benefit and detriment regarding specific tasks, products or services.4 Contracting is not a new instrument of public policy; governments have long contracted with private- and voluntary-sector organizations for services. Under NPM in thc 1980s and 1990s, however, the use of contracting rose significantly a s 'I means of cutting the costs of public services, reducing the size of the stdte, avoiding public-sector unions, improving efficiency, and enabling governments to manage to results for better customer service.5 In addition to contracting-out services, the federal government also shifted how it provided financial support to voluntary organizations - where such support continued to be provided at all - from operational funding to project funding." Money that used to flow as grants with no conditions attached has been almost entirely converted to contribution agreements that, like contracts, require the pre-specification and production of concrete deliver able^.^ In practice, then, project funding became barely distinguishable from contracting, and an analysis of the contracting culture appropriately includes contribution agreements as well as contracts. It is not TII/Z&PY governments should exercise accountability over contracts and contributions but Izow they do so that is the critical determinant of the impact of accountability measures on the contracting organizations. Peter Aucoin and Ralph Heintzman argue that government accountability can be designed to meet three quite different purposes that may present tensions and contradictions between and within them.' First, accountability may be aimed primarily at control over the abuse and misuse of public authority. Such regimes are generally very rule-based and rely heavily on auditing to determine whether finances were used appropriately and proper procedures were followed.' The second goal is to provide assurance to the public, legislatures and governments that public resources and authority were used in ways that adhere to public-service values, public policy and the law.'" Because a contract takes the definition of the goals, and usually the

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indicators as well, out of the hands of the service providers and seeds them with the contracting authority, there is an onus on governments not only to demonstrate that the contract requirements have been met - a narrow form of accountability - but that the goals were the right ones in the first place.” The broader public accountability regime thus includes both the front-end process of negotiating the goals and deliverables of a contract and setting performance targets and, at the back-end, the subsequent responsibility for ensuring that the contracting organizations have delivered on these. Finally, accountability may be the basis for learning and continuous improvement in public management, and this involves a degree of risk-taking and willingness to tolerate failures a s part of the learning process and often a certain degree of conflict.I2 The strict accountability measures currently in place are overwhelmingly focused on control and on demonstrating that the rules, particularly those related to financial reporting, have been followed. There is little scope in the regime for accountability as learning, given its origins as a reaction to a crisis over what appeared to be inadequate accountability. Learning nevertheless does occur, although it may not result in the intended or in particularly positive lessons. For most voluntary organizations, especially those that are not engaged in policy work, their primary points of contact with the federal government are in the negotiation of contracts or contributions agreements and in the process of accounting for their performance. Their experiences with contracting and accountability thus become the defining characteristic of their relationship with the federal government as a whole, and it is here that they formulate judgements about the nature of government.

Accounta biIity post-2000 In 2000, the federal government significantly tightened its accountability measures over contribution agreements. As David Good argues, ”It is probably not an exaggeration to say that HRDC put into place one of the most extensive and elaborate project review and monitoring systems ever before implemented in the federal government.”13Born out of crisis, the major goal was to ensure that accountability controls were in place - and be seen publicly to be so - rather than carefully balancing any adverse impacts on the contracting agencies. The controversy began in January 2000, when HRDC, the largest federal department, released an internal audit of a sample of several project files from eight grants and contributions programs.I4 The audit was a file review and revealed several deficiencies, including inadequate documentation and missing data. Although this was not a financial audit, the media construed it as such and created the impression that a billion dollars of taxpayers’ money had been lost in grants and contributions. The media held onto the IIRDC affair with tenacity over a long period, even after the auditor general released a report in October 2000 that indicated that the

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amounts of money not fully accounted for were actually quite small. More reflective views provide quite a different take on the existence and depth of any mismanagement in the department from that portrayed by the rnedia.l5 While problems with the administration of the grants and contributions programs may have existed, they were due largely to a decade of cuts to budgets and personnel that reduced the internal capacity of public servants to complete the necessary paperwork, particularly in the face of political demands to respond quickly to the needs of "customers." From this perspective, things were working as they were designed to do in the smaller, more responsive state of NPM: government, in effect, inflicted its own wound. What blew any problems out of proportion was a scandal-starved media that misunderstood the meaning of the audit results, and the fact of poorquality auditing in the first place.

The oz~erwheliiiingindication front the interz7iews was tlint the current requirements hazv not yrivnoted niow effectiz)e RCCOUIItability

More consequential than the causes or reality of the event itself was the response in the form of much tighter accountability. As part of crisis management, not only were central agency controls reinforced but departments could also make additional requirements. Not surprisingly, the two departments most vulnerable due to the size of their grants and contributions programs - then HRDC and Canadian Heritage - chose to d o exactly this as a means of regaining a sense of control and restoring confidence, even if it meant losing some flexibility and responsiveness. As Good notes, overreaction often occurs when administrative reforms are made in the midst of crisis." Both departments implemented a comprehensive and standardized set of checklists and forms that officials must complete in the process of considering, recommending and approving projects and reporting on them. "[Tlhis involved the use of twenty-four separate forms and checklists and requiring the completion of as many as 1,800 individual information fields in the review of each project through six stages of the 'project life cycle' from application to approval, to payment and project close The application process now requires completion of an application form, background information on the quality of the organization, and a full proposal that specifies in concrete terms the activities, deliverables, scheduling and anticipated outcomes of the project. Projects are normally to be completed within one fiscal year, and, while some activities may be carried out and costed over two years, neither multiyear funding nor support for core

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operations is common. In some departments, the application is reviewed at five different levels, starting with the project or program officer and moving to the program supervisor (or a regional committee), the director, director general and the assistant deputy minister, followed by sign-off by the minister.” Often this process involves a quasi-negotiation in which proposals are sent back to the applicant for clarification or changes. The procedures used to monitor and assess the process have also become considerably more stringent and include the requirement of quarterly cash-flow statements and reporting before funds for the previous quarter are transferred. Large projects normally require site visits by the program officers to inspect records and examine control systems, and such projects are subject to both financial and program audits, including measurement of outcomes. It is important to note, however, that there is considerable variation across the major funding departments, and, indeed, across funding programs within the same department, as to how approval and accountability requirements are implemented. The goal of our research is not to analyse particular departmental practices in depth but to explore the overall impact of the accountability regime, which may be the cumulative effect of different departmental practices, since voluntary organizations often receive funding from more than one department.

