Taxation and Non-Profit Organizations

Nonprofit Umbrella Organisations in a Contracting Regime: A Comparative Review of Australian, British and American Literature and Experiences

The International Journal
of Not-for-Profit Law

Volume 1, Issue 4, June 1999

As is the case in many countries overseas, most nonprofit organisations in the Australian community sector belong to a `peak body’ or umbrella organisation. Australian peak bodies are either established by an interest group or by the state as a means of policy direction and communication with a group of service providers. Since the 1970s, both state and federal governments have recognised the legitimacy of these groups to shape social policy by publicly funding these organisations. They are primarily concerned with advocacy and information dissemination on behalf of their member organisations. The term `peak body’ is not used widely amongst all three countries. In Britain and the United States these kinds of nonprofit organisations are usually referred to as intermediaries, resource/umbrella groups, trade associations, coalitions, federations and advocacy organisations.

This paper examines current literature on peak bodies/umbrella organisations from Australia, Britain and the United States. Both Britain and the United States were chosen as comparative case studies because of the similarities in public sector and market reform processes experienced over the past two decades. They also provide a means to compare these different experiences because of the similarities and differences in welfare state models and Westminster and presidential styles of government. In this paper it is argued that the state is beginning to curtail the advocacy role of peak bodies as a consequence of the introduction of market type funding regimes and the influence of public choice theories. Anecdotal evidence suggests that they are multiplying on the one hand, and rapidly merging with similar bodies on the other, as a way of dealing with the increased competition which accompanies a contracting and tendering culture. A change in the policy role of peak body/umbrella groups has serious implications for the political participation of marginalised groups traditionally denied basic citizenship rights.


Most third sector organizations in the United States, Britain and Australia belong to some sort of umbrella organisation or peak body [1]. The roles of these organisations vary, but they all engage in some form of political lobbying and advocacy for their member organisations and/or client groups. Many of them have become intimately involved in the policy-making process as a result of either their effective political action, and/or the state’s use of various forms of consultative mechanisms to involve them in the policy networks in specific areas of community service provision.

The major focus of this paper is on the changing role of umbrella organisations in Australia during a period in which we are seeing the strengthening of market policies and the imposition of neo-liberal notions which challenge welfare state intervention on behalf of disadvantaged groups. Some analysts seek to explain the fate of these organisations in terms of neo-Marxist, pressure group and public choice theories. Whereas, this author supports the contention of Sawer and Jupp (1996) that new social movement theory and new institutionalism, with its emphasis on policy communities and policy networks, provides a better ways of understanding the way peak bodies/umbrella organisations are negotiating the current policy environment.

The paper provides an overview of an extensive literature review of the impact of the `contract culture’[2] on third sector organisations. Evidence from the United States and Britain suggest that the state is seriously challenging the advocacy role of these types of organisations. This has implications for their ability to engage in the political and policy-making process.

A brief analysis of the policy context and welfare state histories of the three countries is included as a means in which to locate the Australian experience in a comparative international perspective.

Administrative Reform Agendas and Third Sector Organisations

Australia, like many other OECD countries, has been subjected to a wide range of state and public sector reforms during the past two decades. On the one hand there has been pressure to reduce government expenditure, whilst simultaneously reforming state bureaucracies (Melville, 1998). A considerable body of Australian literature has evolved which provides analyses of the range of competing ideological and economic imperatives underlying many of these reforms. They are not part of a uniform set of ideas but a conglomeration of different and often conflicting belief systems (Yeatman, 1993; Hood, 1991). In Australia, these three sets of ideological beliefs have become known as `economic rationalism’ (Pusey, 1991), ‘corporate managerialism’ (Bryson, 1987; Considine, 1988) and ‘New Public Management’ (Yeatman, 1993; Hood, 1991). [3]

The extent to which the public sector reform and government reform process has impacted on the Australia, the United States and Britain has depended on the systems of governance operating in each of the three countries. Both Britain and Australia have `parliamentary systems in which the institutional links between the political executive, ministers, and cabinet, who are elected members of Parliament, and the public sector are closer and more fused’ (Mascarenhas, 1993, p. 321). Whereas in the American presidential system the executive and legislative authority is more clearly delineated and policy making diffused between many different levels of government. This combined with a weak-party system where responsibility of elected politicians is seen to lie with their individual constituents makes it difficult for coherent policy to be adopted and implemented at the federal level. In addition, there are many more outside appointments versus career public servants in the American public sector (Weaver, 1996, p.265-267).

