On the Government-Nonprofit Relationship in German Welfare Services – Still the Era of Corporatism?2

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

D. Mauricio Reichenbachs1

On the government-nonprofit relationship in German welfare services – still the era of corporatism?2

Abstract

This qualitative study discusses whether with respect to welfare services Germany’s government- nonprofit relationship can still be characterized as corporatist. Taking the city-state of Bremen and the federal state of Saxony-Anhalt as examples, Elinor Ostrom’s distinction between rules-in-form (legal guidelines and laws) and rules-in-use (norms, practices) serves as vantage point for scrutinizing the de facto characteristics of the state-third sector interaction in the realm of welfare services. Traditionally, the relationship between the German state and the third or nonprofit sector regarding welfare production has been referred to as corporatist, collaborative, and coordinated. However, recent developments, such as increasing market measures and the proliferation of short-term and performance contracts, have profoundly challenged this notion. Notwithstanding well-documented legal changes, there has not yet been a systematic, encompassing attempt to describe the rules-in- use dominating the current state-third sector relationship. Expert interviews were conducted from January to August 2012 in Bremen and from November 2013 to January 2014 in Saxony-Anhalt with the executives of the service-providing nonprofit organizations and public leaders. The underlying dimensions of six state-third sector relationship schemes were the foundation of the interview guide and the deductive coding framework. For Bremen, the results suggest that despite legal changes, state and third sector officials assess their arrangement as corporatist – though with some modifications. Collaboration, partnership and integration still very much shape state-third sector co- governance and co-management, not supporting forecasts of corporatism’s decay. However, formality and instances of low decision making mutuality and low autonomy regarding the implementation of services are on the rise. Nursing care appears to be the pioneering sector in this respect. For Saxony-Anhalt the findings indicate that a balance of corporatist and new elements (high formality, rising occasions of non-partnership interaction) are characteristic of the government- nonprofit relationship.

1 PhD-Fellow at the Bremen International Graduate School of Social Sciences (BIGSSS) at the University of Bremen, Germany. Contact: [email protected] 2 Draft: please do not cite without author’s permission. 1

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

Table of Contents

1. The traditional view on Germany: subsidiary welfare corporatism and state-third sector partnership ...... 4

2. Corporatist welfare arrangements under pressure ...... 5

2.2. Legal changes emphasize competition, pluralism and efficiency ...... 5

2.3. Still corporatism? ...... 6

3. Research focus, case studies, and the concept of rules ...... 8

3.1. Rules-in-use versus rules-in-form ...... 8

3.2. Case selection: political stability and socio-fiscal pressure ...... 8

3.3. The city-state of Bremen – Small, social-democratic, and high financial pressure .. 9

3.4. The federal state of Saxony-Anhalt – changing governments, GDR legacy and high financial pressure...... 10

3.5. Defining the terms third sector and social and health services ...... 10

3.6. Conducting qualitative research using expert interviews ...... 11

3.7. Filtering out relevant relationship dimensions: Six state-third sector relationship schemes under review ...... 14

3.8. Developing the coding system and analyzing the interviews ...... 20

4. Results of the qualitative content analysis...... 21

4.2. Kuhnle & Selle – Integrated dependence ...... 23

4.3. Gidron et al. – Collaborative-partnership versus collaborative-vendor ...... 24

4.4. Coston – Collaboration versus contracting and third-party government ...... 25

4.5. Young – Complementary and adversarial lens ...... 26

4.6. Najam – Complementarity versus confrontation ...... 27

4.7. Brinkerhoff – Partnership versus contracting ...... 29

4.8. Who interacts with whom? Shedding light on the interacting parties ...... 30

5. Summary and discussion of the findings ...... 31

5.1. The resilience of the corporatist paradigm?!...... 31 2

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

5.2. What ‘new’ elements? – Changes in welfare service planning and delivery ...... 34

5.3. Sector-specific trends...... 35

5.3.1. General findings ...... 35

5.3.2. Nursing care ...... 36

5.3.3. Children, youth, and family help ...... 36

6. Limitations. conclusions and outlook ...... 37

List of Figures

Figure 1 - Case selection ...... 9 Figure 2 - Interviewed experts and their organizations ...... 13 Figure 3 - Kuhnle & Selle's four government-voluntary welfare organization relations ...... 15 Figure 4 – Gidron et al.’s four models of state-nonprofit relations ...... 16 Figure 5 – Coston’s state-nongovernmental organization continuum ...... 17 Figure 6 – Young’s three modes of government-nonprofit interaction ...... 18 Figure 7 – Najam’s Four C’s of state-nonprofit relations ...... 19 Figure 8 – Brinkerhoff’s four modes of state-third sector interaction ...... 20 Figure 9 – Summary and interpretation of the coding results ...... 22 Figure 10- Overview and interpretation of the coding results ...... 32

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

1. The traditional view on Germany: subsidiary welfare corporatism and state-third sector partnership With corporatism and subsidiarity as bedrocks, the German system of ‘subsidiary welfare corporatism’3 has ever since its institutionalization during the Bismarckian era (subsidiarity) and the Weimar Republic (corporatism) attributed an integral partnership role to the third sector. More precisely, Germany’s welfare production has been characterized by institutionalized and persisting state-third sector linkages4 and “provides a prime example of a corporatist regime”5. Recent developments, however, have called these descriptions of cooperative partnership into question.

Germany’s traditional ‘neo-corporatist’6 setup prominently showed in the incorporation of recognized third sector entities – first and foremost the six grand welfare associations and their umbrella organization, the BAGFW7 - in public policy development, goal setting and policy implementation.8 Especially in the provision of public services, the state and third sector associations can look back on a long tradition of cooperation and coordination.9 Consequently, Esping-Andersen ascribes Germany to the group of corporatist-statist welfare states10 and Salamon & Anheier characterize Germany’s ‘nonprofit regime’ as corporatist - epitomized by a large share of public funding of nonprofit organizations and close state-third sector cooperation.11 This cooperation is guided by the subsidiarity principle implying that tasks which the individual or community can achieve independently must not be appropriated by higher level entities.12 Hence, family provided welfare should precede state welfare13 and nonprofit organizations affiliated with the grand welfare associations are endowed with a de jure and de facto precedence over statutory and for-profit entities.14

3 Cf. Boeßenecker (2005), p. 11. 4 See Czada (1994), p. 37; Backhaus-Maul/Olk (1996), p. 580. 5 Priller et al. (1999), p. 109. 6 Schmitter (1974); Lehmbruch (1979); Streeck (2008); Stephenson (2010). 7 These are Arbeiterwohlfahrt, PARITÄT, Caritas, Rotes Kreuz, Diakonie and Zentralwohlfahrtsstelle der Juden. Together they constitute the Bundesarbeitsgemeinschaft der Freien Wohlfahrtspflege (BAGFW). 8 See e.g. Merchel (2011), p. 255. 9 See Seibel (1990), p. 48; Schuppert (1991), p. 131; Zimmer (1997), p. 82. 10 See Esping-Andersen (1990). 11 See Salamon/Anheier (1998), p. 240ff. 12 See e.g. Nell-Breuning (1976), p. 6ff; Backhaus-Maul/Olk (1994), p. 105; Sachße (1998), p. 369ff. 13 See e.g. Strünck (2010), p. 57. 14 See e.g. Heinze/Olk (1981), p. 106; Zimmer (1999), p. 40. 4

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

2. Corporatist welfare arrangements under pressure 2.1. Welfare state expansion and third sector reintegration

During the welfare state expansion in the 1960s and early 1970s, the major welfare associations developed into functional equivalents of statutory entities.15 With the welfare state being “under strain”16 since the late 1970, however, the partnership role of the third sector was challenged too. Socio-demographic changes and the prominence of neo- liberalism began to undermine the subsidiarity principle and therefore the welfare associations’ privileged, monopoly-like position.17 Hence, the 1970s witnessed a de facto reintegration of the nonprofit associations into the state’s welfare system – particularly in the field of youth and social care.18