The impact of accountability “on the ground” What is the impact of these accountability requirements on voluntary organizations? Our interviews indicate that voluntary organizations respect and welcome the need for accountability. Moreover, it was generally agreed that, to the extent that accountability requirements encourage the development of better control and governance systems within voluntary organizations and greater transparency, they have positive effects. That said, the demands of the current accountability measures have to be set in the context of a decadelong trend characterized by off-loading of services and cutbacks to funding that have greatly reduced the capacity of voluntary organizations.” Against the backdrop of these general trends, the stricter accountability regime produced a marked change - indeed, described as a sea change - in what is being demanded of funded organizations. The overwhelming indication from the interviews was that the current requirements have not promoted more effective accountability, however. Rather, requirements focus on financial reporting and demonstrating accountability in a narrow control sense, without necessarily promoting better accountability, either as performance measurement (assurance) or as learning, in Aucoin and Heintzman’s framework. Five major themes, based on the effects of the post-2000 accountability measures, were consistently identified in the interviews.

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More detailed review and reporting "The trndr-off IIPCOIIIL~S doing pq~t~rzuork zJersiIszuorkirig zuitli kids. This typr ofaccoirntnhility hurts sriiiill~ro r p 1 i 2 r 7 tioris fhe triost, zohiclr / I I I Z ) P ~o niiddlc ninririgmioif nrid 7uwk lriirrinii resoiirces (i,e.,skills)." - Interview with a community-based non-profit tlir

The most obvious impact, reported in virtually all of the interviews with voluntary organizations, is that there has been a substantial increase in the time and resources needed to prepare, negotiate, manage and report on contracts and contribution agreements. One frustration is that, without core or multiyear funding, each proposal has to advance, or at least appear to advance, a ~ 7 project u - something in addition to the central programs and projects already undertaken by the organization. Because each application is treated as a stand-alone projrct, rather than as a relatioiisliip, a considerable amount of background information about the organization and project staff needs to be provided, whether or not it is already known to or has a history with the department. I n addition, many organizations reported that government micromanages the process. For instance, one respondent noted that before a proposal for a conference was approved, the department wanted to know how many people from a particular province would attend, implying that a quota systcni was i n effect, even though by the nature of the client group, an even distribution of attendance at the conference could not be expected. Another representative from a national non-profit noted, "I was asked to detail exactly how many pencils we would use for the project." 111 order to get all of the details right, it is not uncommon to be asked to rewrite a proposal several times. The inquiry into minutiae is evident on the reporting end as well - evidenced in the request to justify why the number of kilometers in two travel expense claims for an event in another city diftered by a kilometer or two. Perhaps the most common complaint focused on the department now disallowing organizations to charge a flat percentage (often fifteen per cent) as an administrative fee; all indirect overhead costs (e.g., rent, utilities, computing) have to be calculated separately, which takes unfunded time a t the proposal stage and additional staff time at thc reporting stage - both of which time expenditures must also be calculated and charged to the project or be absorbed by the organization.

Thinking small and inside the box "Mnwngenieiif ofprcijwts h i s tieroriic so ~ I C - C O I I Itrible I arid mvw

to risk thot

170 room for crtwtizrit!y. Interview with an umbrella organization

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The second pervasive theme is that the accountability regime is stifling inno-

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vation, risk-taking and creativity. This is happening not only as direct pressure from the contracting authority - because it requires deliverables and anticipated outcomes to be specified in advance - but also from an overall environment that is risk averse and does not accommodate failure. In addition, as one public servant told us, the federal government has not been particularly interested in recent years in funding ideas or other intangibles, such as building networks and the assessment of community needs and issues - the very activities that make non-profits important to the process of governance. Instead, government is focused on the "nuts and bolts," projects that can be conceptualized, completed and evaluated, usually in the space of a fiscal year. So, the applicants respond accordingly: as the executive director of a multicultural organization working mainly on preventative issues told us, "I have learned how to take a preventative, proactive program and make it seem reactive." For the most part, however, organizations were not simply learning to repackage their projects; they felt they were submitting more conservative proposals. Depending on one's perspective, this could be seen as positive because it is likely to produce proposals that have been well planned so as to reduce risk. For those who value the sector's ability to "think outside the box," however, it is a serious concern. There was also a sense that innovative problem-solving during the course of a project was not particularly welcome, because a new innovation might not pass an audit if it had not been in the original proposal. Therefore, when innovation does take place, it has to be disguised rather than shared. Although this conservative approach facilitates good control, insofar as the funded organization does what and only what it says it will, it does little to encourage learning and the communication of such learning.

Delays in the approval process "We had a specinl event plarinedfor April nnd received the clieqiie tofiind the project at the end of April." - Interview with a provincial organization

The third major concern relates to time delays because of the new layers of review and the depth of scrutiny as proposals move through the governmental approval process. For example, when a proposal is initiated in the regional office of a department, it will go to a regional committee, which meets only every six or eight weeks; the result is that it takes a minimum of two months just to get the application through the preliminary stage. Requests for clarification and rewrites delay the process further, and the bottlenecks may increase due to sheer load as the application moves up the approval process. We regularly heard about major events being funded only a month before they were to take place, and even cases in which the projects were approved only after they were to have been completed, forcing the

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applicants to return the money, One problem is that even if verbal approval is given, no expenditures can be made until the project has been signed-off by the minister and a contract or contribution agreement is in hand, which could take an additional two to eight weeks. Nor can expenses incurred before sign-off be backdated and recouped once the project has been approved. And, even with a delay in approval, there nonetheless may be an expectation that the project will proceed according to the original schedule.