As a means of forcing reform onto the public sector in Australia (where political parties wanted to reduce control over the policy setting agenda traditionally exerted by career public servants), the American system of the Senior Executive Service (SES) was adopted by state and federal governments during the 1980s-1990s. As in Britain during the Thatcher government, a small but growing number of outside appointments in Australia were made to the top levels of bureaucracies and in the role of ministers’ policy advisers. One political reason for this was to reinforce the idea that public servants were `managers of programs’ and were to have less input into policy-agenda setting (Mascarenhas, 1993). Many public policy analysts, such as Mascarenhas (1993), argue that it led to a much more `politicised’ public sector, as outside appointments and career public servants values and ideals clashed constantly (McTaggert, Cauley, Kemis, 1991). According to Mascarenhas (1993, p. 321) the impact of these reforms in Australia has been less than in countries, such as New Zealand, because the Australian federal constitution equally divides powers between the state and commonwealth governments. This means that a range of parties have to be equally committed to the reform process. It helps explain some of the uneven implementation of `contracting and privatisation’ between the different jurisdictions of government that have occurred since the 1980s as demonstrated in the Contracting for Care Study (Lyons, 1997). It also has meant that public servants have tended to just add on another layer of ideology `managing for results over the top of the existing public servant concern for the public interest’ (Mascarenhas, 1993 p. 325).

At a general level of analysis, one of the main outcomes of the public sector reform processes in Australia has been the development of a leaner public sector, which focuses more on policy development and management of services and developing quantifying output and outcome measurements (McTaggert, Cauley, Kemis, 1991). Another outcome of this process has seen a shift towards the `contract culture’ (Melville & Nyland, 1997) accompanied by an increased emphasis on using `market type’ mechanisms to deliver community services. In some instances, this has involved the introduction of more `legalistic’ funding agreements (referred to as contracts) and/or the use of various forms of contracting, such as competitive tendering for services (Lyons, 1997, O’Neill, 1997). This has led to the introduction of radically different funding arrangements based on the `unit cost’ principle, so that funding is provided only for clearly defined and measurable `outputs and outcomes’ for clients which are costed on an individual service user basis. This funding model is starting to replace the traditional input based funding model, which entailed providing public funds to individual organisations to provide services (DHSH, 1995; Melville & Nyland, 1997).

There has also been an increased interest in neo-liberal political as well as neo-classical economic theories, such as public choice and principal agent theories in Australia during the 1980s-1990s. Both these sets of ideas have influenced the political and policy making spheres at both state and federal government levels in Australia. The marrying of public choice theories with neo-classical economic views of the market has had a marked impact on the nature of the relationship of third sector organisations with the state (Self, 1996). On a prima facie level it has seen a shift in the simple mechanics of funding as outlined above. In practice what it means is that major shifts are going on at the interface between government funding relationships with service providers and users. (Melville & Nyland, 1997). The rhetoric and practice is changing about the nature of the relationship between the state and service providers. Terms such as `mature partnership’, which may have been used previously to describe the `mixed economy of welfare provision’ have been replaced with terms like `purchaser/provider’ split. Bureaucrats justify this in terms of needing to increasingly distancing themselves from service providers and users to maintain the `market type relationship’ (Melville & Nyland, 1997). Thus the often fragile but mutually beneficial interlocking relationships,[4] established policy networks and methods of consultation, which have existed between state agencies and services providers are being reshaped in ways which seriously undermine access of these groups to the political and policy making process.

This process was further exacerbated by the election of the Howard conservative government in 1996, which ushered in an era of politics which challenges the legitimacy and practice of collective political action in the policy-making arena. The Howard Government (1996-) was elected with a catch-cry of government and political parties no longer `being the captives of special interest groups’, but as government for all the people. In practice this has translated into denying a whole range of interest groups from gaining access to the Prime Minister, Cabinet ministers and even public servants. Many disadvantaged groups who had fought for a long period of time to have a voice in the policy-making arena now find themselves increasingly shut out of these same political processes.