2.2. Legal changes emphasize competition, pluralism and efficiency A decade later, the German third sector faced the introduction of New Public Management, short-term pay-for-service contracts instead of lump-sums, and the step-by-step abolition of the legal precedence of acknowledged third sector organizations.19 Generally, a transformation towards a more ‘enabling’ and ‘activating’ welfare state20 could be observed. As a result, the concerted cooperation between the state and the third sector seems to have given way to more conflictive, contractual relationships. In the early 2000s, the trend towards performance based short-term contracting and greater competition among non- and for-profit social service providers gained further momentum. Already in the late 1990s, Evers & Olk, Backhaus-Maul & Olk, and Olk21 questioned whether Germany was moving from corporatism to pluralism. Legal changes - from the introduction of the Pflegeversicherungsgesetz (‘nursing care insurance law’) in 1995 to amendments of the Bundessozialhilfegesetz (‘national social help law’) and the Kinder- und Jugendhilfegesetz (‘children and youth help law’) – steadily diminished the position of nonprofit organizations and undermined the subsidiarity principle. Amongst others, the commissioning rule

15 Backhaus-Maul/Olk (1996), p. 582; Zimmer (1999), p. 41; Bode (2011), p. 121. 16 Hacker (2004), p. 243. 17 Heinze/Olk (1981), p. 103; Zimmer (1999), p. 43. 18 Sachße (1998), p. 376. 19 Zimmer/Nährlich (1997), p. 662ff; Zimmer (1999), p. 44f; Bönker/Wollmann (2000); Bode (2011), p. 125. 20 Cf. Gilbert/Gilbert (1989); OECD (1990); Mezger/West (2000); Bandemer (2001). 21 Olk (1995); Backhaus-Maul/Olk (1996); Evers/Olk (1996). 5

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany guaranteeing a service-provision mandate to acknowledged third sector providers was abolished, endowing for-profit providers to a large extent with equal status.22 Moreover, further market and efficiency measures were introduced,23 establishing a system of ‘quasi- market arrangements’24. Nowadays, the state’s decision as to which provider of public services to choose seems to depend on price-performance ratios and competitive bidding rather than on mutual bargaining and coordination.25 Consequently, state-nonprofit relations have supposedly become more conflict-laden and less driven by mutual agreement and concertation. In economic terms, one could speak of a monopsony: one buyer of social services (the state) can choose from many sellers/providers (nonprofit organizations, for- profits) and can thus dictate the rules of the game.

2.3. Still corporatism? Given these well-described developments in the legal realm, it appears questionable whether the corporatist interpretation of the German state-nonprofit relationship with its focus on non-competitive, coordinated state-association networks is still valid. This holds true for the input (e.g. policy and program development) as well as the output side (e.g. service delivery). In addition, the changes call the implicitly assumed ‘carved-in-stone’ nature of Esping-Andersen’s and Salamon & Anheier’s categorizations into question – at least with respect to welfare arrangements. Already in 1999, Heinze et al. argued that the German welfare state had been transformed into a ‘competition state’.26 Further, they diagnosed a switch from status to contract which, however, appeared to change the (legal) rules rather than the entire game.27 Later, Merchel, maintained that, although it might be premature to declare corporatism’s decay, the contemporary changes can at least be seen as a modernized shape of corporatism.28 Contrastingly, Münder claimed that the heyday of the German system of ‘welfare corporatism’29 is over. Instead competition-based ‘welfare

22 Brünner (2007), p. 220; Kruse (2007), p. 215; Münder (2007), p. 211; Neumann (2007), p. 217f; Zimmer/Priller (2007), p. 164; Kubisch (2008), p. 105. 23 Priller (2004), pp. 329, 337; Brünner (2007), p. 222. 24 See e.g. Brandsen (2004); Dahme et al. (2005), p. 38; Braun (2008), p. 127; Evers et al. (2011), p. 25. 25 See Zimmer/Priller (2007), p. 211; Merchel (2011), p. 256. 26 See Heinze et al. (1999). 27 See Heinze et al. (1997), p. 257ff. 28 See Merchel (2011), p. 257. 29 Münder (2007), p. 208. 6

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany pluralism’30 coupled with a ‘contract-bound steering’31 dominated by the state has been identified. In line with Strünck, Bode, moreover, argued that Germany is leaving the path of ‘social corporatism’32 towards a system of disorganized, volatile welfare mixes.33 In another paper, Bode even proclaimed that the old partnership (corporatist) model has been substituted by post-corporatist arrangements.34 What these studies do not answer, however, is whether the findings for the legal and regulatory changes adequately picture the everyday relationship between welfare state and third sector entities. Accordingly, I ask:

Have the legal changes also affected the everyday practices guiding the state-third sector relationship in welfare services? And if yes, can be still speak of a corporatist welfare state- nonprofit relationship?

Taking the city-state of Bremen (henceforth: HB) and the federal state of Saxony-Anhalt (henceforth ST) as cases, this paper tries to shed light on the answers to these questions. Research on the state’s relationship to welfare producing associations in Germany is a “poorly developed field”35. Schmid even referred to it as ‘the dark side of the moon’.36 Thus, it is neither a surprise that there is no thorough and systematic account of recent changes yet nor that the contemporary developments in the realm of welfare production have not yet been integrated into theoretical frameworks. This, however, changes with this research. Indeed, there have been attempts to describe parts of the current state-third sector relationship.37 Yet, these accounts are based on anecdotal evidence and general observations rather than on in-depth case study research. Moreover, their main focus is often solely on the grand welfare associations and the legislation concerning them without taking into account the statutory side.

30 Cf. e.g. Wendt (2010), p. 20ff; Evers (2011). 31 Priller (2004), p. 337. 32Bode (2006a), p. 555. 33 Bode (2006b), p. 346f; Strünck (2010), p. 60. 34 See Bode (2011). 35 Dahme et al. (2005), p. 11. as quoted in Kubisch (2008), p. 96. 36 Schmid (1996), p. 186. 37 See e.g. Evers/Olk (1996); Zimmer (1997); Priller (2004); Bode (2006b); Zimmer/Priller (2007); Strünck (2010); Bode (2011); Evers (2011); Merchel (2011). 7

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

3. Research focus, case studies, and the concept of rules 3.1. Rules-in-use versus rules-in-form

Focusing on the realm of welfare production, this paper examines whether Germany has indeed moved away from a concerted, mostly conflict-free government-nonprofit partnership – not only on the legal level but also regarding everyday practices and routines. For conceptualization, Elinor Ostrom’s research on rules is taken as vantage point. Ostrom broadly distinguished between rules-in-use, referring to the “the dos and don’ts that one learns on the ground that may not exist in any written document […and which…] may actually be contrary to the do’s and don’ts written in formal documents”38, i.e. with the rules-in-form. As the literature review shows, when it comes to welfare services substantial changes to the rules-in-form were made, supposedly undermining the German system of corporatist state-third sector cooperation. However, as Ostrom noted, rules-in-form and rules-in-use might not always be congruent. Therefore, this study examines whether the changes in the rules-in-form towards more formal, efficiency-driven state-third sector relations have also changed the rules-in-use, i.e. the practices and routines guiding everyday state-third sector interaction.

3.2. Case selection: political stability and socio-fiscal pressure Following a “most different cases” design39 the case selection is based on two variables: political (in-)stability (number of changes of government after 1990) and the relative presence (absence) of socio-fiscal problems (overall recipient/ donor in Germany’s fiscal equalization scheme across the Laender since its introduction in 1995). Political stability is thought to support the survival of the status quo - i.e. corporatist relations - since political continuity makes the creation and maintenance of inter-personal and inter-institutional relations easier and stronger, and thus renders change less likely. Contrastingly, socio-fiscal pressure is expected to promote a governmental push towards efficiency-driven, market- based principal-agent relations, hence undermining the corporatist paradigm. In this paper the results for the Bremen case study and Saxony-Anhalt’s nonprofit sector experts are presented. The missing case studies will be conducted within the author’s PhD research.

