We’re getting an inside look at some of the challenges facing community-based organizations (CBOs) which are nonprofits delivering critical human services to our communities.

A National Imperative: Joining Forces to Strengthen Human Services in America, a report commissioned by the Alliance for Strong Families and Communities and the American Public Human Services Association(APHSA) and funded in part by The Kresge Foundation, details the challenges facing these organizations and provides a call to action for cross-sector collaboration and support.

CBOs serve a wide range of community needs including child welfare; health care; services for our aging population; violence and abuse prevention; employment services; early childhood education; transportation services; housing and homelessness; public safety and more.

What we learned about CBOs from the study:

• There are more than 210,000 human services CBOs serving communities across the country

• 1 in 5 Americans receive critical services from the human services ecosystem

• Human services CBOs employ approximately 3.2 million Americans and generate $200 million in economic impact for our country

• Those who receive human services have access to both preventative services and support in a crisis situation, which the report says, “allows them to lead healthier and more productive lives.”

• Human service CBOs have led to “increased investments in targeted, ‘upstream’ human services that have demonstrated to improve the social determinants of health and have the potential to transform how our society approaches and pays for human services. Additionally, this impact has a ripple effect on other vital and expensive sectors, including the health care, education, judiciary, and corrections systems.”

While the report highlights the value of CBOs to our communities it also examines the challenges facing CBOs, especially the concerns around their financial health and how it could negatively impact our most vulnerable populations.

The report states, “Against the backdrop of an increasing need for human services, driven by persistent poverty rates, income inequality, an aging population, and the challenge of the opioid epidemic, the financial stability of CBOs is increasingly becoming tenuous.”  

“CBOs have cut a lot of the supports for staff to put as much money as possible into direct service," Kate White, executive director, Michigan Community Action told CMF. "That means that human service workers receive less training and professional development, less time to support one another on the job, and the constant pressure to do more with less. You can only make so much stone soup.”

The study shares challenges facing CBOs, highlights include:

• More than 40 percent of human service CBOs lack liquidity to meet short-term financial obligations

• Nearly 1 in 8 CBOs have liabilities exceeding their assets

• CBOs who deliver housing and shelter, mental health and general human services are facing more financial stress

• There are constraints for CBOs with government contracts, for instance the government may not reimburse the CBO for the full cost of providing the services due to funding levels or a belief that philanthropy may fill the gap

• Restricted donations by philanthropy can also be a challenge as it’s difficult for a CBO to determine what the need may be in the future

• Compliance with the current regulatory and legal environment can place an undue burden on many CBOs who are forced to spend large amounts of staff time on paperwork to meet reporting requirements

• Many CBOs face problems such as lack of access to capital for investment in technology and systemic barriers, which limit opportunities for data sharing and integration.

• Organizational silos pose issues, as many clients have a wide range of needs where a coordinated or integrated human services system could better serve them and improve efficiency

• Current funding levels of CBOs do not reflect the costs of competitive salaries and it’s difficult to maintain talent, yet the need continues to grow. This is a growing issue, as the study states: By 2025, the Health Resources and Services Administration predicts that there will be a shortage of 20,000 – 50,000 mental health and substance abuse social workers, a shortage of up to 20,000 psychiatrists, and a shortage of up to 60,000 clinical, counseling, and school psychologists.

These are just a few highlights from the study, but as the research shows addressing these challenges will require a cross-sector response involving CBOs, government and philanthropy.

“As government funding changes, and core funding streams for CBOs are reduced, the need for a return to funding for multi-year general operating support from foundations and private donors is critical," White said. "It would be ideal if CBOs could focus on delivering services and be able to keep their grant writing and special events to a manageable level.”

The report provides five guiding initiatives that can support CBOs and serve as a road map to strengthen the human services ecosystem, they include:

• Commitment to Outcomes: Efforts should be focused on a common set of widely used outcomes and core measures with accountability and appropriate flexibility. Funding should be targeted to outcomes and results rather than outputs or services delivered.

• Capacity for Innovation: Public and private funders will also need to recognize the importance of the capacity for innovation, the need for better data and analysis, and the need to support that through funding.

• Strategic Partnerships: Grants from public and private funders should include allocating financial resources toward partnership development for CBOs.

• New Financial Strategies: CBOs and their boards of directors must look to develop more robust finance and financial risk management capabilities, including scenario planning, recovery and program continuity planning, benchmarking and self-rating, reporting, and disclosure.

• Regulatory Modernization: Regulators at all levels should engage with human services community-based organizations in a review and reform of CBO regulation.

Want more?

 Read the full report: A National Imperative: Joining Forces to Strengthen Human Services in America.