Albrecht Martin Bähr & Sylvia Fink: Non-profit welfare as an economic factor in Rhineland-Palatinate

Associations of charitable organisations are traditionally seen as major players in Germany’s social economy and rate among the largest job
providers in the country. The social economy is characterised by being strongly embedded in the structures of the local economy. Employment and the boost of income and investment provided by the social enterprises remain almost fully in the respective region. Therefore, the social sector itself is an important economic sector which provides work, forges ­innovations and contributes to welfare in the local region.

Vorstand der LIGA der Freien Wohlfahrtspflege (ohne Vertreter der AWO), vlnr: Hans-Jürgen Eberhardt (Caritas), Regine Schuster (Der PARITÄTische), Albrecht Bähr (Diakonie), Anke Marzi (DRK).

The social economy is primarily regarded as a major cost factor in general observations and public discourse. The debate about the necessity to “economise the social” and its practical implications has been held for over ten years and suggests that “the social” and “the economy” be considered as two parts of a whole rather than two separate spheres, as they have been up until now. By no means the terms efficiency and effectiveness have only just begun to be of importance for activities involved in social work. The same applies to the topic of “money”. The accusation is often raised that public funds are wasted in the field of social work – in contrast to the field of economy, where money is “earned”.

How much commercial economic thinking can social education tolerate without being robbed of its quality and solicitousness? A range of authorities refer to the commodi­fication of social work in this context, meaning that social work is becoming a commodity, which for cost reasons ends up being subjected to an arbitrary subcategorisation process, and whose quality can be flexibly adjusted and checked against efficiency criteria for the same reasons. In this context however, it ought to be borne in mind that the definition of efficiency (which makes an assumption as to which outlays achieve a given effect) nonetheless presupposes the capacity to ascertain effectiveness. For example in youth work, this aspect is generally hard to establish. Whether the offered services are effective requires continual and long-term defining of the quality of the results, which in social service can only be carried out to a limited extent.

 

Services for four million citizens. Health and social work is a branch of the economy which is predominantly formed by the merits and benefits to society by way of the provision of education, care, advice and training. The tasks and services in this economic sector are undertaken by non-profit organisations and churches as well as by regional/local and supraregional public institutions and by private commercial organisations and operators. Due to its extensive range of services, the health and social economy represents a signifi­cant component of the employment landscape. In the facilities of all the organisations involved, and looking merely at welfare in the areas of child, youth and family assistance, and disabled care and assistance, jobs are held by over 145,000 people. Some 14 per cent of those employed in Rhineland- Palatinate work in this sector. Hence, the health and social economy, alongside the processing industry (25 per cent) and trade sector (14 per cent), is one of the most significant sectors in this federal state when measured in terms of volume of employment.

The large volume of employment has a positive impact on the regional economy. This means over 70 per cent of the service charges and public funds, either directly or indirectly, flow back to the nation, the state and municipalities in form of taxes and social insurance contributions or payments by the organisations. From among the expenses attached to the assets, service provisions and investments, which the charity and welfare organisations deal with, more than 75 per cent remain in the region (within 50 km), thereby leading to further employment in other sectors. If one collates the direct, indirect and induced return flows of public funding, it turns out over half of public funding costs come back either directly or indirectly. For costs associated with publice funding, this means that of one euro invested in the Rhineland-Palatinate social economy, on average 40 cents return to the public domain by way of taxes and social insurance contributions. All cooperating sectors in the social economy which were studied in 2014 in Rhineland-Palatinate have over 1.2 billion euros in net income at their command. Deducting an assumed savings ratio of 11 per cent and only taking into account those employed from the region there remains a sum of 970 million euros through which consumption is transacted. Employees of the LIGA associations, on account of their consumption in the region alone, boost employment levels in other sectors by 12,430 positions, 10,000 being fulltime.

Volunteer activities as an economic factor. The associations of charitable organisations, which are also organised in the Federal Association of Non-statutory Welfare (BAGFW), rank among the biggest employment providers in the Federal Republic of Germany. At the same time, over a million people voluntarily take part in them, thus contributing to the country’s social stability. The fields of activity are diverse and range from infant and aged care to preventative care and treatment through to education support and counselling. Through volunteer activities, additional services are generated primarily in care and advisory work, complementing the fundamental working activities in the respective areas of the social economy. According to BAGFW estimates, there are between 2.5 and 3 million people nationwide (that’s roughly a tenth of all active volunteers) actively involved in charitable organisations. The proportion of those employed in charitable organisations among total employees and from the economy sector health and social work has remained constant over the last years. In 2012, the registered number of volunteers in the charit­able organisation associations in Rhineland-Palatinate amounted to 30,544 people. In addition, the full-time employees in the LIGA associations are supported in their work by a further 3,549 part-time employees.

More than the sum of its parts. A closer look reveals that social economic facilities provide much more to various groups of people in society as well as to the infrastructure and to other institutions. This added value cannot be readily evaluated monetarily; nonetheless, it contributes to the importance of social economy. An additional value that is monetarily immeasurable comes from providing young people with the possibility to complete professional training in the institutes and technical colleges or to go through accredited traineeships. Charity associations therefore play an important role in the professional training system.

If one summarises all these findings, the social economy’s importance as a regional economic factor becomes apparent. Here, attention should be brought to the fact that we are dealing with sectors which are hardly transferable or not at all, for instance they cannot be relocated abroad. The findings about the regional radiative effects emerging from the social economy’s facilities and services lead us to conclude that one should not only evaluate this sector in socio-political terms, but that the social economy should also be taken into account as part of business development.

The fact is that facilities of the social economy make a significant contribution to the enhancement of the quality of life for those receiving care and their families, as well those employed in these facilities.
Albrecht Martin Bähr
Albrecht Martin Bähr studied Protestant theology and occupied the position of rectorate in Limbach-Altstadt from 1991 to 2002. From 2002 to 2010, he was the representative of the Diakonische Werk with the state government of Rhineland-Palatinate. Since 2011, Albrecht Martin Bähr has been chief pastor of Rhineland-Palatinate, speaker for the working community of the deaconry in Rhineland-Palatinate as well as chairperson of LIGA der Freien Wohlfahrtspflege in Rheinland-Pfalz e.V. from 2015 until 2016.
Sylvia Fink
Sylvia Fink completed her education studies after following vocational training as a bank officer. She was employed as debt advisor and deputy staff member at the University of Mainz (Specialist Centre in Debt Counselling), consultant to the Board of Management (Deaconry, 2001-2007), consultant in debt counselling and general welfare work (Deaconry, 2007-2010). Since November 2010, Sylvia Fink has been Managing Director of the LIGA der Freien Wohlfahrtspflege in Rheinland-Pfalz e.V.