38 Ostrom (2007), p. 23. 39 Cf. Seawright/Gerring (2008), p. 298. 8

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

Figure 1 - Case selection

High political stability Low political stability High socio-fiscal pressure Bremen Saxony-Anhalt Low socio-fiscal pressure Bavaria Hessen

3.3. The city-state of Bremen – Small, social-democratic, and high financial pressure The case under scrutiny is the city-state of Bremen40, which is characterized by high financial pressure and high political stability. The state of Bremen is located in the north of Germany and comprises the cities of Bremen and Bremerhaven, with the city of Bremen being the political and economic center. In 2012 there were 655.062 inhabitants living in the state of Bremen41 with approximately 550.000 residing in the city of Bremen and 110.000 in Bremerhaven. In fact, Bremen is the smallest of all states in Germany – by population and by size.42 Moreover, it has traditionally been governed by the German social-democratic party (SPD) – since 2011 in coalition with the Green Party. In fact, the SPD has won the most parliamentary seats of all parties in every election since 1947.43 There have only been two changes in government since 1990: from an SPD-FDP coalition to an SPD-CDU coalition in 1995 and then to an SPD-Green Party coalition in 2007. Another trademark of Bremen is the high financial pressure under which the state’s governments have to operate. In fact, with an average reception between 1995 and 2012 of 592,03 Euro per inhabitant per year from Germany’s Financial Equalization Scheme, Bremen trails only Berlin, which ranks first with an average of 785,45 Euro per inhabitant per year.44 Thus, over the last 20 years the financial pressure in Bremen has always been substantially high.

40 If not indicated otherwise, Bremen in this paper refers to the federal state and not the city of Bremen. 41 Bundesministerium der Finanzen (2013), p. 7. 42 Statistisches Landesamt Bremen (2012), p. 10f. -43 Statistisches Landesamt Bremen (2009), p. 53. 44 Own calculations based on Bundesministerium der Finanzen (1997), (1998), (1999), (2000), (2001), (2002), (2003), (2004), (2005b), (2005a), (2007), (2008b), (2008a), (2009), (2010), (2011), (2013). 9

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

3.4. The federal state of Saxony-Anhalt – changing governments, GDR legacy and high financial pressure The second case is the federal state of Saxony-Anhalt. It is located on the territory of the former GDR and in 2012 2.278.621 residents were registered in Saxony-Anhalt.45 , the first state-wide elections after Germany’s reunification were held in 1990. Ever since the first election a total of five state-wide elections have been held, four of which resulted in changes in the (party) composition of the government (1994, 1998, 2002, 2006). Only the election in 2011 did not bring political change but a continuation of the grand coalition of CDU and SPD, which started in 2006. However, there was a change from Wolfgang Böhmer to Reiner Haseloff as prime minister. Hence, unlike Bremen, Saxony-Anhalt is characterized by low political stability. In fact, since 1990 only Hessen (5) and Hamburg (6) have witnessed more changes in government.

With respect to the financial pressure, however, Saxony-Anhalt is similar to Bremen. With an average of 233,00 Euro per inhabitant per year (1995-2012) Saxony-Anhalt has received the sixth most money per inhabitant per year of all 16 German states.46 Therefore, the financial pressure under which governments have to operate in Saxony-Anhalt can be considered high.

3.5. Defining the terms third sector and social and health services The term third sector - also referred to as nonprofit, voluntary, or independent sector - is operationalized following the “structural operational”47 definition of the Johns Hopkins Comparative Nonprofit Sector Project (JHCNP)48. Accordingly, in this paper the terms third sector and nonprofit sector are used interchangeably and designate the set of entities which are organized, private, not-profit distributing, self-governing, and non-compulsory.49

The focus is on nonprofit entities which are generally engaged in the delivery of welfare services and in particular in social and health services. These two subsectors are chosen

45 Bundesministerium der Finanzen (2013), p. 7. 46 Own calculations based on Bundesministerium der Finanzen (1997), (1998), (1999), (2000), (2001), (2002), (2003), (2004), (2005b), (2005a), (2007), (2008b), (2008a), (2009), (2010), (2011), (2013). 47 Salamon (2010), p. 177. 48 For a description of the project see e.g. Sokolowski/Salamon (2005), p. 235ff; Salamon (2010), p. 171ff. 49 Salamon (2010), p. 177f. 10

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany because they are the ones directly involved in third sector welfare production and hence epitomize the welfare state-third sector relations. The field of health and social services is defined according to the International Classification of Nonprofit Organizations (ICNPO) under which the areas of social and health services cover for instance hospitals, nursing homes, income support, and youth welfare.50 In Germany, and particularly in Bremen, virtually all nonprofit social service and health care providers belong to one of the six grand welfare associations.51 Therefore, the emphasis is put on these associations especially. However, as the Central Welfare Agency for Jews in Germany (own translation) is firstly very small and thus only has service facilities Bremen, the research focuses on the remaining five associations plus their state wide peak association, i.e. the BAGFW52 for Bremen and the LIGA FW53 in Saxony-Anhalt.

3.6. Conducting qualitative research using expert interviews Since this research is of exploratory nature, a qualitative research design is applied. A total of 15 semi-structured expert interviews were conducted: 11 with the state wide chief executive officers of the big welfare associations (6 in Bremen, 5 in Saxony-Anhalt), 1 with the spokesmen of the Bremen chapter of the BAGFW, 1 with the head of the LIGA FW, and 2 with the division directors of Bremen’s department for social issues, children, youth, and women. Unfortunately, interviews with statutory experts from Saxony-Anhalt could not be conducted yet, partially due to changes in staff and structure in the relevant agencies. One potential candidate is on sick leave, another one has only started their job two months ago.

Expert interviews are suitable as they can provide the researcher with specialized information about formal and informal organizational processes and institutional relationships, for example.54 The interviews in Bremen were conducted in person; the interviews for Saxony-Anhalt were conducted via telephone. All interviews were digitally recorded, transcribed, and lasted between one and two hours. The experts were selected

50 See Salamon/Anheier (1992), p. 292f. 51 Cf. Zimmer et al. (2009), p. 21; Strünck (2010), p. 58; Bode (2011), p. 121. 52 Bremer Arbeitsgemeinschaft der Freien Wohlfahrtspflege 53 Liga der Freien Wohlfahrtspflege 54 Cf. Przyborski/Wohlrab-Sahr (2010), p. 131. 11

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany using purposive sampling55 based on the knowledge about their organization’s processes, goals and challenges as well as their interaction with the statutory, respectively third sector side. The goal was to find at least one expert from each organization who met these criteria and was responsible for the state of Bremen or Saxony-Anhalt, respectively. Only the expert from the worker’s welfare association was mainly responsible for the city of Bremen. Thus, their accounts exclude first-hand experiences from Bremerhaven. All other experts’ area of responsibility was the state of Bremen. From the international humanitarian network two experts were interviewed because one person’s area of activity was the interest articulation vis-à-vis the state whereas the other person focused more on management operations and bargaining with the statutory side. The remaining third sector experts were involved in both areas - making it sufficient to interview one from each association.

The selection of the statutory experts was done via snowball sampling56 - the third sector officials were invited to recommend further interview partners/ entities. Moreover, the third sector leaders were asked which statutory entity is the one most relevant for them. The results for this question were also coded in order to find out with which public actors/ entities the third sector mostly interacts.