Given the new emphasis on demonstrating accountability, program oficers spend niore timr nionitoring aizd auditing than in helping instigate and nurturc projects and by working with and adzTocating on behnlf of voluntary organizations Such delays are more than a nuisance in project-planning. They impose real costs on organizations, since staff must expend additional time to reprofile budgets that have become obsolete because of delays or the need to provide additional information. Delays also create significant long-term human resource costs. It is difficult to retain good staff who are being paid on a contract or project basis when there is little certainty as to when or if a project will actually be funded. In addition, the pressure-cooker environment that results when a project must be delivered on time even after delays leads to staff bum out. If the timing for a project is established and fixed by external factors, if it has a high community profile, or if communities have come to rely upon consistent delivery of services, the credibility of voluntary organizations, not that of the funders, is on the line when delays are experienced. Because small organizations have such serious cash flow problems, delays unquestionably hit them the hardest. In some cases, voluntary organizations take the risk of starting the project anyway and paying staff from other sources, hoping the project on which they are working will in fact be funded - a process often described a s ”stealing from Peter to pay Paul.” Then, when the money comes through, it is used for another project awaiting funding. What this means is that philanthropic money (donated by the public, private foundations or corporations) is being used to subsidize government projects and, in effect, to pay for public services. Such subsidization is increased if the governmental project expects voluntary organizations to make significant “in-kind“ contributions, including their rent, basic operating costs and time of senior staff.20While it is hard to say how widespread the practice of subsidization and cross-over accounting is in the sector, it clearly makes it more difficult for voluntary organizations to practice full due diligence and transparency in their overall expenditures.

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The changing role of the projecVprogram officer “The increase in due diligence has a sipiificnnt impact on the role of the program oflicer. Previously, ut the most, the division of labour wasfifty per cent social development arid fify per cent ndmin work. Nouj, the split is thirty urid seveiit!y, respectively. - Interview with a program officer ’I

The effect of the governmental project/program officer’s role on the relationship between a funding department and a voluntary organization is critical. When voluntary organizations have a good working relationship with “their” program officer, they generally feel that they have a good relationship with government as a whole: they have a source of advice and support that enables them to submit better project proposals and to conduct and report on them in ways that meet governmental expectations, because these expectations have been clearly communicated to them. A number of the respondents were quick to praise the quality and dedication of federal program officers. The overriding concern, however, is that the systemic change in the role of program offices detrimentally affects this relationship. Given the new emphasis on demonstrating accountability, program officers spend more time monitoring and auditing than in helping instigate and nurture projects and by working with and advocating on behalf of voluntary organizations. The perception is that program officers have become police, pressured from above to ensure that rules are followed, while lacking much discretion to make decisions on their own and necessarily being preoccupied with financial reporting rather than with program impacts. Because these are junior-level positions and there is much mobility within the public service and because a policing role is anathema to many, there is a very high turnover rate among program officers. Replacing junior officers with even more junior officers results in a loss of corporate memory and further exacerbation of the problems with delays and lack of trust. It was not uncommon in our interviews to hear that over the course of a project, the officer changed two or three, even four times. While the rotation of project officers reduces corporate memory, on one hand, it also strengthens it in another, negative sense. Many young public servants get their start as program officers, and what they are now learning is that this role is one of control, not collaboration, and that voluntary organizations are to be treated not as trusted partners but a s contractors to be audited. If such attitudes are set early in young careers and are carried along as public servants move into more senior positions, it may make high-level relationship-building between government and the sector more challenging and the governing contract more difficult to sustain over the longer term.

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The impact of impact measurement "It is wry diffiicirlt to 'prozie' thak people's attitudPs Iiizz~e cltartged tozorirds visibk minorities, pizrticulnrly with shortkrmfurzding. Hozu t m c t l y do you riitwsiire the o i l tconies ( f ( 7 pri blic rducatiori television skozu?" - Interview with a provincial organization The final theme is that outcome measurement has created significant new pressures on voluntary organizations, particularly for those working in preventative services where outcomes are not so easily measured. While most support the concept of outcome measurement in principle, the problem lies in its execution.*l Many respondents indicated that they do not have the expertise, the time or resources to effectively carry out the kind of assessment of outcomes, not just inputs or outputs, being requested. Many also feel that such measurement cannot be effectively done on projects that are aimed at long-term change but funded on short-term horizons. As one antiracism group noted, achieving change in people's attitudes and behaviour towards minority groups is a long-term process that cannot be easily or accurately assessed after a single, one-year project. The consequence was that this organization decided to sacrifice creativity, because creative projects are hard to measure, and instead relied on the "tried and true" in the projects they proposed.

A case study: the hidden costs of accountability The federal government initially estimated that the cost of its new management controls on grants, contributions and contracts would cost about $50 million annually, and this is probably a conservative estimate.22 N o equivalent estimate is available for the costs to the voluntary sector, which is subject to these controls. Yet, as indicated in the interviews, voluntary organizations are bearing real and significant direct costs. We have attempted to get a sense of the magnitude of the costs by asking the executive director of J well-established, medium-size, national umbrella organization, whose members provide services in most cities across the country, to walk us through the additional costs associated with a recent project funded by one of the departments under the post-2000 accountability regime. The goal wL>s to consider the "top-up" costs of accountability - those beyond what would be considered an organization's normal contributions to accounting and reporting. In other words, these are the transaction costs and the externalities of the new accountability regime.23 The case focuses on an application for a project that was eventually funded by a federal department (from which the organization has regularly received funding in the past) for $58,000, or about eighty per cent of the original

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request. First of all, the application process created some unexpected costs in additional salaries for the voluntary organization, because the program officer was new to the job and knew nothing about the organization, even though it had been receiving funding from the department for fifteen years. Roughly three to four days were spent ”educating” the officer, and this process was duplicated when the officer changed so that an additional two days had to be devoted to responding to requests for background information about the organization. This process took longer than expected, in part because of the confusion as to whether the proposed project was eligible for funding, since the answers provided by different officers were inconsistent.

