Outsourcing government functions to nonprofits is a form of privatization. Importantly, it’s a form of privatization that progressives could accept. But nonprofits have little accountability, causing costs to bloat and services to degrade, and allowing unscrupulous nonprofit execs to pocket taxpayer money. And it’s easy for them to become involved in corrupt relationships with their political patrons. One has to look no further than San Francisco, where laws have been crafted in order to give nonprofits maximum influence, to see the negative consequences of government-by-nonprofit….
For example, here’s Jonathan Ireland in American Affairs:
…there is rarely enough oversight to guarantee that they are doing what we pay them to do…[M]oney is…spent in ways that would shock the taxpayers whose hard-earned dollars are being effectively stolen from them. Nonprofits that self-righteously declare themselves providers of homeless services actively lobby to make homelessness worse in order to increase their own funding…and the executives of nonprofits, the very people in charge of institutions whose stated purpose is not to make money, earn millions of dollars while catastrophically failing to deliver the public services we are paying them to provide…And as all of that is going on, the nonprofits in question receive tax breaks from the IRS…
Ireland goes on to describe the notorious case of TODCO, a San Francisco nonprofit that is supposed to provide housing services to poor people, yet provides few services while spending the lion’s share of its taxpayer money on A) executive salaries, and B) lobbying against the building of new housing. Quite a racket.
Source: Noah Smith