A ‘Snap Shot’ View of the Australian, British and American Welfare State Histories

Each of the three countries’ welfare state infrastructure and development is unique and depends on historical, social, economic and cultural imperatives.

As far as Australia is concerned, Britain had developed a comprehensive welfare state model following the blueprint outlined by Beveridge in 1994. This model was based on `universal provision regardless of income levels, compulsory form of social insurance levied on all, with earnings-related benefits, a nationalised health service, personal care services, education and a large public housing program’ (Jones, 1996 p. 27). `Most welfare state services were produced, allocated and delivered through bureaucratic mechanisms, which included statutory authorities and a large network of local government authorities’ (Le Grand & Bartlett, 1993). The voluntary and charitable sector supplemented state provision.

Whereas Australia developed `an ad hoc reactive minimalist welfare state, based largely on a means-tested, flat-rate and targeted social security system’ for selected categories of people (Jones, 1996 p.1), commonly referred to as `a safety net approach’ (Saunders, 1993). Voluntary or non-government provision has always played a key role in social welfare in Australia since the colonial era. In fact since the colonial period the state has heavily subsidised this sector (Kewley, 1969; Mendelsohn, 1975; Rowe, 1976; Dickey, 1992; Kennedy, 1989). Another major characteristic of Australia’s approach to welfare was the establishment of generous fiscal and occupational benefits for workers derived from participation in the paid work force, which undermined the need to expand state services. The roots for this lay in the collusion of trade unions, governments and manufactures/farmers to maintain a predominantly `white work force’. Organised labour and the establishment of a centralised federal industrial conciliation and arbitration system, with parallel systems operating at state government level, enabled this to happen. Thus the term the `working man’s welfare state’ has been adopted by a number of writers to describe this phenomenon (Castles, 1985; Beilharz, Considine & Watts, 1996). Women and aboriginal peoples were either marginalised or actively discriminated against in the design of welfare state provisions (Baldcok & Cass, 1983; Bryson, 1992; Weeks, 1996; Wilson, Thomson & McMahon, 1996; Jones, 1996).

In contrast to Britain and the United States, most state welfare expansion in Australia occurred in the early 1970s (Jones, 1996). During this period the state expanded the groups eligible for welfare assistance as well as substantially increased its financial support for non-government community services with a approximately 47,000 organisations being set up in the period 1970-1972 (Graycar & Jamrozik, 1993). It has been estimated that the community services sector has an annual turnover of $10 billion (ABS 1997 cited in Lyons, 1997 p.5). At least $4-5 billion dollars of this revenue comes directly from government funding (ICIC, 1994).

Another difference between the three countries is the way in which the politics of welfare are caught up in a system of federalism where state governments retained considerable powers within the Australian constitutions. States also legislate and control the development and expenditure of local government.[5] All three levels of government are involved in the policy -making process and delivery of welfare services (Graycar & Jamrozik, 1993).

American social welfare state development is similar to that of Australia and Japan. Overall financial outlays on social welfare are lower than the other OECD countries (Jones, 1996, p. 34). Influenced by internal social development and world wide economic events such as the Great Depression, the United States with a `strong individualistic self-help approach to welfare, developed a sophisticated approach to social insurance in the 1930s’ (Jones, 1996 p. 15). A full-blown welfare state, such as that seen in Britain and several other European countries didn’t eventuate in America. Rather, the United States adopted the approach of using the nonprofit sector to both deliver and, to a large extent, self-finance welfare service. However, as Lipsky and Smith (1990) point out, state financial support of nonprofit agencies has expanded significantly since the 1960s (p. 10). They claim that `over 50% of the social welfare budget are now devoted to nonprofit organisations’ (1990, p. 10).

Although a more recent phenomenon in Britain and Australia, the major administrative mechanism used to disperse these funds has been through the use of contracting and government purchase of services (Lipsky & Smith, 1990; Le Grand & Bartlett, 1993; Kramer, 1994). In contrast to `America where contracts have been [used] to expand social service provision, it has been an explicit government public policy goal in Britain (and Australia) as a means of reducing state provision’ (Lewis, 1996, p. 98). It has also been directed at reshaping funding relationships between the state, service provider and service user (Melville & Nyland, 1997).