What is euident is that the accountability rcgime has significan t transaction costs and unintended consequences, including direct financial costs, iiicreascd difficulty in attracting and retaining quality project staf, and threats to the credibility of voluntary organizations

The real costs and frustration, however, came after the project had received tacit, verbal approval. Project approval had been delayed by six months, but, because the timing of the project was bound by external factors, implementation could not be delayed. With time running out to meet this deadline, and with approval in principle, the organization decided to risk beginning work, as the impression had been created that the budget could be re-profiled to cover some of the salaries expended during this period. Such re-profiling later turned out not to be permissible, however. The delay also necessitated staff time to re-work the budget several times to reflect new fiscal year timing and some four days of the executive director’s time to negotiate what costs, if any, would be covered retroactively. The final up-front cost stemmed from the need to obtain legal advice once the contribution agreement had been drawn up, since it involved some legal questions that the program officer could not answer.24The quarterly reporting stage of the project was not particularly onerous, but it was complicated somewhat due to the numerous revisions to the original budget and was time-consuming because the forms had to be completed with a typewriter (a process that has now been made easier with electronic spreadsheets), adding on an extra five days. Overall, this national organization absorbed over $8,000 in costs, roughly fifteen per cent of the value of the project. If we include the salaries that were spent, but not reimbursed, before a written contract was in hand, the amount rises to almost $28,000, or about forty-eight per cent of the project budget. Because this is a fairly large national organization, it could handle

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these costs in a way that a smaller one would have been unable. Nevertheless, these real and substantial costs for public services are being borne as externalities of the new accountability regime and are being subsidized by philanthropic and other funding sources of voluntary organizations.25 It is doubtful whether such a strict accountability regime has, in fact, achieved its primary goal of enhancing financial management and reporting and of making federal provision of grants and contributions fully transparent. Even some of the public servants we interviewed admitted that the quality of projects being funded does not appear to be much better than before. What is evident is that the accountability regime has significant transaction costs and unintended consequences, including direct financial costs, increased difficulty in attracting and retaining quality project staff, and threats to the credibility of voluntary organizations. Ironically, it appears to have the effect of reducing overall transparency of funding due to the cross-subsidization while covering delays in project start times. Above all, it is hurting the relationship between the federal government and voluntary organizations in significant ways because there is a considerable loss of trust. If the costs are so high, why do voluntary organizations continue to pursue project funding and contracts with the federal government? After all, they are not compelled to apply for federal project funding or enter into a contract without free and informed consent. In several respects, however, the range of funding choices for voluntary organizations has become constrained in recent years due to the shrinking capacity of the sector. Although federal funding accounts for a relatively small portion of the sector's overall revenues, it is often one of only a few sources of support for new projects and it may serve as the means for retaining staff between other projects or be the key to finding matching funding from non-governmental sources. I n such a tight funding environment, the value of federal project funding thus often exceeds its dollar value. Under conditions of constrained choice and limited capacity, making the contracting process work effectively as a means of both service delivery and relationship-building becomes essential. It has be to recognized that, following the scathing attacks it endured a t the hands of the media in 2000, the federal government had little choice but to put in place more stringent financial controls and to be seen to be doing so. Middle and senior managers are certainly aware of the negative consequences of the new accountability regime and, like those they fund, are frustrated about delays and bottlenecks. The public servants and staff of voluntary organizations we interviewed had a variety of suggestions for improving the current situation. These include providing more multiyear and sustaining funding; basing the application and accountability requirements on the degree of risk involved in a project or the size of its budget, rather than being standardized; using a method of "passporting" organiza-

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tions that have a longstanding relationship with a department so that they do not need to be considered a foreign entity each time they apply for a project; promoting greater stability and training for program officers; developing better dialogue between government and voluntary organizations in order to increase understanding of the issues and problems on both sides;’6 devolving more decision-making authority to the regions to address local needs and projects; supporting greater investment in technology so that organizations can better track their projects and expenditures; and clarifying government funding priorities through better communication so that organizations know if they are wasting their time with a particular proposal. Over the past two years, voluntary-sector leaders have tried unsuccessfully to et their concerns about accountability measures on the political agenda.’ Now that the Accord Between the Government of Canada and the Voluntary Sector and the Code of Good Practice on Funding are in place as governance contracts intended to promote a better relationship between the federal government and the sector, they should be vehicles for addressing precisely these kinds of issues. But will they be used?

F

The evolution of contracting, from management to governance tool Like all policy instruments, contracting is used to address a particular set of governmental and policy problems under certain economic, social and political conditions. Under NPM, the contract was primarily a management tool that allowed government to control performance on services provided by third parties. Even under NPM, however, contracting had begun to evolve in some jurisdictions from strictly a management to a governance tool. The evolution and experimentation with varieties of NPM, notably in New Zealand, gave rise to a “new contractualism,” which was a means of changing in quite fundamental ways relationships between governments and citizens. Anna Yeatman argues that one new form of contractualism replaces the idea of the political community and the collectivist conception of governance that were central to the idea of the social contract of the seventeenth and eighteenth centuries with a ”radically disaggregated and individualized relationship to governance.”” This ethos of contractualism means that social obligation is mediated by some form of individual consent embodied in mechanisms such as citizen charters that establish service standards and employment ”contracts.”*a Although the Canadian government looked closely at developments in New Zealand, Australia and the U.K., the major transformation of contracting into an instrument for governance has not been the individualizing of the consent relationship. On the contrary, the new contracting relationship in Canada has been aggregated to a sectoral level in the form of framework agreements that set out the basic terms of engagement and ground rules for

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relationships between the Government of Canada and whole sectors or other governments. The governing problems that these framework agreements are trying to address are quite different from those that motivated contracting-out in the 1980s and 1990s. The main push has come from what R.A.W. Rhodes calls a "pluralization of policy making."3" Governments have come to realize that most of today's complex policy problems cannot be solved by governments alone; rather, governments need to find ways to work more collaboratively with a variety of partners, policy communities, sectors, and other governments, some of which are new or unfamiliar to them. Under these conditions, the appropriate governance model rests on interdependence, not power relationships or hierarchy, and centres on collaboration and negotiation, not controL3' Being effective partners in this environment depends on establishing a platform of trust and mutual understanding about how each sector works and how they will work together. This need to establish some basic understanding of how to collaborate has led to the creation of a number of broad framework agreements among governments (e.g., the Social Union Framework Agreement and the Health Accord), between the federal government and industrial sectors (e.g., the Canada Forestry Accord32), and between government and entire sectors (e.g., the Rural Partnership and the Accord Between the Government of Canada and the Voluntary Sector).

