A MISSIVE FROM HUMAN SERVICES COUNCIL AND FPWA
First in a Series
The time has arrived for a set of damaging practices to be remedied.
For decades, funding from government to provide human services has fallen well short of covering actual costs – resulting in a continual struggle by human services leaders to operate high-caliber programs, maintain skilled and fairly compensated workforces, and exercise strong management functions.
Let us consider major aspects of this dilemma.
Inadequate Salaries and Salary Disparities
The budgets of contracts between human services organizations and government frequently do not allow for compensation for staff consistent with responsibilities and necessary qualifications. This occurs with such positions as early childhood education teachers, social workers, youth development specialists, and family counselors. Ironically, many human services staff, who have dedicated themselves to helping people contending with serious challenges find that they themselves are in need of the same sorts of services they are providing.
These insufficient salaries and benefits translate to a difficultly in recruiting and retaining high-performing staff, leading to disruptions in care and low morale among staff. Moreover, in a number of cases, government agencies, hospitals, and universities offer compensation for these sorts of positions that is considerably more generous than that which human services organizations can afford.
Strong applicants continually express an interest in joining the human services field but indicate that given personal financial pressures, they often feel compelled to opt for employment in these other sectors.
The Under-Funding of Overhead
When contracting with human services organizations, city and state government usually limit the amount of funds that may be expended on overhead, also known as “indirect expenses,” for such functions as financial management, human resources, information technology, and facilities management. The large majority of human services contracts allow for overhead rates of between 8% and 10% – but actual overhead rates for human services organizations usually range between 12% and 20%. This results in sizable deficits, compelling human services organizations to function without adequate management capacity and to scramble to raise supplemental funds.
However, the federal government employs a far more rational approach. It allows human services organizations, based on review of their financial data, to obtain standard overhead rates that are automatically applied in all cases in which they make use of federal funds. Human services leaders report that the process by which rates are determined is reasonable, and that receiving reimbursement for overhead that aligns with actual expenses goes far toward enabling high performance and financial stability.
We are, therefore, calling on the city and state government to adopt the federal practice.
Innovation and Impact
Human services organizations aim to embrace bold ideas and forward thinking. Regrettably though, because they are so strained by insufficient funding from government, they too often lack the wherewithal to engage in innovation. If properly resourced, human services organizations would make use of philanthropic support to incubate, pursue data-driven strategies, and ensure superior services.
To achieve the highest impact, human services organizations must be enabled to stop operating in a climate of constant crisis. Like the people they support, they cannot be expected to thrive while their basic needs go unmet.
A Renewed Partnership with Government
The relationship between the human services sector and government is symbiotic. Government calls upon human services organizations to deliver the indispensible services that it itself is not equipped to provide. And human services organizations are equally dependent on government – indeed, government funds are the primary source of income for most human services organizations, often comprising more than 80% of their budgets.
We believe that public officials making decisions about funding for human services are well intentioned and that we share goals and ideals with them, and that fiscal austerity has been the primary factor limiting investment in the sector. But we must now address the fact that this practice is injurious: it jeopardizes the quality of services and the very viability of the organizations entrusted to deliver them, setting up a situation that will result in continuing social problems and increased costs later.
We are pleased that the city and state governments have taken steps to begin strengthening the human services sector. The city has established a Nonprofit Resiliency Committee designed to enable us to arrive collaboratively at solutions and we will take part fully in this effort. The state has created the Nonprofit Infrastructure Capital Improvement Program and is refining systems like Grants Gateway, which simplifies the process by which human services organizations engage in contracts with the state.
While these efforts are important, we know there are further opportunities to strengthen human services. And toward this end, our organizations will be among the primary participants in a campaign called Restore Opportunity Now that will vigorously make the case for key investments and systems improvements in the sector.
We look forward to cooperating with our many partners throughout government and the human services sector to make the critical changes necessary to equip New Yorkers to realize high aspirations and support the organizations that serve them!
-Contributed by Danny Rosenthal. Danny Rosenthal is a consultant to nonprofit organizations and a free-lance writer.