The foregoing analysis was provided to set the broad policy context to enable a more informed comparative analysis of peak bodies in Australia, Britain and the United States. As the main focus of this paper is on the fate of peak bodies under a `contracting culture’, the discussion will now turn to an examination of these types of organisations.

Definition of Umbrella Organisations and Peak Bodies

There is no clear definition of an umbrella organisation or peak body in the international nonprofit literature. The following definition has been developed from an extensive review of available literature from the three countries examined in this paper.

The main distinguishing characteristic of an umbrella organization/peak body from other types of nonprofit organizations is that they are primarily member serving versus public benefit organizations. They provide a range of services to their member organizations and do not provide services to individuals or groups of clients. Peak bodies/umbrella organizations can represent very specific interests/causes, whilst others consist of broad-based coalitions of nonprofit organizations. They can operate at local, state, national and international levels.

According to Hamilton and Barwick (1993, p 17) a peak body is `an organisation … with other organisations as members formed to represent the collective views of its members to government, to the community and to other bodies. The Australian Industry Commission (1994, p 156) has listed the range of tasks undertaken by peak bodies/umbrella organizations. These include `information and dissemination services, membership support, coordination, advocacy and representation, research and policy development for their members and other interested parties. This role may not include direct service delivery (but may involve grant support, sponsorship and auspicing of other organisations) to deliver services’. In some instances they also take on roles of monitoring industry and service delivery standards and/or training.

Locating comparative terms used in the British and American literature which describe the equivalent nonprofit organisational entity known in the Australian context as a peak body has been a difficult task. A similar type of British organisation includes the National Council of Voluntary Organisations and other specialist and generalist `intermediary bodies’ (see, for example, the Wolfenden Committee Report, 1978). The term intermediaries is no longer used in Britain because it raises too much ambiguity – do `intermediaries’ intermediate among non-profit organisations, or between them and government?’ (Siederer, 1998). The term now gaining wider acceptance in Britain is umbrella/resource organisation. In contrast to Australian peak bodies, these organisations appear to be mainly involved in voluntary sector `training and information, but also as a political channel through which the interests of the sector and those who use its services can be represented’ (Taylor, p. 22).

The equivalent type of American organisation has also been difficult to locate. One suggestion given to the author was that of `trade associations’ (Knoke, 1993). Examples of these kinds of organizations include the United Way, The YMCA and the Boy Scouts, as well as the Neighbourhood Coalition and the Public Services Satellite Consortium (Knoke, 1993 p 139-142)). Although many of these organizations are member serving organisations – they also possess a `small business focus’, which includes private-for-profits (Stead, 1996) and thus fall outside the definition of a peak body as used in the Australian context. However, following an examination of the American political science literature has led to the inclusion of groups referred to as federations, networks, coalitions, advocacy, umbrella and resource organisations (Smith, 1993).

One of the reasons for this gap in the international nonprofit literature on peak bodies/umbrella organizations may be because these types of organizations are much more visible actors in the policy-making process in the Australian and British welfare state and thus have attracted little interest in other countries. Another reason may be the lack of comparative research projects which include the Australian mixed economy model of welfare state provision and the particular relationship these types of organizations have with the state and the policy making process. By far the largest body of literature on nonprofit peak bodies/umbrella organizations comes from Australia. (See, for example, House of Representatives Standing Committee on Community Affairs, 1991; Industry Commission Inquiry, 1994; Department of Human Services and Health, 1996; Abbott, 1996; Hamilton and Barwick, 1993; Mendes, 1996; Sawer and Jupp, 1996; May, 1996; Mowbray, 1980).

