Reason Foundation’s Report on Government Privatization Looks to Nonprofits

April 26, 2012; Source: Stateline

When conservatives talk about state government privatization, are they touting partnerships between government and nonprofits, government and for-profits, or both? The libertarian Reason Foundation think tank has a new report out documenting state government privatization efforts and proposals. The NPQ Newswire has covered the state privatization issue before, notably the California effort to privatize its state parks, given that the state budget is forcing the closure of 70 of them otherwise.

Does privatization, as seen through Reason’s libertarian lens, mean nonprofits? NPQ looked at the recently issued report, examining the chapters on privatization at the federal, state, and local government levels to see how much the nonprofit sector shows up. The federal chapter is largely focused on the roles, portrayed negatively by the Reason Foundation, of Fannie Mae and Freddie Mac. Many libertarians and other conservatives think these two agencies should largely be put on the scrap heap with their functions farmed out to private sector financial entities.

The state chapter has a lot more references to nonprofit roles. Those identified include:

  • New Jersey Gov. Chris Christie’s plan for public-private partnerships to run revenue-producing concessions and services in the state parks;
  • Ohio Gov. John Kasich’s creation of a state-level nonprofit to run the state’s economic development functions (financed through its control of state liquor revenues);
  • The Arizona Commission of Privatization and Efficiency’s assessment of 28 state parks examining potentials for public-private partnerships;
  • The Iowa state government’s creation of the nonprofit Iowa Innovation Corporation to raise private funds for small business start-up subsidies;
  • Kansas Gov. Sam Brownback’s unsuccessful proposal to replace the Kansas Arts Commission with a privately funded, nonprofit arts foundation (though Brownback has since zeroed out the Commission’s budget, so he may win in the end anyhow);
  • The nonprofit North Carolina Aquarium Society’s takeover of three state aquariums; and
  • Several states’ plans for privately run charter schools.

Nonprofits are evident throughout the local government chapter, as well, including an entire section devoted to nonprofits remaking government-run animal shelters plus individual city initiatives such as:

  • Greensboro, N.C.’s turning over of the city’s farmer’s market to a nonprofit;
  • Various studies in places such as Los Angeles and Tulsa to recruit nonprofits to manage city zoos; and
  • Central, La.’s $3 million contract with the nonprofit Institute for Building Technology & Safety (based in Virginia) for public service delivery.

Is the discussion of “privatization” of government services substantively different than governments’ typical contracting with nonprofits for service delivery? Is Reason looking for a new kind of government-nonprofit relationship or simply an increase in current levels of nonprofit contracting? Is there an outer boundary of government functions that should not—or, perhaps as “inherently governmental” functions—cannot be privatized?—Rick Cohen

  • Jerold Kappel

    I have not read the report, but the question I have is whether or not this “contracting” the nonprofit–i.e. the government agency funds the nonprofit to do a specific service–or is it turning government services over to the nonprofit sector and then the nonprofit needs to raise contributed funds, or charge a service fee for what was formerly a free service. It seems as if this is cost shifting from the tax-supported services to tax-deductible funded services. I still do not believe that the philanthropic marketplace can adequately fund what have been government funded service.

  • Ralph

    Thanks for the article. For info on people using voluntary Libertarian tools on similar and other issues, please see the non-partisan Libertarian International Organization @ http://​www.Libertarian-Internation​al.org , …