In the US, the bulk of services constituting the nation’s “social safety net” are provided by nonprofit community based organizations (CBOs) in collaboration with state and local government agencies. Human services CBOs receive funding from the government as payment for delivering critical services to those in need. These services include housing, mental healthcare, substance abuse treatment, foster care, workforce readiness training, and special education programs – among many others. Donations from individual donors, corporations, and private foundations also help CBOs cover their costs. The coordinated efforts of CBOs, government agencies, the philanthropic community, and other key stakeholders together form the human services ecosystem. A strong human-services ecosystem is essential to a healthy and prosperous society. However, a variety of cultural, political, and financial trends over the past several decades have converged to put at risk the ecosystem’s stability. As a result, human-services CBOs currently face unprecedented financial stress: for example, 1 in 8 is insolvent, half consistently operate at a loss, and nearly one-third lack the cash on hand to cover just one month of expenses. Left unaddressed, the situation is bound to worsen considerably. CBOs will need to respond to sharp increases in demand for increasingly expensive services, just as government-funding streams tighten and competition for philanthropic dollars intensifies.
Throughout this engagement, I was consistently humbled by the incredible work that human services CBOs do for our families and communities in need. Ensuring that these organizations are financially strong and able to continue delivering critical services and supports is of the utmost importance. It was a privilege to have the opportunity to support the passionate, dedicated individuals leading these organizations, and to help create a stronger human services ecosystem moving forwardLinnea Cederberg, Consultant, Oliver Wyman
Finding a solution will require coordinated action among all stakeholders across the human services ecosystem. To that end, the Alliance of Strong Families and Communities and the American Public Human Services Association (APHSA), two of the nation’s largest consortia of human services CBOs and state and local government health and human services agencies, respectively, are coming together to promote awareness, develop strategies, and catalyze action around the many challenges facing the human services ecosystem.
This was an extraordinary opportunity for us, both to learn about the impact that human services CBOs can have on our nation, and to apply our financial and management expertise for social good. We are hopeful that this initiative is going to drive real change, with huge benefits for society, in the years to comeDylan Roberts, Partner, Oliver Wyman
Over the course of four months, Oliver Wyman, together with SeaChange Capital Partners, worked with the Alliance and APHSA to document the current state of human services in the US, to uncover key challenges impacting human services CBOs and the broader ecosystem, and to develop a framework for considering potential cross-stakeholder solutions to restore the strength and vitality of CBOs and the full human services ecosystem. Major components of our research included a survey of over 200 leaders from CBOs and government agencies; interviews with more than 40 senior executives from CBOs, government agencies, and philanthropic foundations; and financial analysis of CBO health, using data from over 200,000 publicly available Form 990 tax filings. Findings and recommendations were compiled in a final report, which was presented to more than 50 human services ecosystem leaders during of a two-day stakeholder summit.
As we work to realize the transformative potential of human services, it is critical that community based organizations are financially strong. Having Oliver Wyman, a globally recognized leader in management consulting, take on our project and perform a deep exploration into the financial health of community-based organizations was simply amazing. They were deeply committed to the project and brought a rigor, independence, and discipline that gave us a great final product that we can now use to catalyze action!Susan Dreyfus, President and CEO, Alliance for Strong Families and Communities
Our work is helping to set the agenda for a stronger human services ecosystem of tomorrow. In our report, we outline five “North Star” initiatives to guide the actions needed to bring about change and unleash the full potential of human services in America. These North Star initiatives include: • Committing to better outcomes for those receiving services • Investing in capacity-building and innovation • Embracing strategic partnership as the cornerstone of success • Adopting robust financial management policies and practices • Modernizing regulations to align with the realities of delivering services • The two-day stakeholder summit saw the development of additional recommendations, as well as commitments from several ecosystem leaders to take specific actions. Such commitments to action will be the goal of future work by the Alliance and APHSA, for which our report will continue to serve as the centerpiece.