Overview of Australian Literature on Umbrella Organizations/Peak Bodies

Historically, most Australian umbrella organizations/peak bodies have either been established by an interest group or by the state as a means of policy direction and communication with a group of service providers (and sometimes service users). According to Sawer and Jupp (1996) the impetus surrounding the establishment of peak bodies representing the newer social movements has often come from the state. For example, the NSW women’s refuge working party was set up by femocrats as a means by which they could negotiate directly with service providers. Femocrats argued at the time that it provided a `protective mechanism’ for refuges because it was a way the refuge movement could have input into and control over women’s refuge policy direction. Some women’s refuge movement activists saw the establishment of a formal consultation process as a means of `state cooption’ (McFerran, 1990; Melville, 1993).

Most umbrella organizations/peak bodies have grown in tandem with the community services sector in Australia. The number of community organisations expanded rapidly during the 1970s with the impetus of the Whitlam Government and the emergence of new social movements (Graycar & Jamrozik, 1993; Sawer and Jupp; Melville, 1993). By the 1970s approximately 50 peak bodies received official recognition and funding from the Department of Community Services and Health (May, 1996, p. 252). Some of these of these organisations are very powerful and influential in their fields.[6] The Australian Council of Social Services (ACOSS), one of the largest, claims to represent over 2,500 organisational members (Marsh, 1995, p.64). Many of the larger peak bodies have become more professionalised with the ability to apply sophisticated `political lobbying ’ strategies on government bureaucrats and political parties. The larger peaks employ professional staff, produce scholarly publications and social action type material as well as prepare large numbers of policy related documents, such as submissions on a variety of topics (Marsh, 1995, p. 64).

During the 1980s and 1990s the number of umbrella organizations/peak bodies has continued to increase. This happened for a number of reasons. For example, a number of Ministers and Government Departments the Hawke/Keating Government (1984-96) encouraged the establishment of `peaks of peaks’ as a means of containing `political fallout’ from certain pressure groups. It also made it easier for the state to `manage’ relationships with an increasingly diverse range of constituents (Sawer & Jupp, 1996) during a period of intense social, economic and political change in welfare state provision in Australia and around the world.

There is no accurate estimate of the number of peak organisations operating in Australia or the other two countries examined in this paper. Marsh (1996) has identified 7,000 potential peak bodies – not all of which belong to the community services sector.[7] Anecdotal evidence would suggest that a high proportion of both large and small community sector agencies (ranging from churches, charities, to community or grass roots organisations) belong to a number of umbrella organizations/peak bodies cutting cross various sectorial and interlocking boundaries. This pattern of institutional arrangement is increasing as a way to fend off the incursion of the contract culture. A recent example is the `alliance’ formed between women’s emergency services network (WESNET) and the Council of Homeless Persons over funding concerns. Such an alliance would have been inconceivable a decade ago given feminist women’s services politics, which was predicated on an on-going distrust of hierarchies, formal organisations, and being co-opted by the state and other mainstream groups (Melville, 1993; Weeks, 1994).

Within the Australian political science, social policy, public administration and management and social movement literature, the way in which groups such as peak bodies are conceptualised is a highly contested issue. It seems to depend on the nature of the constituent group, their size, their historical roots, activist history and pursuit of social justice goals. For example, the women’s refuge movement would be seen as a `new social movement organisations’, whereas the Combined Pensioners and Superannuants League would be seen as a `pressure group’ or interest group’, and therefore part of mainstream political culture.

Two prominent Australian social policy writers, Graycar and Jamrozik (1993) have always used the term `interest group’ to characterise the role of community sector peak bodies in the policy-making process. This is based in part on the fact that these groups engage in lobbying and advocacy activities, which seek to influence the policy-making process. Whereas Marsh (1996), a political scientist, claims that two new political organisations appeared in the post-war period which he classifies as interest groups and issue movements. In a recent study conducted by Abbot (1996) of pressure group politics and the Australian federal parliament, community service peak bodies were placed within a special category of pressure groups, known as special situation groups.