55 Cf. Neuman (2003), p. 213. 56 Cf. Neuman (2003), p. 214. 12

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

Figure 2 - Interviewed experts and their organizations

Number Position of Organization Areas of organizational activity of expert(s) experts Association of Umbrella organization for social movements Executive social focusing on social justice, help for self-help, 2 director movements and equal opportunities. Chairperson Social and health service provision for the Christian of the board disadvantaged revolving around Christian welfare 2 (HB) / altruism, solidarity, human dignity, and the association I managing public testimony of the Church’s teaching. director (ST) Provides social and health services for the Executive Christian needy based on a holistic approach, director (HB) welfare respecting human dignity, and Christian 2 / managing association II values – especially those found in the director (ST) Gospel. Third Strives for neutrality, dignity for all human sector International beings, and ensuring health and well-being. Executive humanitarian 3 Especially active in emergency medical director network services. Spokes- Umbrella Peak association functioning as person of the organization representative of the grand welfare board (HB) / of the grand 2 associations vis-à-vis the public and the Chairperson welfare state. of the board associations (ST) Historically connected to the idea and Worker’s values of social democracy. Particularly Executive welfare 2 active in the youth help, and the in- and director association outpatient care sector. Responsible for the development and Division for Division chief management of help for the elderly, the 1 social issues (HB) State handicapped, the poor, and immigrants. Division for Organizes and coordinates the help for Division chief 1 young people children, youth, and families. (HB)

The interview guide for the semi-structured expert interviews was developed based on six state-third sector relationship typologies found in literature. They point to the most important dimensions of state-third sector relationships and highlight how these can be classified. In the following, these frameworks are briefly introduced and their contribution to

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany the interview guide is elaborated on. In a later chapter it is also shed light on how the relationship schemes influenced the construction of the coding system.

3.7. Filtering out relevant relationship dimensions: Six state-third sector relationship schemes under review In order to give an in-depth account of the state-third sector relation, the relevant relationship dimensions had to be filtered out. By means of a literature review, six classification schemes depicting and charting state-third sector interactions could be identified. Despite their theoretical importance, they have not at all or only barely been tested empirically.57 Each scheme contains at least one category resembling a corporatist arrangement of co-governance and co-management. In case the rules-in-use are still of corporatist nature, the codes for these categories should show most prominently in the data. Findings were then contrasted with the results for other themes, such as contractual or adversarial configurations.

In the early 1990s, Kuhnle & Selle58 introduced what can be considered the first typology of state-third sector relationships. Focusing on social and welfare voluntary organizations, they argue that relationship types differ along two dimensions: state-third sector (in-)dependence and nearness/distance. Dependence is conceptualized with regards to sizeable governmental control over third sector organizations (e.g. via financing and/or regulations), whereas nearness refers to the regularity and easiness of state-nonprofit interaction and communication. Hence, it is distinguished between four state-nonprofit relationships.

57 For an empirical application of Kuhnle and Selle’s typology see Vincent/Harrow (2005). For Young’s three lenses see Reisch/Sommerfeld (2003). And for Brinkerhoff’s typology see Johnson/Wilson (2006). 58 Kuhnle/Selle (1990), (1992a), (1992b). 14

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

Figure 3 - Kuhnle & Selle's four government-voluntary welfare organization relations59

Communication and Contact

Nearness Distance

(Finance Dependence Integrated dependence Separate dependence and) Control Independence Integrated autonomy Separate autonomy

In a tentative attempt, Kuhnle & Selle describe Germany’s configuration in 1992 as integrated dependence.60 Clearly, this relationship type comes closest to corporatism with third sector organizations playing an integral role in the public policy process and in service delivery. Germany’s current situation could probably be one of separate dependence with nonprofit organizations being dependent on public funding and under heavy (performance) regulation while at the same time losing importance relative to other actors in policy making and welfare production. The dimensions taken over for the interview guide from Kuhnle & Selle’s scheme are the integration of the third sector into welfare planning (input), welfare production (output), and the (perceived) interdependence of state and nonprofit organizations.. Also, the regulation governing the third sector in the realm of public service delivery and the assessment thereof by public and third sector officials is scrutinized. This is because regulation can serve as statutory tool for controlling the third sector.

Another scheme stems from Gidron et al.61, who scrutinize the public service dimension of state-nonprofit interactions. They identify four overarching models based on which actor dominates, who finances and who delivers the services. Two of these overarching models can be divided into two further ‘submodels’. These submodels are the collaborative- partnership and collaborative-vendor model, and the dual-complement and dual- supplement model.

59 Own illustration of Kuhnle/Selle (1992a), p. 30. 60 See Kuhnle/Selle (1992a), p. 30. 61 Anheier (1992). 15

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

Figure 4 – Gidron et al.’s four models of state-nonprofit relations62

Government Third sector Dual Collaborative dominant dominant

No actor No actor Dominant actor Government Third sector dominant dominant

Government & Service finance Government Government Third sector third sector

Service Government & Government Third sector Third sector provision third sector

Following this scheme, corporatist arrangements fit the collaborative-partnership model with its emphasis on state finance, nonprofit delivery and bargaining autonomy. This is in line with Anheier, whose description of Germany’s situation in the early 1990’s fits the collaborative-partnership model.63 By contrast, the collaborative-vendor model might depict the current situation for contractual arrangements have likely deprived nonprofit organizations of their decision-making authority. For the interview guide, the important dimensions from Gidron et al.’s scheme are dominance and discretion, i.e. decision making authority and bargaining power. Also, the state’s and third sector’s importance in service finance and service delivery is examined.

The scheme developed by Jennifer Coston in 199864 describes state-nongovernmental organization relations by taking on a public service perspective and excluding advocacy nongovernmental organizations. In this model, state-third sector relations are organized along four main dimensions: formality of interaction, (dis-)balance of power between the actors, statutory acceptance of institutional pluralism, and the strength of the state-third sector linkage.

62 Own illustration of Gidron et al. (1992), p. 18. 63 Anheier (1992), p. 31ff. 64 Coston (1998). 16

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

Figure 5 – Coston’s state-nongovernmental organization continuum65

With respect to Germany, the description of complementarity (rather informal, high linkage relationship) comes closest to welfare corporatism. Taking into account the growing use of (performance) contracts and competitive bidding, it could be argued that Germany has moved to a state of third-party government or even contracting where nonprofit organizations are “mere implementers of government’s will”66. Based on Coston’s model, the degree of (in-)formality in the relations between third sector and state officials are assessed. Signs for formality could for instance be contracts, official meetings, and committee work. Furthermore, the strength of the state-third sector linkage is analyzed, i.e. the frequency, intensity, and scope of public-nonprofit interaction. Next to the state’s acceptance of institutional pluralism, which shows in the favorability of government policies vis-à-vis nonprofit organizations, the power distribution between the two actors is assessed. Signs for a symmetrical power distribution are for example the presence of joint action as well as resource and information sharing among public and nonprofit entities.67

In his attempt to classify state-nonprofit sector relations, Dennis Young68 came up with three distinct perspectives through which these relations can be viewed. The bedrock of his scheme are economic theories of the nonprofit sector, most notably Weisbrod’s governmental-failure theory.69 The three modes Young identifies are not to be regarded as

65 Coston (1998), p. 363. 66 Coston (1998), p. 375. 67 Coston (1998), p. 365ff. 68 Young (2000), (2006). 69 Weisbrod (1977). 17

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany mutually exclusive categories.70 Young focuses on the presence of state-third sector interaction, state regulation, third sector advocacy activities, and client structures.

Figure 6 – Young’s three modes of government-nonprofit interaction71

Germany’s traditional state-nonprofit relationship can best be viewed through the complementary lens with its focus on partnership and cooperation. Current changes, however, suggest that the adversarial lens gains importance – the state pressures nonprofit organizations with market measures and nonprofit organizations, in turn, campaign for more solidarity and a revival of the subsidiarity principle. Young’s lenses induce the consideration of the quantity of interaction between nonprofit organizations and the state. Another valuable dimension is the amount and quality of regulations enforced by the state which apply to the realm of welfare services – and also the third sector’s opinion on these measures. Moreover, it is analyzed whether, and if yes why, state and third sector officials perceive each other as partners.

By integrating complementary, cooperative and confrontational interaction modes, Najam’s ‘Four C’s Model’72 is similar to Young’s classification scheme. The four types identified by Najam are based on the (mis-)match of the goals and strategies between statutory and nonprofit entities. The model includes both, advocacy and service delivery organizations.

