Study Finds Welfare Tender System Favors Private Firms Over Non-Profits
A new study by the Yessodot Institute, commissioned by the Ministry of Welfare and Social Services, reveals that the current tender system for social welfare services in Israel inadvertently benefits private companies over non-profit organizations (NPOs).
The research, authored by Nui Brint, Liron David, and Shiran Reichberg, highlights that tenders do not adequately account for the fundamental differences in goals, operations, and legal constraints between private companies and NPOs. This disparity, the study suggests, can disadvantage NPOs, which often rely on social motivation, donations, and volunteer work, and are legally bound to reinvest assets into their mission rather than distribute profits.
Researchers propose modifications to the procurement process, including potentially prioritizing NPOs in certain tenders or restricting private companies from specific social service sectors. The study notes that Israel has been privatizing many sectors, including social services, since the 1980s, shifting the state's role to that of a funder and supervisor.
However, social welfare services possess unique characteristics, such as the difficulty in measuring service quality and the potential conflict between long-term care or client well-being and a private company's profit motives. The current tender structure, often short-term, can undermine continuity of care for service recipients and job security for professionals. It also frequently fails to incorporate the principle of 'nothing about us without us,' which mandates the involvement of service recipients in decision-making.
The study also points to market structure issues, where the state and local authorities are often the sole or primary clients, limiting competition and potentially leading to low service prices and dependence on a few large providers. The research draws parallels with European countries like the UK, Sweden, and the Netherlands, which have adopted 'strategic procurement' to advance social, environmental, and economic goals alongside service delivery, including measures like profit limitations and restrictions on leverage.