In contrast to the above approaches, two well know Australian political scientists, Sawer and Jupp (1996) are highly critical of many of the orthodox theoretical approaches taken to analyse the interaction between government and community-based advocacy organisations. They argue that the relationship between the state and community-based advocacy organisations is becoming increasingly complex and highly structured. These two authors reject the notion of pressure group as a way to theorise peak bodies relationship to the state. They also reject the corporatist approach, which is based on `a situation where binding decisions are made by big government, big business and big labour and has little relevance to the more diffuse power arrangements characteristic of social movements’ (Sawer and Jupp, 1996, p. 83). Instead Sawer and Jupp (1996) suggest that a more useful way to understand the nature of the relationship between peak bodies and the state is to draw on the theoretical insights offered by Neo-Marxist, New Social Movement theory as well as that of New Institutionalism.[8](See for example, the writings of Pross, 1986, 1992)

Sawer and Jupp (1996) draw on a number of case studies of peak women’s and ethnic communities organisations to examine the way in which social movements can autonomous influence on the policy agenda. One of their main conclusions is that the relationship between governments and peak bodies is best understood as a `two-way street’. The relationship with the state is one which is characterised by tensions, but not one which should be seen in conspiratorial terms against the public interest nor part of a larger plot to `deradicalise social movements’ (Sawer and Jupp 1996, p. 82).

Current Political and Policy Issues

The role and relationship of peak bodies with government is under serious question in Australia at the present time. This is due to a number of factors: the election of a conservative Federal Government which has been strongly influenced by public choice theories about the nature of political participation; and the influence of neo-liberal notions about the role of the market in Australian society. The latter is not a new phenomenon. During the 1980s and 1990s, both state and federal governments have introduced policies of `contracting’ and competitive tendering’ into the funding process for community services. In some states, such as Victoria, the policy of competitive tendering has been applied to both individual service providers as well as peak bodies (ACROD Newsletter, 1997).

In Australia, the conservative Howard government (1996-) has made it clear that it does not intend to become a `captive of any special interest group’, and that all groups should be treated in the political process in the same way. The current Australian Prime Minister, John Howard, has argued that groups, such as women and aboriginal and people from Non-English speaking backgrounds have been accorded privilege access to government and special funding programs which other Australians do not have similar access to. As a result their political influence is out of proportion to the needs and number of overall constituents his government should listen to. The Howard government’s interpretation of public choice theory as it has been applied to disadvantaged groups is leading to a systematic loss of ‘political voice’ and a reduced ability to engage in the policy-making process.

Implications for Umbrella Organizations/Peak Bodies

What I would like to return to is to discuss some of the implications of the influence of these sets of ideologies on the state’s relationship with peak bodies.

Anecdotal evidence tends to suggest that a certain amount of rationalisation is taking place in the nonprofit sector. Over the past five years umbrella organizations/peak bodies have been subjected to a wide range of radical restructuring of sector funding at both state and federal levels of government. In some instances funding has been withdrawn completely and suddenly whilst the government decides on who should receive funding and under what conditions.[9] These changes greatly reduce the ability of peaks to undertake effective lobbying and advocacy work, let alone have input into policy development, implementation and evaluation processes.

It is anticipated that Australian peak bodies/umbrella organizations will increasingly mirror business enterprises and hive off other roles to a separate part of their organisation. This has already happened in the field of overseas development aid organisations, which have also been under increasing pressure to demonstrate greater efficiency and effectiveness, in the form of quantifiably measurable outputs and outcomes (Blackburn, 1993; Edwards & Hulme, 1996; Smilie, 1995). In some instances this has led to the establishment of a separate `business entity’, which is responsible for fundraising and the selling of its products and development of market opportunities. An Australian example is Community Aid Abroad, which now has separate service delivery and commercial business organisations known as the International Development for Support Services (IDSS, Blackburn, 1993). There is evidence that a similar trend is occurring amongst nonprofit peak bodies/umbrella organizations. Following a 50% reduction in the core funding of WACOSS – a state based Australian umbrella organization/peak body (Western Australian Council of Social Services) in 1995; the Organization reformed into two separate entities. An organization which has both a business arm which advises other groups on how to `compete’ more effectively in the tendering environment; and an information and policy body.[10]

Overseas Experience

One important question of relevance to Australian peak bodies is whether the introduction of a contracting regime seriously curtails their ability to lobby and undertake advocacy work on behalf of their members. We have yet to feel the full impact of the introduction of a contracting culture in the Australian community services industry.