70 See Young (2006), pp. 41,48. 71 Own illustration of Young (2006), p. 40. 72 Najam (2000). 18

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

Instead of focusing on comparative advantage, as Coston for example, the Four C’s model is based on a theory of strategic institutional interests.73

Figure 7 – Najam’s Four C’s of state-nonprofit relations74

According to Najam’s model, Germany seems to have moved from cooperation and/or complementarity to confrontation. Since a corporatist welfare structure entails joint goal setting and agreeing on strategies, cooperation comes closest to the German system. One could also argue for complementarity, because despite jointly set goals, the strategies differed or were at least divided: the state as financier, nonprofit organizations as providers. This implies that the current situation with a still present strategy division coupled with goal divergence – the state allegedly opting for efficiency, nonprofit organizations possibly stressing effectiveness in helping people – might potentially be classified as confrontation. When gauging state-nonprofit relations, it is indispensable to chart the actors’ goals and strategies and check for their compatibility – that is the lesson learned from Najam’s Four C’s model. Hence, statutory and nonprofit entities’ ends and their chosen means to reach them are assessed. Also, it is analyzed in how far the actors perceive a congruence or divergence between their goals and means and those from the other actor.

Brinkerhoff75 identifies partnership as a common and desirable, yet poorly examined, theme of state-nonprofit sector relations. She contrasts partnership – which is depicted as mutually agreed upon division of labor due to comparative advantages - with three other relationship forms. The two defining dimensions are mutuality and organizational identity. The former refers to mutual interdependence of the actors coupled with equality in decision making and

73 Najam (2000), p. 382f. 74 Najam (2000), p. 383. 75 Brinkerhoff (2002). 19

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany a shared commitment to common goals; the latter to the distinctive normative and functional traits of an entity.76

Figure 8 – Brinkerhoff’s four modes of state-third sector interaction77

When placing a corporatist country on this map, one is bound to end up with the label partnership. For current Germany, contracting seems to be the appropriate notion since the state increasingly appears to pull all strings regarding program selection (low mutuality). Also, it appears plausible that nonprofit organizations have lost their characteristic traits (low organizational identity) due to the state’s demand for business efficiency and professionalization. Hence, extension might be an appropriate label too. Leaning on Brinkerhoff’s typology, the extent of mutuality and organizational identity experienced by state and third sector entities is examined. Mutuality is assessed via equality in goal setting and decision making, actors’ (in-)dependence, and the degree of trust in the relationship. The presence (absence) of mission drift and goal displacement, for example, would indicate low (high) organizational identity.

3.8. Developing the coding system and analyzing the interviews The analysis of the transcribed interviews was conducted with the use of qualitative content analysis. Such is especially useful when comparing what one “group of persons says to a

76 See Brinkerhoff (2002). 77 Brinkerhoff (2002), p. 22. 20

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany given topic compared to another group”78. The two groups were the statutory and the third sector experts. Qualitative content analysis involves the coding of the data, that is organizing “the raw data into conceptual categories”79 by assigning ‘chunks’80 of data to a particular theme, category, or concept. A good code is supposed to “capture the qualitative richness of the phenomenon”81. Since the conceptual foundation for the interview analysis are the six state-third sector schemes, “quantitative”82, “a priori”83 coding was conducted. Following this deductive approach, codes were derived from the conceptual frameworks, i.e. the relationship typologies. Broadly speaking, every dimension/ concept, such as mutuality (derived from Brinkerhoff’s scheme) and power distribution (deduced from Coston’s framework) constituted a code. Subcodes were then created for each dimension, such as ‘high’ and ‘low mutuality’, and ‘equal’ and ‘asymmetrical power distribution’. Overall, thirty- four codes were established. Subsequently, the data was coded using MAXQDA by assigning parts of the interviews – words, sentences, or entire paragraphs – to the predefined codes. However, as the dimensions of the different schemes were partially overlapping, some data chunks were assigned to more than one code. Besides the codes deducted from the relationship frameworks, it was also coded for the specific sector, for instance nursing care or youth help, the interviewee was referring to.

4. Results of the qualitative content analysis 4.1. Overview Below the unweighted coding results of the qualitative content analysis are laid out. It is distinguished between the responses of third sector leaders and state officials. Unweighted means that the numbers in the table reflect the occurrences in the data. For instance, the value 28 for high state-third sector linkage indicates that overall 28 segments were found in the transcriptions which implied that the state-third sector linkage is high. The classification row points to the respective scheme’s category which depicts best the situation following the coding results.

78 Schreier (2012), p. 42. 79 Neuman (2003), p. 441. 80 Cf. Miles/Huberman (1994), p. 56. 81 Boyatzis (1998), p. 31. 82 Richards (2010), p. 94. 83 Miles/Huberman (1994), p. 64. 21

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

Figure 9 – Summary and interpretation of the coding results

State Third sector Typology Dimension HB HB ST Communication Integration 8 40 41 and contact Separation 1 6 10 Kuhnle Finance and Autonomy 3 11 2 & Selle control Dependence 14 44 18 Integrated Integrated Integrated Classification dependence dependence dependence High Discretion of 17 44 45 discretion third sector Low organizations 5 44 27 discretion Who Finance State State State prevailingly finances and Gidron who prevailingly Provision Third sector Third sector Third sector et al. delivers the services? Between Collaborative- collaborative- Collaborative- partnership with Classification vendor and partnership Collaborative- collaborative- vendor elements partnership Favorability of Favorable 1 2 0 state- Unfavorable 0 2 0 regulations State more 3 25 16 powerful Equal power Power 16 16 20 distribution distribution Third sector more 0 0 2 Coston powerful State-third High linkage 7 21 22 sector linkage Low linkage 0 2 4 Formality of Formal 19 43 27 state-third sector Informal 2 29 9 interaction Contracting or Third-party Classification Collaboration third-party government government High degree 7 16 22 of partnership Partnership Low degree of 0 6 18 Young partnership

Interaction Frequent 4 15 16 quantity interaction 22

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

Rare 2 2 2 interaction High/ close- meshed 8 45 38 Regulation regulation quantity Low/ loose 1 8 9 regulation Third sector’s In favor n.a. 18 6 opinion on Neutral n.a. 3 1 regulation Opposed n.a. 8 25 Adversarial lens Complementary Complementary with elements of Classification lens and lens and complementary adversarial lens adversarial lens lens Goals Congruence 2 12 16 Divergence 5 2 13 Means Congruence 1 0 0 Divergence 2 1 7 Najam between Complementarity Classification Confrontation Complementarity and Confrontation High 18 17 16 Mutuality mutuality Low mutuality 2 11 18 High organizational 1 17 23 Brinker- Organizational identity hoff identity Low organizational 0 6 9 identity Partnership with Between Partnership or Classification contracting Contracting and Co-optation elements Partnership

4.2. Kuhnle & Selle – Integrated dependence The clearest categorization of the rules-in-use characterizing Germany’s current state-third sector relationship in the realm of social and health services appears to be Kuhnle & Selle’s typology. For Bremen, a total of 127 segments were found with both, state and third sector experts clearly viewing their interaction as frequent, extensive, and rather smooth. As one third sector expert remarked “the contacts which […] exist on our and on their side have been and still are good” (own translation). Accordingly, Bremen’s public and nonprofit actors

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany seem to be integrated instead of distant from each other. In Saxony-Anhalt the third sector experts paint a similar picture.

Moreover, in both federal states the experts claim that they are dependent on each other – the third sector on the state for financing and the state on the third sector for service delivery. This for instance shows in the high “path dependency” (own translation) in welfare services, i.e. the state continues to turn to the third sector for service delivery due to already existing joint projects. In conclusion, state and third sector leaders view their relationship as integrated dependence. Hence, Kuhnle & Selle’s tentative claim in the early 1990’s that Germany’s welfare system is characterized by integrated dependence seems to still hold – at least for Bremen and the third sector in Saxony-Anhalt. Remarkably, this category also resembles closest corporatist structures.