The need is not siniply to recalibrate accountability requirenzerzts on coiztributioiz agreements or contrncts so that they are less oiierous on zmluiitary organizations buf to establishfiiridiizg instrunzetits that are better siriteil tu a model of horizontal goz~errzance

In many respects, the voluntary-sector accord is among the boldest of these framework agreements and is a novel experiment in relationshipbuilding in this area. By the late 1990s, both the voluntary sector and the federal government independently recognized that there was a need for greater collaboration between the two and that the current relationship was not particularly healthy, having been undermined by a decade of funding cuts, attacks on the legitimacy of voluntary organizations as "special interests," and the absence of mechanisms for constructive dialogue and policy leadership during the period of retrenchment. The blue-ribbon panel created by the voluntary sector in 1997 to make recommendations on improving its accountability and governance looked to the U.K., where the Blair government was in the process of negotiating "compacts" with the sector, first in England and then in the other three U.K. jurisdiction^.^^ The idea of such an

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agreement was taken up enthusiastically by the federal government, which had already begun implementation on a commitment made in the Liberal Party’s 1997 electoral policy Red Book to better engage the voluntary sector and enhance its contribution to Canadian life. Although the idea for a contract-like agreement was borrowed, the process was home-grown and itself collaborative. As part of the five-year Voluntary Sector Initiative (VSI), established in June 2000, the Joint Accord Table, consisting of six representatives of the voluntary sector (chosen by the sector) and an equivalent number of senior public servants, set about the task of developing such an accord, as it was rebranded. The goal of the Accord Between the Government of Canada and the Voluntary Sector, which was signed on 5 December 2001, is to provide the foundation for a better relationship between the voluntary sector, us u sector, and the Government of Canada, as a whole. To this end, the accord not only sets out the Canadian values and the principles that undergird the relationship and that should shape future practices but it also codifies commitments on the part of both government and the sector as to their conduct relative to each other. Although the commitments in the accord are framed at a high, almost symbolic, level much more detailed and specific commitments were developed jointly and set out in the Code of Good Practice for Funding and the Code of Good Practice for Policy Dialogue, which were released in October 2002. Given that explicit commitments are made, the accord and its codes could be seen as a contract, albeit an imperfect one. The contract is imperfect in the sense that it is not legally binding and judiciable, a point often reaffirmed by the federal government, that the power relationship between the parties is asymmetrical (with greater consequences borne by the voluntary sector if government does not comply), and that adherence to it and the results may not be readily transparent to the broader public. Under such conditions, contract ”enforcement” depends on the creation of ongoing joint mechanisms for dialogue and negotiation, voluntary compliance by both parties, and good public reporting on results, thereby encouraging adherence through moral or political pressure. Most of this implementation machinery is in place, although its status under the Martin government is somewhat uncertain. A joint steering committee of six senior government officials and six sector representatives has been established to coordinate and oversee implementation and to prepare an annual public report on results, an administrative unit currently housed in the Department of Social Development provides support, and champions have been named in most departments. The initial plan was to have a committee of ministers with the responsibility to meet annually with voluntary-sector leaders to review results and lead future work on relationshipbuilding, but it never met and is not likely to be reintroduced under the Martin g ~ v e r n m e n tNor . ~ ~is the leadership role of senior management evi-

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dent. The role of the steering committee of assistant deputy ministers from key departments and central agencies in providing horizontal leadership is uncertain, and the initial plan to hold deputy ministers accountable for progress towards implementation, as part of their performance contracts, has not yet been reaffirmed by the Martin government. Within the voluntary sector, a new coalition, the Voluntary Sector Forum, consisting of twentytwo representatives of a diversity of the sector, was created to promote awareness and adherence to the code within the sector, as well as carry forward other outstanding pieces of the VSI, although it was funded only on a short-term basis, until 2005.

Applying the governance contract Canada's Code of Good Practice on Funding contains a section on accountability that holds enormous promise for reshaping the contracting accountability regime. It commits the federal government to 1) "make accountability standards and procedures flexible enough to accommodate a variety of approaches and the limited capacity of smaller organizations while ensuring effectively protection of, and proper accountability for, public money"; 2) take into account the monitoring arrangements already agreed to by the other funders of a voluntary organization, as well as the quality assurance systems that the organization itself may have in place; and 3) recognize that different community groups can manage their resources in different ways and still meet the government's accountability requirernenh3' In addition, the code tackles the issue of stability of funding, making it a responsibility of the federal government to use multiyear funding agreements (in appropriate circumstances) and to use a strategic investment approach to strengthen the capacity of voluntary organizations over the longer term.36It also recognizes the need to promote efficiency and transparency in the funding application process and to solicit and consider the sector's views and needs on ways to improve the funding relationship. The joint premise is that "[elver time, and supported by continuing communication between the sectors, these practices will become the basis of a renewed funding relationship between the two sector^."^' Technically, then, both the responsibility and the machinery to enable the federal government and the voluntary sector to work collaboratively in addressing the damaging effects of the control-dominated accountability regime are in place. Achieving any real change in the accountability regime probably entails a three-pronged process. First, recognizing that the current accountability regime is a product of crisis management and thus an overreaction, Good suggests that a deliberate readjustment strategy within the public service is n e c e s ~ a r yThe . ~ ~ need is not simply to recalibrate accountability requirements on contribution agreements or contracts so that they are less onerous on voluntary organizations but to establish funding instru-

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ments that are better suited to a model of horizontal governance. This includes developing financial instruments that can support joint work and partnerships and that are less control-oriented, thereby facilitating the kind of learning that Aucoin and Heintzman argue should be an important component of accountability. Social Development Canada has proposed the creation of an interdepartmental task force on federal funding instruments, which would greatly advance this project and which, in our view, should be strongly supported by Treasury Board and by other departments. The second step is to engage the accord machinery in this issue. One of the lessons of the Social Union Framework Agreement - which suffered such inaction that its sunset clause eventually ran out and was not renewed - is that a governing contract needs to be invoked and used from the outset. In this case, the joint steering committee might develop a plan for taking forward the discussion about accountability, which will not be an easy task in a political environment in which the 2004 sponsorship scandal again raised issues of inadequate accountability (although not involving the voluntary sector). In getting understanding of the need to ease back on the overly restrictive controls, the process will need to engage ministers and members of Parliament (both government and opposition), and in this the voluntary sector may need to work both within and outside of the joint machinery. Finally, an important lesson from the U.K. experience with the compacts is the requirement of a good reporting process that is based on solid research into the state of the relationship and that is candid about which departments or parts of the sector have initiated better practices and where major problems still exist. An incentive to providing such reporting and, more importantly, to ensuring that such information is used as a basis for improvement, is to table the report with a parliamentary committee.39Canada’s first mandatory report on progress, published in December 2003, although exceedingly general overall, indicates that a number of steps to promote awareness of the accord and the codes have been taken, but the research, especially on the voluntary-sector side, was limited by a lack of resources.4oMuch better reporting will be needed in the future if implementation of this imperfect governance contract is to be transparent - such could serve as a means of engaging a broader debate around collaboration versus control.

