A National Imperative: Joining Forces to Strengthen Human Services in America (Jan 2018)

ROADBLOCKS AND CHALLENGES

Realizing the transformative potential of human services will require a stronger andmore sustainable human services ecosystem than we have in 2017. The research for this report surfacedmany obstacles that the human services ecosystem, and especially human services CBOs sector, faces today in its pursuit of greater productivity and prosperity for Americans.

ROADBLOCK: FINANCIAL STRESS AMONG HUMAN SERVICES CBOS

Before diving into the challenges, it is important to understand the level of financial stress felt by human services CBOs. To develop a quantitative view of this stress, we analyzed IRS Form 990 filings of over forty thousand human services CBOs from 2013 to 2016. 17  Our analysis assesses the “financial vital signs” of human services CBOs, including: • • Solvency : Total liabilities as a percentage of total assets, indicating a CBO’s ability to meet its long-term financial obligations • • Liquidity: Short-term assets as a percentage of short-term liabilities, indicating a CBO’s ability to meet its short-term financial obligations • • Three-year operatingmargin : Net income as a percentage of total revenue, indicating the extent to which CBOs are able to generate and retain financial resources above those required to cover expenses • • Months of reserves : The number of months that a CBO’s reserves are able to cover operating expenses with months of reserves calculated for: − − Cash : to cover immediate needs − − Unrestricted net assets : as the best measure of a CBO’s “equity” available to bear losses and make investments − − Operating reserves : the portion of equity available in the short-term

Exhibit 6: Roadblocks and challenges facing the human services ecosystem

ROADBLOCKS TO REALIZING THE TRANSFORMATIVE POTENTIAL OF HUMAN SERVICES

Financial stress among human services CBOs • Constraints imposed by government contracts • Constraints imposed by private philanthrophy • Challenging regulatory and legal environment • Underdeveloped financial risk management capabilities

Operational shortcomings of the human services ecosystem • Organizational “siloes” • Transitioning from

Mistaken beliefs about human services CBOs • Building trust among human services stakeholders • Building trust in the

Human services CBO talent and technology limitations • Human capital • Technology challenges

providing services to delivering outcomes

transformative potential of the human services ecosystem

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