4.3. Gidron et al. – Collaborative-partnership versus collaborative-vendor The picture drawn by Gidron et al.’s typology points in a similar, yet different direction. There appears to be no disagreement with respect to the assigned roles: the state is seen as financier and the third sector as service provider. However, findings regarding the discretion of third sector providers with respect to service planning and delivery are ambiguous. The Bremen statutory and, to a lesser degree, the Saxony-Anhalt nonprofit experts hold the view that nonprofit organizations by and large enjoy a rather high degree of bargaining power and decision-making authority. One public expert in Bremen remarked that their department tries to treat for-profit providers equally as compared to nonprofit providers. Later in the interview, however, the same person expressed preference for providers which deliver services due to “their convictions and self-conception” (own translation) over purely profit- oriented ones as “intrinsic motivation to increase social cohesion […] is a very important prerequisite for service quality” (own translation). It might thus be concluded that formally for-profit providers are treated equally but that the specific setup of nonprofit association, such as their intrinsic motivation and the profit-distribution constraint, gives them still an edge when competing for public contracts and thus a greater discretion in bargaining.

Bremen third sector officials tell a contrasting story, namely one of ambivalence. One the one hand, they agree to still have “an influential say […] in the planning processes” (own

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany translation). On the other hand, however, third sector organizations complain that their influence is dwindling because the statutory side is frequently unreceptive to their critique and decides upon concepts and guidelines as they see fit. Moreover, given the close-meshed state regulations applying to nonprofit entities receiving public support, Bremen third sector providers feel deprived of considerable leeway in service delivery. This is especially the case in the nursing care sector with its tight regulations and clearly defined standards.

Applying Gidron et al.’s scheme the government-nonprofit relationship can be described as collaborative-partnership (Bremen statutory experts), collaborative-partnership with collaborative-vendor elements (Saxony-Anhalt nonprofit experts) and in-between collaborative-partnership and collaborative-vendor (Bremen nonprofit experts).

4.4. Coston – Collaboration versus contracting and third-party government The state’s and the third sector’s view also differ when applying Coston’s typology. Since too few segments were found in the data indicating whether state regulations are favoring or hampering the third sector, the interpretation of the results for this dimension can only be vague. If at all, they point in the direction of neutrality to favorability. Fortunately, the findings for the other three dimensions are stronger – and again show signs of disagreement.

The only dimension on which all experts share the same view is their high linkage (cf. ‘integration’ from Kuhnle & Selle). Both claim that they are frequently interacting with each other and that some reciprocity is involved. Yet, when it comes to the question of how formal that interaction is, opinions are diverging. According to the proponents of the state in Bremen, the state-third sector relationship in Bremen is overwhelmingly formal and resembling a “business relationship” (own translation). Saxony-Anhalt third sector leaders agree that there are important formal elements to the relationship with informal elements still being present (“the informal part is in fact still present” (own translation)). For Bremen nonprofit leaders informal arrangements play an important role as well. Examples are for instance round tables, spontaneous meetings, and personal ties to members of the Bremen parliament. Several times it was remarked that the informality is facilitated by Bremen being

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany a city-state. After all, meeting the decision makers could easily be achieved by walking “at noon over the market square” (own translation).

Regarding the perceived power distribution between public and third sector entities there is even greater disagreement. Bremen state officials paint an image of equal power distribution with both sides being dependent on each other and no party being able to dominate. By contrast, the welfare associations’ experts perceive an asymmetrical power distribution with the state being the overall more powerful actor. This is not to say that they feel entirely dominated. In fact, it was remarked that the state’s power has its limits, for example due to the state’s dependency on the third sector for service delivery. However, third sector officials generally hold the view that the state is the one which is calling the shots in the end. One example would be the procedure for awarding contracts. Here, Bremen nonprofit leaders claimed that the state takes advantage of its monopsony and dictates the rules and decision criteria. This would show especially in the prominence of economic efficiency and the preference for offers with a higher self-contribution by the service provider when awarding public contracts or subsidies.

Following Coston’s framework the state-third sector interaction is depicted as collaboration (Bremen statutory experts), in-between contracting and third-party government (Bremen nonprofit leaders), and third-party government (Saxony-Anhalt nonprofit leaders).

4.5. Young – Complementary and adversarial lens The results for Young’s framework scheme are also ambivalent. On two dimensions the statutory and the nonprofit assessment of the state-third sector relationship point in the same direction. Confirming the findings for the high state-third sector linkage (cf. Coston), the interaction quantity is seen as high by both parties. Moreover, there seems to be consensus that the quantity of statutory regulation is also high and that the regulations are close-meshed. Despite a few critical remarks by third sector experts, however, the Bremen third sector appears to be in favor of guidelines and standards. One argument was that tighter (quality) standards help uncover cases of incompliance and misconduct more easily. The critical remarks revolved around occurrences of overregulation and documentation requirements “on top” of the actual care work. The tenor in Saxony-Anhalt is the same,

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany however, the third sector experts there stress much more the negative impacts of the regulation with one experts even speaking of a statutory “documentation mania” (own translation). In Bremen, both sides view their relationship as a partnership – that statutory side even exclusively so. In Saxony-Anhalt, occasions of government-nonprofit partnership only slightly outscore situations of non-partnership interaction.

Therefore, Bremen’s state-third sector relationship should be viewed through the complementary and the adversarial lens. The perception of partnership and the frequent interaction indicate strong elements of complementarity. Hence, corporatist arrangements appear still to be present. The adversarial lens seems to be applicable as well. This is epitomized by the perceived presence of close-meshed state regulation for, as Young put it, “in the guise of regulation, government can become the adversary of nonprofits in the policy arena”84. It has to be born in mind, however, that nonprofit organizations are mostly in favor of the regulations. Therefore, it seems questionable whether the presence of the adversarial lens is as pronounced as the close-meshed regulations and standards suggest. For Saxony- Anhalt it can be concluded that the situation portrayed by the third sector officials can rather be viewed through the adversarial lens (close-meshed regulation which is opposed by the third sector) with some elements for the complementary lens (a balance of high and low partnership occasions).

4.6. Najam – Complementarity versus confrontation In the interviews the experts were first of all asked to describe the goals and strategies of their organization. In a second step, they were asked to whether they think these are congruent with those of the other side, i.e. the state or the third sector. Using this approach, the experts agreed that the means of the state and the third sector are different. With respect to the goals, however, the third sector leaders in Bremen see a clear congruence, the third sector experts in Saxony-Anhalt perceive a balanced situation, and the Bremen state officials perceive divergence. According to Najam’s typology, the Bremen state thus experiences the situation as confrontation (dissimilar means and goals) whereas Bremen’s nonprofit experts rather see complementarity (similar goals, dissimilar means). The

84 Young (2000), p. 157. 27

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany perception of Saxony-Anhalt’s nonprofit sector is in-between complementarity and confrontation (similar and dissimilar goals, dissimilar means).

However, since this way of applying Najam’s typology did not yield high-volume results, i.e. only a few segments were found in the data, the interview transcriptions for Bremen were analyzed once more in a different way.85 This time the goals and means that the experts ascribed to their own entity were compared to each other. This way the assessment of one actor about the goals/ means of the other actor were kept out of the equation. First of all, the goals/ means that state and third sector officials claimed they would pursue/ use were sorted as to group goals/ means of the same theme together. This resulted in 14 thematically different statutory goals and 13 different means, and 19 different goals and 11 different means for the third sector. In a second step, the two lists were scrutinized for corresponding entries. For example, a state official named the maintenance of diversity in welfare services as a goal. Corresponding goals listed by third sector leaders were for instance preserving current services and developing new ones and offering special services to children and young people.

Overall, equivalent goals on the third sector side were found for 9 out of the 14 statutory goals, which is a ratio of about 64%. Vice versa, however, only 9 out of the 19 goals of the third sector could be attributed to a statutory goal (ratio of about 47%). This is due to the fact that some goals mentioned by third sector experts could be attributed to more than one statutory goal leaving many third sector goals unassigned. In other words, 18 out of the 33 identified goals are shared by both the state and the third sector (≈55%). This leaves 15 goals which are either unique to the state (most importantly the desire to meet public budget objectives) or the third sector (mainly to maintain and extend their level of service provision). Consequently, the results point rather in the direction of goal congruence than divergence. However, they are anything but unequivocal.