The evidence from countries such as Britain, the United States and New Zealand presents a mixed picture. Lyons (1997, p. 7) suggests that the evidence from the American experience shows that the outcome for nonprofits under a contracting regime is quite complex. In some instances it is dependent on the degree to which the state needs the services the nonprofit sector can supply. In other words, the autonomy of nonprofits can in fact be strengthened in a competitive contractual environment. Likewise, in a recent review article of the New Zealand’s experience under a `contracting regime’, Nowland-Foreman (1996) reports similar findings. In many instances the costs to the sector are very high, and the disadvantages to the overall `health’ and viability of the sector have given cause for the New Zealand Community Funding Agency to reconsider it’s funding policies (Nowland-Foreman, 1996 p21). At the same time, there are some case studies, which point to positive outcomes for some service providers and client groups (Nowland-Foreman, 1996). Both authors hesitate to apply these findings to the Australian context (Lyons, 1997; Foreman-Nowland, 1996).

Just as in Australia, there is very little American literature, which deals specifically with peak, bodies (Young, Bania & Bailey, 1996). A recent article estimates that there are approximately 83,000 health and human service nonprofits with incomes over $25,000, but very few of these belong to umbrella organisations (Plantz, Greenway & Hendricks, 1997). In fact, it has been estimated that only 22% of charitable institutions in social and human services, health, the arts, education, religion, and other fields belong to some national umbrella organisation (Hodgkinson, Weitzman, Noga, and Gorski, 1993).

One recent study investigated the type of structural arrangements found amongst peak bodies in the United States with the view to trying to find a model, which may used to assist nonprofits to become more accountable to funding bodies and the community at large. Three types of structures were identified, including the corporate model, the federation, and the trade association. Each of the three types of organisational structures provided different services to its member constituents, and the type most like its Australian counterpart is the `federation’ or umbrella organisation. An international comparative study has been located which examines the roles of peak bodies in the United States and Britain (Hunter, 1993). A number of major differences were noted, including the extent of dependence on state sponsorship in the two countries, their degree of autonomy from the state bureaucracy and political apparatus; and the role and style of lobbying and advocacy work undertaken by federations in the two countries. Unfortunately it doesn’t deal with the issues currently under investigation in the present study.

If we turn to Britain, what sorts of lessons can be learnt from the British experiences under a contracting regime? There is one study, which has examined the impact of tending on `intermediaries’ or `resource and umbrella organisations’ as they are now know in Britain (Lansley, 1996).[11] The author undertook a case study of the outcome of the establishment of a Central Wirral Council for Voluntary Services on local CVS and other smaller voluntary organisations. One of the main findings of this study is that there is a stronger role for `intermediaries’ in a contracting culture, than there may have been previously in the British voluntary sector (Lansley, 1996). One of the main outcomes of the study was that the Wirral CVS was able to provide a wide range of resources, training, and support for organisations trying to deal with state social services and the `new contract arrangements’. Although the interpretation of the findings are dubious because they don’t question the issue of `voluntary organisations’ autonomy from funding bodies; it raises interesting questions about the possible direction Australian peak bodies might take in the present political climate.

Several recent Inquiries by the Charities Commission of England and Wales give examples of the activities of charities that had used government (and other privatively raised) funds to engage in advocacy and lobbying work, and have been severely reprimanded for doing so (Burnell, 1992). As a result of these inquiries the Charities Commission for England and Wales has issued a separate set of instructions called the CC9A – Political Activities and Campaigning by Local Community Authorities’ (Charity Commission, 1997). This guideline sets out the parameters in which charities can engage in political activities and the penalties for failing to adhere to the guidelines.

A similar move to curtail the advocacy role of charities known as the Istook amendment was recently defeated in the United States Congress. Representatives from both political parties attempted to curtail the use of government and private funds by charities to engage in political lobbying and advocacy work. An overview of the debate and its potential impact on American nonprofit and charitable organisations has been compiled by a coalition of 1,500 national and community-based organisations working to uphold and preserve the advocacy role of nonprofits (Let America Speak, n.d).

