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

managed care models, certification of CBO sustainability, etc.) and contract templates. Industry associations should also seek opportunities to play a stronger and more proactive advocacy role for the human services ecosystem, to help correct common misperceptions about the system’s role and the value and the importance of CBO’s.

 NORTH STAR #4: FINANCIAL MANAGEMENT POLICIES AND PRACTICES

As discussed in the previous chapter, many human services CBOs do not have healthy, sustainable finances. Some are actively distressed. Many others lack the financial resources to avoid slipping into distress if they encounter any unexpected variations in their financial inflows or obligations. Most observers of the human services sector expect that, left alone, this situation will get worse before it gets better, given likely pressure on public spending levels in the near to medium term. What steps can each group of stakeholders consider in order to spur the development of new strategies to create more stable, sustainable finances for human services CBOs? We recommend that human services CBOs undertake a number of actions, starting with committing to the development of more robust finance and financial risk management policies and practices. Recommended actions include: Ability to say “no”. CBOs must make more strategic decisions about which contracts and funding streams to accept. CBOs should look to renegotiate contracts and funding arrangements that do not cover their cost to provide services. If unsuccessful, CBOs should consider stepping away from these funding streams and turning their efforts toward more viable alternatives. Scenario Planning. As part of their normal planning processes, CBOs should develop a list of the largest risks and uncertainties they face; assess the likelihood and potential financial impact of each; and develop plans for reducing likelihood and/or impact of each. Examples of risks to be considered might include lease renewal, cost overruns on a capital project, the non-renewal of an important contract, settlements from litigation, and succession. Recovery and ProgramContinuity Planning. CBOs should also have plans for how they will respond in the event of a true financial disaster. Plans should include steps to be taken to maintain program continuity (e.g., laying off staff or selectively discontinuing some programs in order to preserve others). Large organizations should also consider developing “living wills” to expedite program transfer to other CBOs in the event of bankruptcy. These plans should be discussed in advance during stable times with government agencies and partners so that everyone is prepared to act in a crisis.

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