To paraphrase Connecticut’s private, nonprofit social service agencies: Gov. Ned Lamont just doesn’t get it.
Frustration with Lamont, who rebuffed a request from nonprofits for $100 million of the state’s $2.5 billion reserve, recently surged after the governor urged the agencies to ask more from wealthy donors.
Leaders of nonprofits, who provide the bulk of social services in Connecticut and will soon be asked to do more, were disheartened by that suggestion, saying it belies a fundamental misunderstanding of what they do.
“It is extremely difficult to raise money to support services for adults with serious mental illness and serious addiction disorders,” said Heather Gates, president and CEO of Windsor-based Community Health Resources. “They are a highly stigmatized conditions. Traditional philanthropy does not want to pay for hardcore professional supports.”
To her point, private fundraising typically accounts for 3% or less of most nonprofit budgets, while government sources represent three-quarters or more.
“It is extremely difficult to raise money to support services for adults with serious mental illness and serious addiction disorders. Traditional philanthropy does not want to pay for hardcore professional supports.”
President and CEO
Community Health Resources.
In other words, public funding is the meat and potatoes. Philanthropy, while much appreciated, is little more than an after-dinner mint.
Gates’ own organization is testament to this imbalance. With more than a dozen facilities across eastern Connecticut, CHR is one of the state’s larger nonprofit agencies, serving about 24,000 patients per year and operating with a $63 million budget.
About 87% of that budget comes from government resources — state contracts, federal grants, and Medicaid and Medicare payments. Another 12 to 13 percent comes from commercial insurance.
Less than 1% comes from private donors.
Gates praised her fundraising staff, but said CHR could triple its philanthropy revenue and that still wouldn’t position her agency to add programs and staff.
Former state Rep. Jack Malone of Norwich, who now is president of the Southeastern Council on Alcoholism and Drug Dependence, said fundraising accounts for only $29,000 of his Lebanon-based agency’s $9.5 million annual budget.
Like CHR, the overwhelming bulk of SCADD’s funding comes from government sources. Three different state departments contract with the council to provide addiction treatment services to roughly 3,500 adults each year.
“We have to work hard for our fundraising,” Malone said, adding that while he appreciates the council’s supporters, their resources are limited as well. “They’re not well-heeled, Gold Coast, western Connecticut families.”
Lamont, who addressed more than 550 leaders of nonprofit agencies last week at their annual convention, said the best he could do in his first year on the job was hold their state funding flat.
The Democratic governor inherited a state budget that — without adjustments — was on pace to run more than $3 billion in deficit across this fiscal year and next combined.
But that’s an explanation nonprofits have been hearing for years, particularly since Connecticut emerged from the last recession in 2010 with a sluggish economy and enormous pension debt.
“We have never benefitted from the state doing well and we have always paid the price when the state has struggled,” Gates summarized neatly.
Presently, more than a half dozen state agencies collectively spend roughly $1.4 billion to hire private, nonprofit agencies to provide social services, health care, job training and other government functions.
These payments represent more than 7% of the state budget’s General Fund.
Since 2002, state spending for nonprofits has grown by about 10%. After adjusting for inflation, nonprofits say they have lost money over that period.
Further complicating matters, state officials project a huge surge in retirements will occur in three or four years, potentially eliminating as much as 15% of the state’s workforce.
Nonprofits already provide 80% of state-sponsored social services, and Lamont said last week Connecticut will lean more heavily on them in just a few years.
Gates said CHR already has trimmed staffing and program slots in some residential programs and also is struggling with longer waits at its outpatient clinic — which translates into fewer patients served each day.
“We have never benefitted from the state doing well and we have always paid the price when the state has struggled.”
All of this begs the question of how nonprofits can be expected to handle more patients with flat funding three years from now?
The CT Community Nonprofit Alliance, which represents more than 300 agencies, proposed a solution this past spring: invest $100 million — most of which would come from the budget reserve, but some could be borrowed — in nonprofits right now, and then have the administration, legislature and industry work together to develop a multi-year plan to phase in higher rates.
Lamont said last week that preserving the surplus is the best way to provide stability for nonprofits.
“The rainy day fund is to make darn sure that when there’s a rainy day I don’t have to cut funding for services like this at a time of most need,” Lamont said last week.
“There is no level of philanthropy that, alone, will be sufficient to meet the needs I have now, let alone the growing needs.”
Andrea Barton Reeves
President and CEO
There is some historical evidence to support the governor’s argument. During the last recession — between 2008 and 2010 — annual tax receipts in the General Fund fell from $12.5 billion to $10.9 billion.
Lamont did offer the nonprofits an alternative at their convention, however
“I spent the last two weeks talking with a lot of pretty well-heeled investors,” he said. “I also mentioned to those investor-types that … I need them to step up more. And I need them to contribute more to what we’re trying to do in the not-for-profit community.”