Neither of these cases directly impact on Australian peak bodies, as very few of them have access to public benevolent institution status (PBI) and cannot register as a charity. What is of concern is the general trend in western post-liberal democratic societies to stifle public dissent and political lobbying by social and political organisations representing disadvantaged groups in these societies. The impact of globalisation and information technology transfers makes it increasingly problematic for nation-states to maintain clear national boundaries and be able to decide their social policy priorities. Although this is the subject of another discussion, it is raised as part of the wider policy environment in which peak bodies must struggle to negotiate in the 1990s.


This paper has outlined some of the major policy initiatives which impact on umbrella organizations/peak bodies in Australia, with reference to overseas experience. Until recently, peak bodies have played a very important role in the policy making and consultative processes in Australia. Peak bodies represent many different groups in society ranging from very conservative political and social views to those emanating from the newer social movements. The state has over a period of time accommodated the voices of some of these hitherto marginalised groups. Thus, these groups have been accorded a degree of legitimacy and been able to make claims on a share of state resources.

However, since the 1980s, orthodox neo-classical economic and political thinking has heavily influenced Australian social and public policy. This has taken a number of different forms including the introduction of competitive tendering and contracting as well as other market driven reforms, which have influenced the public sector and the policy-making process. With the election of the Howard government (1996-) greater impetus has been given to pursuing these reforms at a faster pace especially in the political arena. There is a very real danger that the outcome will result in the increased marginalisation of disadvantaged groups in the Australian political system. In this process umbrella organizations/peak bodies could undergo significant organizational change both in terms of their structural shape, their relationship with the state as well as their constituents.

*This paper is a re-working of the following papers by the author:

Melville, R. (1998) The State and Third Sector Organisations: Negotiating the Relationship in the 1990s’ Paper given at 27th ARNOVA Conference, Seattle, Washington University.

Melville, R., Pratt, A., Taylor, A. (1998) The Future of Community Sector Peak Bodies in Policy Making and Advocacy: A Comparative Study of Australian, British and American Peak Bodies Within a Neo-Liberal and Market Framework’, Sydney, Centre for Australian Community Organisations and Management, UTS. Lindfield

Copyright © 1999 ICNL. All rights reserved.
Revised: July 22, 2004.


[1] The term’s umbrella organization and peak body will be used interchangeably in this paper because there is no generic internationally recognised term for these types of non-profit organizations.

[2] `The term contracting is used in a generic fashion to apply to a number of related, but distinct, practices and processes. Most theoretical and policy discussions of `contracting’ tend to identify three core components. These are privatisation, competitive tendering and the use of legally binding documents. These three taken together form what we might term the key components in `contracting culture’ ‘ (Nyland in Melville & Nyland, 1997 p. 45)

[3] There is a wealth of Australian literature which provides a good descriptive analysis of the `policy context’ of the introduction of new public management reforms and competitive tendering (see, for example Alford & O’Neill, 1994). But writers such as Yeatman (1996) and Hood (1997) are undertaking the major analytic work.

[4] This is not meant to imply that funding relationships are not also highly contested and problematic.

[5] The Australian system of government is an amalgamation of the American presidential system and the Westminster parliamentary model, being closer to the Canadian system than either of the British or American models (Summers, Woodward & Parkin, 1990).

[6] See, for example, Australian Council of Social Services, Australian Council on the Ageing, the Pensioners and Superannuants Association, Australian Council for the Rehabilitation of Disabled, Australian Federation of Aids organisations, etc.)

[7] In 1994 the Industry Commission conducted a study of 188 peak bodies in Australia. Keith Abbott’s study of pressure groups and federal parliament (1996) identified a sub-set of 29 `special situation groups’ out of a total sample of 178 pressure groups.

[8] New Institutionalism is very helpful in understanding the roles of policy actors, policy communities and policy networks in the advocacy and lobbying work undertaken by community-based groups.

[9] The funding for the Association of Non-English Speaking Background Women of Australia (ANESBWA) – a peak body for migrant women was not renewed in 1997. The peak body was told that the Federation of Ethnic Communities Councils would now deal with all issues previously handled by this group (Duncan Kerr, Press Release, 29/597).

[10] Information provided from a fellow researcher during the Contracting for Care Study (1996).

[11] Correspondence from the Director of the Association of Charitable Foundations, UK dated 16 th April 1998.