Hartford Business Journal: Nonprofit human-services sector in need of reforms

By Jack Horak | MARCH 13, 2017

If I had the power to give homework to the members of the state legislature, their first assignment would be a book report on the 2017 Legislative Briefing Booklet prepared by the Connecticut Community Nonprofit Alliance, the leading state association that speaks for our nonprofits.

“The booklet is a terrific document. On one level, it offers some head turning, common-sense recommendations to ease the costly regulatory burden borne by the state’s network of nonprofit human-service providers. However, on a deeper level, there is an epiphany between its lines: Our nonprofit human-service provider network is standing ready and willing to play a helpful (and perhaps leadership) role in reforming bureaucracies that have exhibited a tendency to eat their own young (at least financially) and are long overdue for reform.

Let me start with the reasoned assumption that there will always be people among us who require care and assistance because they are afflicted with physical or intellectual disabilities, mental health conditions, broken families or other maladies of the human condition. There is a thin and porous line between people who have been so afflicted (directly or vicariously) and those who have not. The case for providing assistance is axiomatic, and the only question is how best to do so.

Unfortunately, our system seems to have been deliberately designed to find the most complex way to get the job done. The state competes with itself. It provides human services directly with its employees (at higher wage levels and costs), and it also hires the nonprofits (the competitors) to do the same work for much less money while simultaneously subjecting them to an impenetrable regulatory regime that, as the briefing booklet says, can require the nonprofits “to maintain as many as 24 separate licenses from state agencies to operate their programs.”

The rub in this arrangement is that the “much less money” the nonprofits are paid is essentially 100 percent of their operating budget. This means that they depend on their high-price competitor (the state) for their existence while simultaneously trying to survive under the competitor’s burdensome regulatory regime. The bizarre circularity in this arrangement is that the costs of regulatory compliance are (re)paid to the state with some of the same dollars the state paid the nonprofits in the first place to provide services.”

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