If there is one thing that executives who run nonprofit human services organizations are experts on, it is how to do more with less.
The demand for services in the sector continues to grow while funding sources shrink. The 2020s have been particularly volatile, with a great deal of overarching economic uncertainty, waves of inflation, donor fatigue, increased governmental scrutiny of programs, and shifting political visions of government’s role in supporting services for vulnerable populations. Such economic, social, and political volatility arrives in a climate where individuals feel volatility of a different sort: more individuals seek out mental health assistance, more families lose access to stable housing, more parents discover that their paychecks have not kept pace with the cost of goods when their child’s electric wheelchair breaks, their child’s school cuts a speech therapy course, or their child’s employer is forced to reduce staff and the program that provides jobs for the developmentally disabled is the one that costs the most to maintain. Doing more with fewer resources has life-changing repercussions, sometimes lethal ones.
We have to flip the script on the “do more with less” scenario that has plagued the sector for decades and create mechanisms that allow leaders to do more with more. In an environment of reduced resources, the only way to create “more” is to become more efficient in a manner that expands resources. To do so, the nonprofit human services sector must borrow an approach the for-profit world has excelled at: the development of scale. When small-scale nonprofits are pushed to their limits to provide life-changing and life-affirming care in safe environments that demonstrate respect for those dependent on it, they don’t have the capacity to expend limited resources when the cybercriminal holds their data hostage, their archaic, time-consuming payroll software crashes, or a litigious individual armed with misinformation found on social media files a lawsuit.
Nonprofit human services experts build expert professional staff to provide dedicated care to community members facing challenging conditions. They deserve unfettered access to parallel expert professional staff to provide the services their organizations require to fulfill their missions. By joining together, nonprofit providers can benefit from shared services cost efficiencies provided by highly sought-after experts instead of hoping that they can find a kind-hearted IT expert, accountant, or lawyer willing to work for a fraction of their value because they believe in the organization’s mission.
A small community-based provider is either required to find the means to fulfill all of the requirements for running a complex organization that must meet federal, state, and local government regulations by having its own in-house assembly of expensive experts or risk the mission they exist to serve by cutting corners, hoping for good luck, and praying that their taxed infrastructure holds together.
Rather like the broader culture where half of American families don’t have $400 in reserve to cover an emergency expense, most small service providers are one crisis away—a burst pipe in a key facility, a totaled transport vehicle, the loss of a key donor—from catastrophe. Creating scale through affiliation or shared services models can not only reduce a host of business expenses, but, done right, can also aggregate capital, expand subject matter expertise, create opportunities for peer learning, all while preserving local control over mission.
Affiliation and shared-services models allow nonprofit human services organizations to maintain their local identity and community relationships while gaining access to larger-scale resources such as technology, compliance support, staffing infrastructure, and emergency funding.
The logic of cooperative ventures isn’t rocket science. Enterprise software not only doesn’t care whether it is producing paychecks for 4,000 people or 40, it offers data analysis that allows organizations to track expenditures and revenue and model the financial implications of proposed programs before they exist.
Shared services can not only provide the required paper trail for employee insurance programs, but they can also consolidate insurance offerings across multiple organizations to bring down rates. As discount stores and web-based retailers know well, the ability to purchase in bulk reduces the cost per item, a fact that’s true even if the items purchased are disposable gloves for substance abuse program providers, assistive technologies for disabled individuals, or oil filters for fleet vehicles.
In affiliation models, when the federal government abruptly announces a 90-day hold on reimbursement payments for counseling services or a state government shutters offices during a budget impasse, a robust network has the financial ability to carry organizations in one service sector or within an impacted state until funding stabilizes. They can provide interim leadership when an organization suffers the tragic loss of a visionary founder. Truly innovative affiliation models go beyond assisting during temporary crises and create long-term stability by implementing strategic investments and recognizing that clear educational materials can attract sophisticated investors into vehicles like municipal bond offerings.
As any cursory survey of news headlines reveals—new federal investigations into Medicare fraud accusations, reduction of funding for homeless services, organizations announcing closures citing inflationary pressures—the landscape in the human services sector isn’t going to turn suddenly rosy.
If we are to sustain the missions of providers doing the unheralded, exhausting work of ensuring that whole populations don’t fall through the holes of our social fabric, we’ve got to think innovatively and adopt proven systems that enhance efficiency. Developing durable, flexible nonprofit networks may become one of the most important solutions for protecting long-term consumer access in underserved communities.
Ryan Dewey Smith is the Founding Executive Chairman & CEO of Inperium, a nonprofit supporting organization that helps human services providers scale sustainably while preserving their mission and identity. He is also the author of Sustaining the Mission, a forthcoming book on building durable nonprofit organizations through disciplined strategy, infrastructure, and long-term stewardship.