Conclusion: the “snakes and ladders” of accountability Collaboration is central to horizontal governance and to the future of the relationship between government and the voluntary sector. A key challenge for the emerging model of governance will be to find a balance between the exercise of appropriate controls when public money is expended on services and project funding is entrusted to voluntary organizations, on the one hand, and, on the other, the construction of ongoing, positive rela tionships

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with these voluntary organizations, which increasingly act not only as service providers but also as governance partners. There is currently a serious tension, however, between the strictures of excessive control in the accountability regime for contracting and the collaboration inherent in a new governance contract. Not only are tight accountability measures imposing considerable financial and human resource costs on voluntary organizations, they are also eroding trust between voluntary organizations and government and threaten to undermine the benefits of relationship-building at higher levels. Indeed, this contradiction conjures up an image of the children’s board game, ”Snakes and Ladders,” which involves progress towards the winning circle being advanced upward along a fortuitously placed ladder or diverted even further downward upon encountering a snake. Our research suggests that the current accountability regime governing contributions and contracts has presented, so far, many more snakes for the voluntary sector than the accord and codes have offered ladders for improving the relationship. It is, however, still relatively early days in the life of the Accord Between the Government of Canada and the Voluntary Sector. How effectively the machinery supporting this new governance contract will be used to engage a political debate around developing a more sustainable accountability regime related to voluntary-sector funding is still an open question. If such dialogue is undertaken in a serious way, the results will surely be more rewarding for both government and the voluntary sector than the continued game of snakes and ladders.

Notes 1 M. Power, The Audit Explosioii (London: Demos, 1904); M. Power, The Airrfit Society: Ritirrils of Vkrificntioti (Oxford: Oxford University Press, 1997). 2 Recent research, funded by the Voluntary Sector Initiative, has added greatly to the undcrstanding of issues surrounding funding and capacity in the sector, but it has not dealt explicitly with accountability. See Katherine Scott, Firtiding Matters: The liiipnct c!f Ccrtiaih’s N I W Firtiding Rgimi7on Notiprcfit and V ~ / u t i t ~ Orgmiizntiotis r!/ (Ottawa: Canadian Council on Social Development, in collaboration with the Coalition of National Voluntary Organimtions, 2003); Canadian Centre for Philanthropy, The Cnpacify to S m w ; A Qiralitntiw Stir+/ i!f tlic ClirilltwXcs Facing Cotmila‘s Notiprofit ntid Volirritary Organiizatiotis (Toronto: Canadian Centre f o r Philanthropy, 2003); and Lynn Eakin, “An Overview of Funding of Canada’s Vnluntary Sector (Ottawa: Working Group on Financing, Voluntary Sector Initiative, 2001), available at http://www.vsi-isbc.ca. 3 The voluntary organizations were selected from lists provided by the then HRDC and Canadian Heritage of all non-profits that received either a grant or a contribution from their two main granting programs, the Social Development Program of IIRDC and the Multiculturalism and Official Languages Programs of Canadian Heritage. From these lists, we chose a non-random sample based on two criteria: size and location. The sample includes small, grassroots groups, those working at a province-wide level, as well as large, national organizations. In addition, it includes non-profits located in remote, rural areas as well as in urban centres. To the extent possible, we selected groups that had a history of funding, both pre-

