Let's Converge

Andrew Hahn
July 1, 1999

I have been thinking about an old topic — the relative lack of market forces at work in nonprofit youth organizations. Hardly a day goes by when I don’t encounter stories in the financial pages touting the advantages of convergence.

But why so little of this in youth work?

Convergence is the trend where one company buys another to promote “synergy” among product lines. Time will tell whether the emerging mega multi-media companies will meet our needs for cable TV, Internet access, long-distance dialing, entertainment and e-commerce. Bigger is not always better. But the convergence movement has me thinking about our many fragmented and small scale youth programs. Why are we not seeing more convergence?

For insights I have turned to some “learnings” made possible by an allied helping field — the private and non-profit health care industry. Consider the following: Modern Healthcare, a trade publication, reports that between 1996-1998 over 3000 hospitals were involved in mergers, acquisitions, joint ventures, long-term leases and other partnerships in which there were control changes or an equity stake changed hands. While not all of these deals involved nonprofits, that portion of hospital deals soared during this same period.

One interesting twist in health care involves the change in status from nonprofit to profit — a huge boon for the creation of new “conversion” foundations. Think about it: when was the last time you heard about a youth program someone was interested in buying or converting?

The next time you hear a youth advocate condemn the private sector with 60’s style fears (something I hear more often in the youth sector than in other fields), think about that small band of health care, consumer and legal advocates who created in perpetuity the new foundations. Talented health care for the poor advocates like Judith Bell (now of PolicyLink in Oakland and former director of Consumer’s Union’s western division) recognized that rather than trying to halt this march to privatization in health care, we might as well extort a large price for the conversions. Working with various state attorneys general, Consumer’s Union did more to stimulate the growth of new philanthropies than anyone since John D. Rockefeller.

Surely, private firms in residential care or any youth serving field need to be watched and scrutinized. But what’s worse: quiet inefficiency among the bottom 25 percent of low performing non-profit youth programs, or the highly visible occasional private sector mess?

Years ago I joined the chorus of folks who lamented the fragmentation among youth service organizations. I asked why the cash-starved neighborhood youth employment program didn’t join forces with the mentoring program around the corner? An industry grew up around advising practitioners about coordinated services, comprehensive services and one-stops. We didn’t call it convergence, but that was the spirit.

Admonishing people to think about economies of scale and developing organizational structures to fulfill consumer choice isn’t enough to get the job done. You need something like a marketplace. Hospitals, for instance:

  • see their fees as revenues, not just as grants and contracts, as in much of the
  • develop profit and loss statements and boards actually act on them, quickly and decisively.
  • buy cheap assets and sell costly ones.
  • compete amongst themselves to fill their beds — not on a program cycle of, say, every three months, but night after night.
  • can’t hide and resist change. Too many constituencies are involved, from drug companies and patients to regulators and professional trade groups.

The pace of change in the private sector and the dramatic moves to privatization in other helping professions like health care and public education are far from perfect templates for nonprofit youth work. Nevertheless, more convergence would be healthy for the youth field. Without market forces, however, I am afraid the topic will be relegated to technical assistance guides and hollow speech-making at national conferences.

Andrew Hahn is professor and associate dean at the Heller School for Advanced Studies, Brandeis University, Waltham, Mass.

Hahn, Andrew. "Let’s Converge." Youth Today, July/August 1999, p. 54.

©2000 Youth Today. Reprinted with permission from Youth Today. All rights reserved.