The airline, restaurant and hotel industries are being battered by a lack of customers. The healthcare industry is bracing for a frightening surge in usage that will likely present challenges to the capacity of hospitals and other medical centers.
Caught in between those circumstances is the human services sector, which employs 2 percent of the American workforce but in the best of times operates on extremely thin margins – about one-third of nonprofits do not have enough cash on hand to operate for more than one month. Many of America’s service providers, including those in child and family services, will see a drop-off in clients while social isolation policies are in place, and then will likely be slammed with demand during an economic recession.
Sector leaders are asking for a $60 billion package to inject cash immediately into human services organizations and are calling on states and counties to ensure the continuation of fee-for-service contracts, the lifeblood of the sector.
Leadership 18, a collective of providers and membership organizations, blanketed congressional offices with that request early this week. Steve Taylor, senior vice president of United Way Worldwide, said that his “early sense” is that Congress will pay attention to the request, and that dozens of charities were reaching out to their connections on the hill to push it.
The “A National Imperative” report analyzed the tax returns of thousands of human services nonprofits and found an astonishing instability in the liquidity and stability of the sector.
“There is a lot to do on the economic relief side, and we think this will be put into the mix with other business asks,” he said. “The airlines asked for $60 billion, hotels asked for a couple hundred billion. We employ more people than they do. We make up about 10 percent of GDP [gross domestic product].”
Susan Dreyfus, CEO of the Alliance for Strong Families and Communities, which is part of Leadership 18, called on states, counties and cities to start declaring nonprofit employers and their workers as essential employees. The idea, she said, is to ensure that contracts would be paid even if demand for services temporarily slowed, or if in-person visits were impossible because of social isolation or shelter-in-place orders.
“Mission driven organizations will be the ones to make sure an isolated senior is contacted, and that children are safe,” Dreyfus said. “This is time when government and this sector need to trust one another.”
New York City Mayor Bill De Blasio took this step yesterday, declaring the city’s 40,000 human services employees to be “essential personnel.” The city spends nearly $7 billion on human services contracts in a year, and there was mounting pressure from those providers for flexibility during an unprecedented event that disrupted the continuity of virtually every community-based and residential operation.
“In times like this, our government and philanthropic partners must provide proactive, concrete guidance to support our contingency planning and disaster response,” said Good Shepherd Executive Director Michelle Yanche last week.
The need for continuity echoed beyond New York. Youth Advocate Programs (YAP) CEO Jeff Fleischer, whose organization provides professional community-based mentoring services for juvenile justice, child welfare and school systems, has about 2,000 staff serving around 10,000 youth at the moment. Almost all of YAP’s work requires direct, in-person contact with youth.
Some contracting government agencies have permitted that work to continue through teleconferencing.
“Those that have said, ‘Don’t see the kids at all,’ we have not yet discussed whether we get paid or not yet,” said Fleischer, in an email. “Our focus has been on safety first. Funding conversations will follow I’m sure.
YAP is committed to keeping all employee’s pay checks coming, he said. “We just don’t know yet if we will get help.”
While continuation of contracts is a bigger concern to the bottom line of organizations long-term, Dreyfus said the $60 billion injection from Congress is needed now.
“Everything we are hearing is, how are we going to make payroll, or how long before we are shutting things down?” she said.
The $60 billion figure reflects conservative estimates of losses for nonprofits on two fronts, said Scott Taylor of the United Way. First, Leadership 18 expects a $40 billion decline in charitable giving this year, assuming the nation’s economy takes the major hit that is widely expected.
“I think it will actually be worse,” Taylor said, “because in the last decade, giving has shifted more to the wealthy.” The percentage of Americans who donated to charity dropped from 68.5 percent to 55.5 percent between 2002 and 2014, according to a recent report.
To that end, the group is also asking for universal deduction to boost charitable giving, which would enable taxpayers to lower their reported taxable income with donations.
The other $20 billion of the request, Taylor said, comes from a “rough estimate” of lost program revenue for some nonprofits. One of the hardest hit in this arena are the many local YMCAs in America, which offset the cost of community programs with gym membership fees.
The $60 billion fund could be distributed by various federal agencies, including FEMA’s Nonprofit Security Grant Program, said Ilana Levinson, senior director of government relations for the Alliance for Strong Families and Communities.
“We haven’t landed on anything yet,” Levinson said. “We’re leaving that open with the hill.”
John Kelly can be reached at [email protected].