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and post-implementation of the new accountability regime, so that we could get a sense o f how things have changed. The interviews were completed between February and July 2002, and all inteniewees spoke to us on the condition of anonymity, given the sensitivity of their relation with their funders. 4 On contracting as a public policy instrument, see John Martin, “Contracting and Accountability,” in Jonathan Boston, ed., The State Under Corrtrnct (Wellington, New Zealand: Bridget Williams Books, 1995), p. 39; Barbara Sullivan, “Mapping Contract,” in Clyn Davis, Barbara Sullivan and Anna Yeatman, eds., T k N w Cuntrnctimlism? (Sydney: MacMillan Education Australia, 1997), p. 6; and Stephen Osborne and Piers Waterston, ”Defining Contracting,” in Perri 6 and Jeremy Kendall, eds., The Contract Cultitre in Piiblic Serriices: Stirrliesfrom Britniri Europe mid the USA (Aldershot, U.K.: Asligate Publishing, 1997), pp. 17-26. 5 For a discussion of N P M and contracting, see Michael J. Trebilcock, “Can Government Be Reinvented?,” in Boston, Tlir State Urrdt>rContract, pp. 1-35; Peter Aucoin, The Neru Pitblic Managment: Canada in Corr~pnriitivePrrspectiue (Montreal: Institute for Research on Public Policy 1995); J.M. Ferris, “The Double-Edged Sword of Social Service Contracting,” Non17rofiit Management and Lrailerslrip 3, no. 4 (Summer 1993), pp. 363-76; D.C. Kettl, Thr Globnl Public Managenient Revolirtion: A Report on the Transforrrmtioti of Governatict~(Washington, D.C.: Brookings Institute, 2000); Ralph Kramer, ”Voluntary Agencies and the Contract Culture: ’Dream or Nightmare?’,” Social SciencP Rsview 68, no. l (March 1994), pp. 33-60; and Philip Panet and Michael Trebilcock, “Contracting-out social services,“ C A N A D I A N PUBLIC ADMINISTRATION 41, no. 1 (Spring 1998), pp. 21-50. The impact on voluntary organizations of sustained participation in contracting regimes has been well documented, mainly in the US.and the U.K., although this literature looks mainly at contracting pt’r se rather than at their accountability regimes. These impacts include increased professionalization and bureaucratization of voluntary organizations, particularly small ones; goal displacement, creating a “dance of contract management,” in which organizations pursuing project funding take on activities that are farther and farther away from their original missions; a loss of flexibility and independence arising largely from government attempts to ensure acceptable performance by non-profits; vulnerability in the face of competitive contracting, which may squeeze them financially by limiting their ability to cross-subsidize operations, provide complementary services, cover administrative costs and meet broader missions; and a greater reluctance to engage in advocacy or be critical of their funders. See Jennifer Alexander, Renee Nank and Camilla Stivers, “Implications of Welfare Reform: Do Nonprofit Survival Strategies Threaten Civil Society?,” Nonprofit nrid Volirrrtary Sector Qirarterl!/ 28, no. 4 (December 1999), pp. 458-59; Peter Frumkin and Alice Andre-Clark, “When Missions, Markets, and Politics Collide,” Nonprofi’t nnd Volurrtnry Spctor Quorterly 29, no. l (March 2000), pp. 14143; Steven Rathgeb Smith and Michael Lipsky, Notiprofitsfor Hirt? Tlv We!firrc,Staft, it! the Age uf Coritracting (Cambridge: Harvard University Press, 1993); Kirsten A. Grenbjerg, “The U S . Nonprofit Human Service Sector: A Creeping Revolution,” Nonprofit and Volirntmy Sector Qiinrterly 30, no. 2 (June 2001), p. 293; and Rachel Laforest, ”Rethinking the Contours of Advocacy.” Paper presented to the annual conference of the Canadian Political Science Association. Toronto, May 2002. 6 Susan D. Phillips, “How Ottawa Blends: Shifting Government Relationships with Interest Groups,” in F. Abele, ed., How OffarunSprrrds: The Politics of Fragnrrtrtatioti (Ottawa: Carleton University Press, 1992), pp. 183-228; B. Mitchell Evans and John Shields, “The Third Sector: Neo-Liberal Restructuring, Governance, and the Remaking of State-Civil Society Relationships,” in Christopher Dunn, ed., The Handbook qf Canadinn Public Aifministmtiorr (Don Mills, Ont.: Oxford University Press Canada, 2002), pp. 139-58; Michael H. Hall and Paul Reed, “Shifting the burden: How much can government download to the non-profit sector?” CANADIAN P U B L I C ADMINISTRATION 41, no. 1 (Spring 1998), pp. 1-20. 7 A contribution is ”a conditional transfer made when there is or may be a need to ensure that payments have been used in accordance with legislative or program requirements.” More

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specifically, contributions are based on reimbursing a recipient for specific expenditurrs according to the terms and conditions set out in the contribution agreement and signed hy the respective parties. Canada, Treasury Board Secretariat, Guide 017 Firinricial Arrarigwizrits tirid Firtidiqq Options (Ottawa: Public Works and Government Services Canada, lYYS), p. 9. Available a t http:/ /www.tbs-sct.gc.ca/pubs-p[)l/dcgpubs/tbm-l~3/arral-e.asp. In comparison, a contract ”is used to obtain goods or services. It is an agreement between a federal government contracting authority and an outside party to purchase goods, provide a servicc or lease real property. Most often, the outside party is chosen through a competitive selection process, as described in Govrriitnvrzt Contract Regitlations.” Canada, Treasury Board Srcretariat, Gitidr o r i Grants, Coritribittiotis arid Other Trarrsfir P~i!/incwts(Ottawa: Public Works and Government Services Canada, 2002), p. 6. Available at http:/ /www.tbs-sct.gc.ca/ pubs_pol/dcgpubs/tbm~l33/ggcotp-gscaptl0_e.asp. 8 Peter Aucoin and Ralph Heinzman, “The dialectics of accountability for performanct. in public management reform,” lnterriatioiial REV~CIIJ qf Adttiiriistratiw Srirriccs 66, no. 1 (March 2000), pp. 45-55. Y See David A. Good, The Politics of Public Mariagerrietit (Toronto: Institute of Public Administration of Canada, 2003), pp. 167-68. 10 Aucoin and Heinzman, “The Dialectics of Accountability,” Irit~riiutiorinlRruiw of Arlriiiiristratiw Sciences,p. 49. 11 Linda McQuire, “Senice Delivery Contracts: Quality for Customers, Clients and Citizens,” in Clyn Davis Barbara Sullivan and Anna Yeatinan, eds., Tlri. N ~Cotilrnctirnlkrii? J (Syclncy: MacMillan Education Australia, 1997), p. 116. 12 See also Marilyn Taylor, “Between public and private: accountability in voluntary organis,itions,” Policy arid Politics 24, no. 1 (January 1996), pp. 57-72. 13 Good, The Politics of Public Mariagenwnf, p. 127. 14 The eight grants and contributions programs included labour-market training; Canada Job5 Fund; youth programs; aboriginal training programs; Human Resources partnerships; social development; learning and literacy; labour programs. In 2004, under the Martin government, HRDC was divided into two departments: Social Development Canada, and H u m a n Resources and Skills Development Canada. 15 See Good, Thc9 Politics of Pirblic Managemerit; Sharon Sutherland, “Biggest scandal in Canadian history: HRDC audit starts probity war,” Critiral Persp,ctirrrs on Accoctntirig 14 (20(13), pp. 187-224; and Arthur Kroeger, “The ‘Scandal’ at FIIIDC.” Paper presented to the Canadian Club, Ottawa, 2000. 16 Good, TIw Politics $Public Managmiznt, p. 128. 17 Ibid., p. 127. 18 When there are potentially sensitive issues, it is not unusual, apparently, for the director to initial each page of the proposal and for staff in the deputy minister’s office to look hoth at the proposal and at the quality controls exercised along the review stages. 19 Canadian Centre for Philanthropy, The Capacity to Stwe; and Scott, Firtiditrg Matters. 20 The expectation of in-kind contributions varies considerably across departments. 21 The challenges of performance assessment have been documented in a national survey, which points to the lack of capacity in both voluntary organizations and funders to undertake and make effective use of evaluation. See Michael Hall, Susan D. Phillips, Claudia Meillat and Donna Pickering, Assessing Perfirniance: Evaluutioti Practices and PersptTctiws irr Cntiuda’s Voluntary Sector (Toronto: Canadian Centre for Philanthropy, 2003). 22 Sutherland, “Biggest scandal in Canadian history,” Critical Persp~tiz~es on Accoimfirig, p. 214. 23 We asked the executive director to go through every stage o f the project, estimating atfditiorral time spent (beyond expected requirements for accountability standards) of staff. The salary estimate for this time was calculated at $400, $300 or $200 per day, depending on whether the staff involved had been senior, mid-level or junior.

