Nonprofits’ Real Cost of Doing Business

and What We Can Do About It

A REPORT BY THE HUMAN SERVICES ALLIANCE

OCTOBER 2018

Community-based non-profit human service providers are a critical component of Contra Costa County’s system of care.  For example, fully 60% of publicly funded behavioral health services are provided by non-profit organizations, and a host of other organizations provide services ranging from homelessness, crisis services, economic development, alcohol and drug treatment, senior services, and many more.

Yet funding structures and budgeting practices do not take into account community-based organizations’ (CBOs’) full cost of doing business.  This, combined with a history of no or very low increases in contract reimbursement rates, has created financial challenges that have severely impacted CBOs’ ability to provide much needed services. 

The Human Services Alliance of Contra Costa conducted a survey to assess the financial and service impacts of inadequate funding.  The findings are stark: 75% of respondents reported that revenue has failed to keep pace with expenses over the past 3 years; 68% reported that they are not able to hire enough staff to serve their clients, and 62% have had to reduce services or refrain from taking on new clients because of inadequate funding.  

The Human Services Alliance of Contra Costa proposes 5 strategies to redress this situation: 1) lower indirect costs by streamlining paperwork requirements, 2) improve turnaround times for reimbursement, 3) maximize leverage of state and federal funds, 4) provide an 8% COLA in FY 2019-20, and 5) commit to working towards compensation parity of County and CBO employees.