The results for the means are more straight-forward. The state and the third sector seem to have only one strategy in common: (the threat of) opting out of the contract negotiations. Since such would leave the state without a provider and the nonprofit organization without public subsidies, however, it is the threat of opting out rather than the actual act that

85 Since hitherto no interviews with statutory experts could be conducted in Saxony-Anhalt this analysis could only be run for Bremen. 28

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany represents the strategic tool here. None of the other statutory and third sector strategies are matching, rendering 12 state means and 10 third sector means unique to the respective actor. Hence, with only 2 of the 24 reported means matching, one can clearly speak of dissimilar means when comparing the state and the nonprofit sector.

In conclusion, the alternative evaluation of the experts’ insights with Najam’s scheme shows that the means in Bremen are indeed dissimilar. Furthermore, the state and the third sector have a great deal of similar and dissimilar goals. Thus, Bremen’s state-third sector relationship could be characterized as either confrontation or complementarity.

4.7. Brinkerhoff – Partnership versus contracting Last but not least, Brinkerhoff’s typology once more portrays differences in the actors’ perception of their relationship. Bremen’s statutory experts clearly paint a picture of high mutuality, whereas Bremen’s nonprofit officials also reported many occasions of low mutuality. Despite the general goal to reach consensus, for instance in the area of youth help, third sector experts hold the view that many decisions are taken by the state without the consent of the welfare associations. From the public administration’s point of view, however, these instances are very rare and only play a minor role. Saxony-Anhalt’s nonprofit leaders even reported slightly more often about low mutuality than about situations of high mutuality..

Unfortunately, only the third sector experts felt able to evaluate the organizational identity of the service providing nonprofit organizations. Only one segment was identified in the statutory interviews dealing with this dimension, which indicated high organizational identity. Hence, no proper conclusion can be drawn. In both federal states nonprofit organizations assess their degree of organizational identity vis-à-vis state institutions as high. Although they are at times forced to adjust their work to the state’s demands, they feel generally able to maintain their characteristic traits and values which distinguish them from public entities and other nonprofit organizations.

According to Brinkerhoff’s typology the state-nonprofit sector interaction in Bremen can be described as partnership (statutory experts) and as partnership with contracting elements

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

(nonprofit experts). In Saxony-Anhalt the nonprofit experts’ assessment leads to a categorization in-between contracting and partnership.

4.8. Who interacts with whom? Shedding light on the interacting parties As described in the methods section, third sector and state experts were asked to list the entities and/ or people which they see as their most important contacts from the other actor. Not surprisingly, the nonprofit leaders listed Saxony-Anhalt ministry for labor and social issues and Bremen’s department for social issues, children, youth, and women as their most relevant contact. A bit less often Saxony-Anhalt’s ministries of finance and of education and cultural affairs and Bremen’s department for education, science, and health, the department for finance, and the department for the economy, labor, and harbors were listed. When asked whether they are rather in touch with the administrative or the political part of the statutory entities, both parts were mentioned to roughly equal extent. The nonprofit experts maintained that for policy-related, strategic issues they rather turn to the political side. In their everyday business, third sector entities frequently interact with the public administration, for example when negotiating service charges and submitting proofs of performance.

The state officials in turn listed the Bremen branch of the umbrella organization of the grand welfare associations as their main contact. Moreover, they are also in touch with the executives of the respective welfare associations. More to the point, no welfare association was mentioned explicitly meaning that the linkages to them are rather similar. Besides the big welfare providing organizations, Bremen’s public administration also interacts with some small, independent welfare providers and civil society entities such as refugee organizations and senior citizen’s associations. Last but not least, there are also linkages to for-profit providers and their peak association the bpa86.

86 Bundesverband privater Anbieter sozialer Dienste e.V. (National association of private social service providers) 30

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

5. Summary and discussion of the findings 5.1. The resilience of the corporatist paradigm?! When looking at the results revealed by the qualitative content analysis and the application of the six typologies, it is first of all striking that no matter which scheme one applies, Bremen’s state-third sector relationship can overwhelmingly be attributed to the corporatist categories. In Saxony-Anhalt the third sector experts’ description paint a mixed picture. In the table, the term ‘new’ designates elements not in congruence with a corporatist configuration.

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

Figure 10- Overview and interpretation of the coding results

Expectations based on rules-in- Results form Traditional Current configuration State Third sector configuration (‘corporatist’) HB HB ST Classification Interpretation Classification Interpretation Classification Interpretation Kuhnle & Integrated Separate Integrated Integrated Corporatist Corporatist Integrated dependence Corporatist Selle dependence dependence dependence dependence Collaborative Collaborative- Gidron et Collaborative- Collaborative- Collaborative- Corporatist & new partnership with Corporatist with Corporatist partnership & partnership vendor partnership elements collaborative vendor new elements al. collaborative-vendor elements Third-party Third-party Corporatist with Third-party Complementarity government / Collaboration government & New New Coston new elements government contracting contracting Complementary Adversarial lens with New with Complementary Corporatist & new Complementary lens Corporatist & new Adversarial lens lens & adversarial complementary lens corporatist Young lens elements & adversarial lens elements lens elements elements Cooperation / Complementarity & Corporatist & new Confrontation Confrontation New Complementarity Corporatist Najam complementarity confrontation elements

Najam Cooperation / Confrontation Confrontation & complementarity (Corporatist & new elements) n.a. n.a. alternative complementarity Contracting / Partnership with Corporatist with Contracting & Corporatist & new Partnership Partnership Corporatist Brinkerhoff extension contracting elements new elements partnership elements

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

The first conclusion is that the rules-in-use by and large still coined by the traditional corporatist paradigm. Or leaning on Pierson’s famous line about the British welfare state87: the German system of subsidiary welfare corporatism, if battered, remains intact. Accordingly, Backhaus-Maul & Olk’s ‘from corporatism to pluralism’88 question has to be answered in the negative. Nor do these observations confirm Bode’s89 claim of the end of the partnership model.

This is not to say that nothing has changed, however. As a matter of fact, an unequivocally corporatist image can only be sketched with Kuhnle & Selle’s integration and dependence dimensions. Rather, the case of Bremen seems to substantiate Merchel’s90 conclusion that German corporatism has been modified but not disappeared. In fact, 4 of the remaining 5 typologies indicate that Bremen’s state-third sector relationship can be characterized as generally corporatist with some minor modifications (‘corporatist with new elements’). In Bremen it is almost always the experience of the third sector officials that deviates from the corporatist interpretation, whereas the state experts perceive the present configuration as clearly corporatist. Bremen’s third sector leaders are either entirely disagreeing with public officials (see for example Coston’s typology) or at least perceive a balance of corporatist and other characteristics (‘corporatist & new’). Only with Najam’s typology the picture is reversed. However, it has to be kept in mind that the coding scores for Najam’s strategy dimension were very low. Thus, the interpretation of this dimension has to be treated with caution. Last but not least, Young’s and the alternative application of Najam’s scheme depict a balance of corporatist and new elements. However, one has to distinguish between these two. Since the ratio of similar and dissimilar goals of the state and the nonprofit sector is close to equal, the alternative analysis with Najam’s classification indeed portrays a balance of corporatist and new elements. The findings for Young’s typology have to be examined further. At first glance, they show that the adversarial lens is not to be neglected when interpreting Bremen’s state-third sector relationship and that the complementary lens fits well too. Indeed, it is clear that the complementary lens appears appropriate. However, the results for the adversarial lens might be misleading. On the one hand, both actors agree that there are close-meshed regulations and standards – a sign that the state acts as adversary

87 Pierson (1996), p. 161. 88 Backhaus-Maul/Olk (1996). 89 Bode (2011). 90 Merchel (2011). 33

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany and controller of the nonprofit sector using legal tools. On the other hand, Bremen’s third sector experts are mostly in favor of these regulative policies. That is why it is questionable whether the adversarial lens is as applicable as the findings suggest at first sight. Potentially, the overall interpretation could also be ‘corporatist with new elements’ instead of a ‘balance of corporatist and new elements’. This would make the overall interpretation even clearer with then all schemes besides the alternative results for Najam’s typology classifying Bremen’s state-third sector relationship as either ‘corporatist’ or ‘corporatist with new elements’.