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24 At about this time, some federal departments started asking voluntary organizations entering into contracts and contribution agreements to sign forms indicating their status under the Lobbyist Registration Act and the nature of their advocacy activities. The purpose and implications of the form created considerable confusion on the part of many organizations, although this was not the only legal issue in this case. 25 This is probably a fairly conservative case. In the interviews, we heard of one pilot-project worth $25,000, in which at least that much had already been spent in staff time between the two sides in negotiations, and approval has not yet been finalized. 26 The new Department of Human Resources and Skill Development has begun to hold sessions to explain and discuss the accountability requirements to staff of voluntary organizations. 27 During the course of the joint phase of the Voluntary Sector Initiative, voluntary-sector leaders made a number of requests to have the issues of accountability addressed as part of the VSI. See Government of Canada/Voluntary Sector, Thc Vulirntary St,ctor Initiative: A Process Eualiration (Ottawa: Social Development Canada, 2004), available at www.vsi-isbc.ca.. 28 Anna Yeatman, ”The New Contractualism: Management Reform or a New Approach to Governance?,” in Glyn Davis and Patrick Weller, eds., New Ideas, Better Gouernrnent (Brisbane, Australia: Centre for Australian Public Sector Management, 1996),p. 285. 29 Anna Yeatman, “Interpreting Contemporary Contractualism,” in Boston, Tlic Stat(, Under Contract, p. 124. More recently, New Zealand has moved away from its radical experiment with NPM; indeed, NPM in New Zealand has been declared by some as officially dead. See Wendy Larner, “Neoliberalism (Regional) Theory and Practice: The Story of the Communities Action Fund.” Unpublished paper, University of Auckland, N.Z., May 2004. 30 R.A.W. Rhodes, “Governance and Public Administration,” in J. Pierre, ed., D r b a f i q Covertintice (Oxford: Oxford University Press, 2000), pp. 54-90. 31 Guy Peters, The Future of Governing, 2”d edition (Lawrence: University Press of Kansas, 2001); G. Stoker, ”Governance as theory: Five propositions,” International Social Science lownal50, no. 155 (March 1998), pp. 17-28. 32 The Canada Forest Accord is a formalized commitment among various actors to work together to respond to the challenges facing Canada’s forests. Each edition of the accord spans five years, with the current third edition, spanning 2003-08. See the National Forest Strategy Coalition web site at http://nfsc.forest.ca/accord.html. See also Kernaghan Webb, “Sustainable Governance in the 21” Century: Moving Beyond Instrument Choice,” in P. Eliadis, M. Hill and M. Howlett, eds., Designing Gooertiment: Front Instrirments to Gozlernnnce (Montreal and Kingston: McCill-Queen’s University Press, forthcoming). 33 The idea of a government-sector “compact” in England also came out of an independent panel (the Deakin Commission) created by the voluntary sector and was based (and initially named) after the “concordants” developed within government as a means of facilitating accountability between the centre and the host of departments and agencies that had been so significantly decentralized as part of NPM. See Jeremy Kendall, “The mainstreaming of the third sector into public policy in England in the late 1990s: Why and wherefores,” Policy and Politics 28, no. 4 (October 2000), pp. 541-62; Susan D. Phillips, “In Accordance: Canada’s Voluntary Sector Accord from Idea to Implementation,” in Kathy L. Brock, ed., Delicate Dances: Public Policy and the Nonprofit Sector (Montreal and Kingston: McGill-Queen‘s University Press, 2003), pp. 17-62; and David A. Good, “Promises and pitfalls: experience in collaboration between the Canadian federal government and the voluntary sector,” \ourna/ of Polic!y Analysis and Manngenrcwt 22, no. 1 (Winter 2003), p. 123. For a comparative analysis of framework agreements, see Deena White, “Citizenship and the Welfare State: Formalizing Relations Between States and Voluntary Sectors.” Paper presented to the ISA-RC19 Conference, Oviedo, Spain, September 2001. 34 In other countries with similar accords (such as England and Estonia), the issue of how to

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engage elected officials is solved by requiring that the annual report be tabled in the parliament. The voluntary sector also takes on a number of responsibilities through the code. See Canada, Privy Council Office, Voluntary Sector Initiative, Code of Good Practice on Firriding (Ottawa: Public Works and Government Services Canada, 2002), pp. 11-12. 'The Strategic Investment Approach aims to strengthen the capacity of voluntary-sector organizations by supporting specific areas such as governance, community outreach, financial or program management, program development and technology. Although project and results based, the time-frames for support of such initiatives would be longer (up to five years). See hid., Appendix 6. Canada, Privy Council Office, Voluntary Sector Initiative, Taking the Accord Forruard: The Firs/ Rt7port to Canadians o i i lmplrnientiiig aii Accord betuieen the Covernnient qf Canada and Hie Vo/it?itary Sector (Ottawa: Public Works and Government Services Canada, 2003, p. 12. Good, The Politics of Pitblic Manageinent, p. 129. In Wales, for instance, an independent commission was established to report on the implementation of the Welsh Voluntary Sector Scheme. Its 2004 report runs 179 pages, compared to the mere ten pages of Canada's first report, and provides concrete information about the strengths and weaknesses in the relationship. See also the annual report on the English compact, which is very specific in naming both which departments are advancing good practice and those that are not, available at http:/ /www.homeoffice.gov.uk/docs2/ compactannrep2003.pdf. An electronic survey was sent to 2,000 individuals in the voluntary sector who were on the VSI mailing list, but only 110 responses were received (a response rate of 5.5 per cent), which is unlikely to be very representative of the sector.