The Perils of Partial Funding

The Perils of Partial Funding

June 22, 2015

During a visit to a community-based nonprofit organization earlier this year, I learned that the organization has a proven approach to increasing a child’s experience of permanency while in foster care by making the best possible match between the child and their foster home. 

Among other activities, this organization conducted a comprehensive assessment of the child and their foster home needs to include things like family culture, traditions, beliefs, interests, and unique characteristics to guide the match between the child and the best placement for them. The results are stunning. More than 83 percent of all children this organization places have only one placement during their stay in out-of-home care. Nationally, the average number of placements is three, and for too many that number can climb much higher.

I use this example to show that this is truly a situation where you pay less for what works now or pay much more later. 

Human-serving nonprofits like the one I mention are the biggest providers of services to abused and neglected children in America. But, we are at great risk of losing their expertise and mission-driven motivation to ensure success for children and families. 

There is no question that these organizations are vital to our communities. They are there to support our most vulnerable and help to solve some of society’s toughest and costliest challenges. But in many cases, the services they are contracted by their states to provide are paid at around 60 percent of actual cost. This is not an effective way for these organizations to operate, and it is even more damaging to our communities.

For example, would a construction company be asked to build a road according to required specifications for 60 percent of actual cost? It would never happen, but yet when investing in the most important part of our nation’s infrastructure—our people—we are willing to pay rates that do not cover actual cost. 

According to a recent survey by the Nonprofit Finance Fund, many nonprofits are chronically under sourced. The survey revealed that 32 percent of nonprofits believe that achieving long-term sustainability is one of their top challenges. 

There needs to be a greater awareness of the fact that we are dangerously close to a point of dire straits for America’s nonprofit human-serving sector. I am not being an alarmist, but rather a realist.  

As a society, we acknowledge that we need the services and value these organizations bring, yet we fall short of making sure that they are able to operate effectively and efficiently. There must be a national recognition of the disconnect that exists between what our policies say regarding the value for our children and families, what we say we want to achieve on their behalf, and the current  regulatory and fiscal policies that make that achievement increasingly impossible for America’s nonprofit human-serving sector. 

The organization I visited is just one example of how nonprofits are meeting dual goals—serving the needs of their communities while saving money for their state. Children who are abused and neglected represent a staggering cost to our country in terms of lost human potential and sky-high risks for costly lifelong negative outcomes. Therefore, we need to take seriously the fact that nonprofit human-serving organizations can no longer subsidize their services for these vulnerable children and families. 

We are a nation that promotes the high value we place on the strength of families and communities. We say we want effective and earlier intervention that build parenting skills and strengthen families before they collapse. Yet, state contracting practices, regulatory policies, and federal financing simply are not aligned. They stand in the way of doing what works, they thwart innovation, and they thwart efficiency. Let’s inform our elected officials that they must change this alarming practice. 


Susan Dreyfus is President and CEO of the Alliance for Strong Families and Communities. 

Susan Dreyfus