For Saxony-Anhalt the case looks a bit different. Here the system of subsidiary welfare corporatism seems to have been severely battered and has not remained intact in its entirety. Following the insights of the third sector experts only Kuhnle & Selle’s typology would uphold the corporatist interpretation. Furthermore, applying Gidron et al.’s scheme the government-nonprofit relationship as perceived by Saxony-Anhalt’s nonprofit experts would be interpreted as still corporatist, yet with conceivable new elements. Najam’s and Brinkerhoff’s typology in contrast depict a picture of a balance between new and traditional, corporatist traits. Observing the relationship dimension proposed by Young one could even speak of a new system of welfare production with still a considerable amount of corporatist elements in place. Based on Coston’s relationship scheme, however, Saxony-Anhalt’s state- third sector relationship cannot at all be considered a corporatist one anymore.

In sum, the Bremen state experiences the relationship still as overwhelmingly corporatist, whereas its nonprofit sector perceives a mix of by and large corporatist and some new elements. In contrast, Saxony-Anhalt’s nonprofit sector experts view their relationship to the state as an overall balanced mix of corporatist and new elements. This raises the question about the nature of the modifications to the corporatist systems of welfare production.

5.2. What ‘new’ elements? – Changes in welfare service planning and delivery The new elements disclosed by the analysis give further momentum to the claim that competitive, market-based mechanisms have been injected into the state-third sector relationship in Germany – not only when looking at the rules-in-form but also regarding the rules-in-use. This, however, is not to say that such a system has already been fully

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany established. Instead, the corporatist rules-in-use appear to be rather resistive to the legal changes – at least regarding Bremen. On a general note, the high organizational identity (Brinkerhoff’s typology) suggests that the welfare associations have partially grown out of the statutory system of welfare production. This does not mean they are independent; rather the integration of the nonprofit associations into the state’s welfare system in the 1970s appears to have been reversed to some extent.

Moreover, the study could show that instances of low third sector discretion (see Gidron et al.’s framework) and low mutuality (Brinkerhoff’s typology) are considerable. In Bremen nonprofit organizations increasingly feel that the state’s political will regarding welfare services is imposed on them from above and without their opinion being considered. This is not so much the case in Saxony-Anhalt. Here the state rather seems to try to make use of almost every option to pay as little as possible for social services. These instances are also mainly responsible for the instances of a low degree of partnership (Young’s scheme). Saxony-Anhalt’s welfare associations feel being reduced to petitioners for public funding and contracts. One expert summarizes the state’s actions as “I award you a contract but please bring the money yourself” (own translation). The high score for close-meshed regulation is mainly related to process requirements and documentation obligations imposed by the state on social and health service providers. Moreover, the high formality score (Coston’s dimension) is not surprising. After all, market and contract interactions are of formal nature. Next to the contracting and tendering procedure the formal elements relate mainly to official invitations to formal hearings e.g. on law proposals.

5.3. Sector-specific trends 5.3.1. General findings The sector-specific analysis focuses on the nursing care and children and youth help sector for only with these two sectors the found segments reached a critical amount. Note that for reasons of completion, this analysis only takes into account the data from Bremen where already public and nonprofit experts could be interviewed. In total, 56 segments dealing with nursing care and 77 relating to children, youth, and family help were identified. In a second step, MAXQDA’s retrieval function was used to list all interview parts where codes relating to one of the relationship typologies were inside one of the sector-specific codes (MAXQDA 35

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany command: “If inside”). This resulted in 37 segments for the nursing care sector and 63 for the children, youth and family help area. Subsequently, the sector-specific result was compared to the overall result where meaningful, since for some typologies only 2 or 3 sector-specific codes appeared in the data.

5.3.2. Nursing care The nursing care sector has repeatedly been mentioned to be (the) one where the legal changes are most pronounced. Examples are for instance the introduction of the funded instead of pay-as-you-go nursing care insurance in 1995 and the extensive regulative standards for providers. The analysis confirms this view. For example, the intensity of regulations in the nursing care sector was exclusively described as close-meshed and tight. Also, the experts evaluated the state-third sector interaction solely as formal in the area of nursing care. More to the point, the experts’ statements reveal a stark third sector’s dependence on the state. The results for the nursing care sector are even clearer than the already unequivocal findings for all the sectors. Out of 9 coded segments dealing with the nursing care sector, 8 portray a situation of third sector dependence. What is more, the third sector leaders evaluate their discretion in the care sector exclusively as low.

5.3.3. Children, youth, and family help The findings for youth and family services, such as kindergartens and youth centers, are mostly in line with the overall results, yet slight differences are apparent. Similar to the nursing care sector, the interaction in the youth and family help sector was exclusively evaluated as formal and regulations are thought to be tight. Also, in congruence with the overall picture, public and nonprofit organizations seem to depend on each other. The scores for the power distribution axis in the youth and family help sector matches the overall findings too – 4 statements indicating an equal, 4 for a state-dominated power distribution. When it comes to the discretion of the providers, however, third sector experts evaluated their discretion mostly as high. Furthermore, in contrast to the nursing care sector, instances of integration (smooth and regular contact) were reported for the youth and family help sector.

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

6. Limitations. conclusions and outlook First of all, it must be kept in mind that the case study for Saxony-Anhalt is still incomplete for it still misses the views of the statutory side. Moreover, Bremen’s statutory experts both belong to the administrative and not the political section. Unfortunately, no interview with the senator of Bremen’s department for social issues, children, youth, and women was granted. It was argued that the public perspective is sufficiently captured by the two heads of administration. However, this view is doubtful. After all, the third sector experts themselves noted that there are at times differences in their relations to the political and the administrative part. Hopefully, a better mix of experts can be achieved in Saxony-Anhalt and the following case studies. On a more technical note, the deductive approach to the interview analysis creates the danger of missing out on important aspects which do not match the predefined codes. Although the interview guide was constructed around the crucial dimensions of the relationship frameworks, several parts of the interviews could not be attributed to any of the dimensions but still seemed relevant. That is why an inductive approach to charting Bremen’s state-third sector relationship would potentially yield further in-depth findings.

The conclusion that can be drawn from these first results is that the still rather corporatist setup in Bremen might indeed be fostered by its institutional stability. In Bremen institutional stability is present on both, the statutory and the nonprofit side. In the last 15 years Bremen witnessed only two different heads of government and two different division leaders in the department for social issues. Moreover, all interviewed experts have been active at their respective entity for five or more years. In fact, besides one, all interviewees can look back on 10 or even 20 years of experience in Bremen’s social care sector. Such of course fosters the creation of personal ties among each other and to the other actor. What is more, several experts maintained that the geographical proximity in Germany’s smallest state facilitates a rather smooth and integrated state-third sector arrangement with sizeable informal elements. Three experts even explicitly argued that Bremen’s setup might be less standardized, more informal, and closer when compared to bigger territorial states in Germany such as Bavaria and Lower-Saxony. Hence Bearing in mind the mentioned ‘path dependency’ in the welfare sector, it seems reasonable to conclude that this constellation

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany plays an important role in maintaining corporatist structures in times of a changing legal foundation. Since both Bremen and Saxony-Anhalt have to endure high socio-fiscal pressure, the divergent findings can likely be attributed to the difference in institutional stability. Saxony-Anhalt lack of institutional stability, at least on the public side, might play an integral in the process of dismantling the corporatist arrangements. Moreover, in contrast to Bremen Saxony-Anhalt is not a city-state. Thus, structures are more centralized and routes are longer. It will be interesting to see whether this first hint holds true for the other two case studies. An educated guess would be that since the financial pressure does not seem to play a major role the corporatism should still be more intact in Bavaria (high political stability) than in Hessen (low political stability).

D. Mauricio Reichenbachs - On the nature of the government-nonprofit relationship in Germany

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