What is the National Imperative?

A National Imperative: Joining Forces to Strengthen Human Services in America is a report commissioned by the Alliance for Strong Families and Communities and the American Public Human Services Association (APHSA) and drafted by Oliver Wyman and SeaChange Capital Partners. This groundbreaking report focuses on human services community-based organizations (CBOs), their economic and social impact, and the need to strengthen and preserve their role in the larger human services ecosystem, consisting of public sector health and human services agencies, private funders and foundations, and the many others who fund, arrange, and deliver critical human services. It offers an important cross-sector call to action to address the challenges facing CBOs, which operate at the nexus of the human services ecosystem, and play a significant role in building foundational supports that contribute to the health and well-being of individuals, families, and communities.

The project was supported by a National Advisory Council whose members come from the nonprofit world, government, the private sector, and academia and funded by The Kresge Foundation and the Ballmer Group, with additional support from the Health Foundation for Western & Central New York, Mutual of America, Selective Insurance Company of America, and the US Chamber of Commerce.

Who is represented in the report?

The Alliance is a network of more than 400 human services CBOs involved in the delivery of all human services, of which [list your organization] is a member. The APHSA is an association of over 300 state and local health and human service agencies. Together, we are working to aggregate the very best sector knowledge and serve as an incubator for learning and innovation to generate new solutions to the toughest problems. We accelerate change through dynamic leadership development and collective actions to ensure policies and systems provide equal access and opportunity for all people in our nation to reach their fullest potential through improvements in health and well-being, educational success, economic opportunity, and safety and security. 

[Include a paragraph about your organization and who you serve.]

What are the key findings from the report?

Among the key findings and conclusions is the critical role and value that human services CBOs play in communities across the nation – and the sector's potential to be even more valuable in the future if strengthened and empowered to help citizens reach their full potential. The sector’s value and impact includes:

  • Helping strengthen individuals, families and communities by building well-being and providing critical assistance and support – both preventative and when in crisis -- which enables individuals to lead healthier and more productive lives.
  • Contributing economic value to society, not only from long-term productivity increases, but also from current economic activity – human services CBOs spend roughly $200 BN per year on wages, rent, fuel, and all the other inputs necessary to run their organizations and deliver services. [Include any local data on your organization’s contribution to the local economy, if available.]
  • Providing investments in targeted, “upstream” human services that are demonstrated to improve the social determinants of health and help individuals achieve their full potential in a way that is transformative for our society and other systems, including health care, education, and the judiciary systems.

[Include a paragraph on what your organization does to strengthen families and communities.]

What are the challenges facing the human services sector?

The financial stability of the sector is tenuous, which will make realizing its transformative potential and contributions to a healthy society and strong economy difficult. Challenges include:

  • Many organizations are running persistent operating deficits, in part due to unfavorable contract terms that reimburse them less than the full cost of providing their critical services. 
  • Many organizations have few or no financial reserves, meaning that they are vulnerable to any fluctuation, even temporary, in their expected revenue and cost levels. 
  • In addition to these financial challenges, many organizations face problems such as lack of access to capital for investment in technology and systemic barriers, which limit opportunities for data sharing and integration.

What are the key roadblocks to addressing these challenges?

Financial stress across many CBOs is a key roadblock, with constraints imposed by government contracts and other funders, the current regulatory and legal environment, underdeveloped financial risk management capabilities, and misconceptions about nonprofits and CBOs in particular. The operational shortcomings of the human services ecosystem is another roadblock, with many organizations operating in “siloes” and trying to manage a transition from providing services to delivering outcomes. Another roadblock is the result of CBO talent and technology limitations, with many organizations failing to take advantage of both human capital and advances in technology which could improve service and outcome delivery.

How do we improve?

Significant changes will be needed both within the sector and in the public and philanthropic sectors as well. We have identified five “north star” initiatives designed to improve population health and well-being, increase economic productivity, and lower social costs over time with and through the success of CBOs. When fully developed and implemented, these initiatives have the potential to set the sector on a path to unlocking its full value. They include: 

  • Commitment to Outcomes – Efforts should be focused on outcomes and accountability, with funding targeted to outcomes and results rather than outputs or services delivered.
  • Capacity for Innovation – The human services ecosystem must develop its capacity for innovation through better data sharing and analysis, technological strategies and knowledge and leadership exchange. Public and private funders will also need to recognize the importance of the capacity for innovation, and the need to support that through funding.
  • A Strategic Partnership Approach – CBOs must look for opportunities for deeper partnerships and networks across the human services sector and related systems. Grants from public and private funders should include allocating financial resources toward partnership development.
  • New Financial Strategies – CBOs 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 should engage in a review and reform of CBO regulation, particularly in the area of litigation risk, which has become a serious issue for CBOs. 

[Include examples of any initiatives your organization has launched to address these north star initiatives.]

What is new about this report that we didn’t already know?

While many people both within and outside the sector have been aware for some time of the financial constraints experienced by human services CBOs, we have not previously had such a detailed picture of the extent of these financial constraints and their causes, and more importantly, a roadmap to how CBOs themselves, with support from government and the philanthropic community, can take steps to improve their financial health and make a full transition to a focus on outcomes. The north star initiatives have the ability to unlock the power and potential of the sector to provide the building blocks that families need to achieve stability, and contribute fully to their communities and society as a whole.

Another new element of this report is the unprecedented collaboration between CBOs and state and local health and human services agencies, as represented by the Alliance and APHSA. We hope this partnership will unlock further potential partnerships between CBOs and the public and private sectors because when we all work together we can bring about significant change.

How many organizations took part in the survey and what data was examined to create the report?

The authors of the report analyzed over 200,000 public available Form 990 tax filings from roughly 40,000 human service CBOs, administered an online survey which drew responses from 177 human services CBOs and 40 government agencies, and conducted interviews with more than 40 senior executives from human services CBOs, government agencies, and philanthropic foundations.

What do you want people to take away from this report?

That this is an ultimately fixable issue and one that will require a coordinated effort among CBOs, federal and state governments, and the philanthropic community to fix. A key part of that will require CBOs to be better advocates for themselves and the transformative role they have to play in building strong families and communities. 

With federal budget cuts to human services and in Medicaid, will the financial health of the sector be even more destabilized?

Our report shows that most CBOs receive a large percentage of their funding from public sector sources so cuts in any of these funding streams will of course have an impact on CBO financial health. However, this is a complex problem and one that cannot be solved by government funding alone.  It will require a deeper cross sector commitment to solving this problem and a concerted effort by CBOs to modernize their approach to delivering outcomes, coupled with efforts to educate the public sector about the importance of financially stable CBOs working in partnership with government to support the building blocks for a healthy and equitable society.

 

A National Imperative Toolkit Materials