What’s happening in our neighborhood?

Our colleague Kivi is hosting the Carnival of Nonprofit Consultants this week, asking about trends in our part of the sector. In the areas where our practice is most prevalent, health and human services, the watchword is clearly consolidation. We are supporting a couple of mergers, some networks, and some broad based discussions among groups of unrelated agencies about back office sharing of administrative supports.

These trends are largely driven by a sea change in the operation of state governments in regard to health and human services, and given our work in Canada, my sense is that the change is larger than the US. The change is this: governments of developed countries appear to want out of the housing business. By housing business I mean the responsibility that governments have taken over the last 50 years to be the provider of heavily subsidized residential care for a wide array of fragile populations: nursing homes for the elderly, group homes and other therapeutic residences for the developmentally disabled, physically disabled and chronically mentally ill, people with AIDS or other chronic diseases, group and foster care for children who have been victimized by abuse and neglect. This step back also includes the poor, if one looks at the trends on government sponsored affordable housing…all downward.

There seems to have been some “all at once” recognition that the number of vulnerable people who need government subsidized places to live has skyrocketed in the last thirty years and will continue to do so with the aging of the baby boomers. With an array of conservative governments in power coupled with economic downturns and losses in tax revenue, coupled with this recognition, there are, in at least 40 states and Canada, various efforts to redefine the relationship between government and families with dependent members.

For the last fifty years, government has stepped in with a variety of interventions, usually in partnership with the nonprofit sector, to provide alternative housing options when families can no longer take care of their own.These options for families are narrowing as we speak. The impact on families and individuals is large. Families with a disabled child or elderly member, for instance, will be able to receive services to support their own ability to care for their dependent family member at home but will face much larger obstacles to placing that dependent family member out of the home. What this means for nonprofits is the collapse of most government contracting that has focused on providing funding for residential care, a very large and, until now, generous source of revenue.

Coupled with this change is the conviction within many state governments that to appropriately support dependent individuals at home, a seamless array of services is needed…hence the increasing demand for networks. A further related trend that is more nascent is how these community based in home services will be funded. Many states are looking at managed care models involving capitation…a single fee paid to a network for an array of supports. All of these trends speak to the outright survival of segments of the sector as well as the increasing expectation for closer collaboration among those who provide services with continuing relevance. Smaller margins also seem to be in the future with less and less ability to fund much needed infrastructure, pushing organizations into shared administrative models. In our experience, nonprofits have lots to learn to exist within this new reality and it is our challenge to support them in the process of these significant changes.

That’s what’s happening in our neighborhood!

Comments

[Jean Butzen]

I think this is a great commentary and I completely agree with your assessment on where government is heading in terms of housing and human services policy and funding. As the president of a supportive housing agency for almost 20 years, I understood that it was networks of housing and service providers who increasingly were meeting the needs of our poorest, most disabled citizens. But even the separate nonprofits in the networks could accomplish more together than by themselves. That's why I decided that our nonprofit did not have to go it alone and that we should identify a merger partner for our agency. That was in 2005, and so far it's been a good decision for our nonprofit and for the people we served. I believe so much in this strategy that I made the decision to become a consultant specializing in nonprofit mergers and partnerships, helping leaders find ways to work together for the good of those they serve.
-Jean Butzen, Mission Plus Strategy Consulting, Chicago, Illinois