News Releases

Op-Ed: Economic Impacts Threaten U.S. Social Service Network

July 8, 2009 (Baltimore, MD) - This month, there are tens of thousands of people who may not be able to continue to receive the services they rely on to gain or maintain self-sufficiency, independence, dignity and support. On July 1, most states began a new fiscal year, and in several states draconian cuts to health and human services programs are translating to the closing of programs which provide child abuse prevention services, mental health services, and services for people with developmental disabilities and elderly, among others.

Two studies released the week of June 29 highlight that more Americans are suffering and in need of supports while nonprofit social service organizations are constrained by government cutbacks and declining contributions.

A Bridgespan Group survey of 100 nonprofit leaders found that the financial situation of nonprofits has worsened in the past six months, while the need for their services has increased. More than three quarters of the nonprofits experienced cuts in corporate foundation and government funding. More than two-thirds experienced cutbacks in fee for service, private foundation and individual funding.

A survey by the Johns Hopkins University Center for Civil Society Studies Listening Post Project found that 83 percent of the 363 responding nonprofit organizations reported some level of fiscal stress. Contributing factors were a “perfect storm of impacts” according to the report: declining revenues, increased costs, particularly for health benefits, declining endowment and decreased cash flow as a result of restricted credit and government payment delays.

The surveys offer composites that can’t tell the whole story of individual impacts that threaten the entire social service network in this country.

The domino effect begins as most states are in or near financial crisis and have instituted a variety of strategies that include: across the board cuts to social programs; targeted reductions in the number of dollars allocated for particular programs for vulnerable people; staff reductions which mean delays in processing time for clients as well as providers; reductions in the number of slots in many types of programs; and alternative approaches to services which often create unintended consequences.

One example is the Illinois state legislature’s inability to come to agreement on a proposed budget which cuts most human care programs by at least half. That left Illinois Governor Pat Quinn with no choice but to warn state contractors that the money may run out this summer. Lutheran Social Services of Illinois (LSSI), one of the state’s largest providers of community-based services, warns that it will have to turn away nearly 10,000 people from services including child abuse prevention, mental health services, and care for people who are elderly or have developmental disabilities. In California, a similar budgetary impasse has prompted the state to issue IOUs to welfare recipients, seniors with low incomes, people who are disabled and others who receive state services.

These sorts of public-private partnerships, where a state relies on private or faith-based nonprofits to provide services, go back more than 100 years. Lutheran health and human service organizations place a high value on these partnerships as a way of fulfilling their missions, the call to love and serve their neighbors. For many years, nonprofits have subsidized the gap between government payments for services and what it costs to provide the services. With wider gaps and decreasing philanthropic resources, that strategy is not sustainable.

States need to place the same value on those partnerships and hold up their end of the deal. Knowing that most people need help at some point in their lives, voters need to make it clear that they place a high value on one another’s well-being.

In his June 30 address on the Community Solutions agenda, President Obama spoke to the importance of these partnerships: “If we work together -- if we all go all-in here -- think about the difference we can make.” The ideas that President Obama spoke about are essential to our future. But, everyone, not just community nonprofits, must do their part.

Until we all realize we’re in this together and work together to implement real, lasting change, continuing cutbacks will mean that foster children will be without a supportive home as foster parents find they can no longer afford to subsidize the small payments they receive; older adults will lose access to in-home care that allows them to remain safely in their homes; the low-cost or no-cost health clinic in a depressed urban neighborhood may need to close or cut services; and emergency food programs will close.

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