The governor also suggested the state offer tax credits to philanthropic donors to encourage giving, but he downplayed this suggestion immediately after the convention ended and said he wouldn’t be proposing tax credits when he delivers his next budget proposal to the legislature on Feb. 5.
“I don’t think February,” he said, adding he has just begun discussions with state tax commissioner Scott Jackson. “I think that’s too soon.”
Gian-Carl Casa, president of the nonprofit alliance, said nonprofits appreciated Lamont’s appearance at the convention, “but his suggestion that increasing philanthropic support is the answer to funding shortfalls is, by definition, only a fraction of what needs to be done.
“Charitable giving does not have the reach or the capacity to substitute for state funding of substance abuse and mental health treatment, support and residential services for people with developmental disabilities, homeless shelters, re-entry programs and other vital human service programs,” Casa said.
Andrea Barton Reeves, president and CEO of HARC Inc., a Hartford-based agency serving about 2,500 people with intellectual and developmental disabilities, said only 1.5% of her $18 million annual budget comes from private donors.
“We really appreciate every single dollar every single donor gives us to move our mission forward,” Reeves said. “But there is no level of philanthropy that, alone, will be sufficient to meet the needs I have now, let alone the growing needs.”
Reeves said much of the philanthropy her agency receives supports complementary services rather than core programs in the budget. For example, summer camp programs for the disabled often are funded by private donors.
Stagnant state funding not only puts programs at risk, Reeves said, but also contributes to high turnover rates in a field that relies on patients and staff forming a close bond.
Over the past decade, nonprofits have routinely complained of annual turnover rates in excess of 20%, and in some cases more than 25%.
“This is so upsetting to parents and families and is one of the most critical issues we’re dealing with,” Reeves said. “We need to hire quality people and have them stay, but people are leaving to work at Wal-Mart and Chick-fil-A.”
If State and Federal funding accounts for the bulk of these nonprofits revenue, why are their CEO’s paid as though they are private sector CEO’s and not state employees more or less? The CT Mirror should publish the salary of the top five employees of all these nonprofits. People would be shocked!!!! How does the CEO of the Community Health Center in Middletown deserve 998K per year? He is basically a state employee.
Right on the money, Jack! In the interests of transparency, salaries of all CEO’s of “non-profits” should be published annually. Most people would be amazed!
State of Connecticut Legislators and the Department of Health and Social Services need to pay much closer attention to Executive Compensation Levels at these so-called nonprofits. In reviewing Form 990 IRS Private Nonprofit Disclosure Forms, compensation levels appear to be quite generous.
2017 Filing – Community Health Resources – President and CEO Heather Gates – Over $340,000.00
2017 Filing – Adelbrook Behavioral and Developmental Services – President and CEO Garrell S Mulvaney – Over $231,000.00
It appears Harc Inc is the only firm whose executives truly understand the meaning of “Nonprofit”.
2016 Filing – HARC Inc – President and CEO Andrea Barton Reeves – Over $139,000.00
Many of these nonprofit executives are being compensated at levels much greater than their peers in Private for-profit entities. However, the for-profit entities executives aren’t being compensated with taxpayer monies. Nor are they exempt from paying property taxes.
Ironic that the governor won’t ask the wealthy to pay more in taxes, but expects them to give to non-profits. And… I don’t disagree with John Doe or Jack. The non-profits need to be more fiscally responsible. More money needs to go to those they help, rather than the folks in administration. Gov’t could learn from this too I suppose.
CEO Heather Gates of the Windsor Community Resources is grossly overpaid. For her to cry poor mouth is sad. She is tone deaf. Looking at IRS Forms 990 she received an 18 percent raise in 2016 from 2014. 340K in salary and another 29K in other compensation (Leased car) is obscene. Form 990 makes them list their most expensive subcontractors. For the Windsor Group it is the Shipmen Goodwin law firm and two Real Estate cleaning companies. I assume they hire the clients to do the work. .Many non-profits have employment temp agencies (Robert Half) as the largest vendor. The people doing the actual work are paid peanuts while the likes of Heather feed at the state trough only they have it better than state workers.
Ironic that the Governor won’t ask his Department heads to trim their bloated $21B budget. Notwithstanding the non-profit executive salaries, you can bet that non-profits deliver services to the community at a much lower cost than state run programs. They also don’t load benefits of staff at 70+% like state jobs do to cover bloated retirement benefits and free healthcare for retirees and spouses.
The tax the rich mantra may get the “I want mine” vote but it isn’t the reality. The rich already pay much more than their share of taxes. Keep taxing them and see how many you have left to pull the wagon.
The Governor seems to be implying that many of the 15% of the state workforce eligible to retire in the next few years provide social services and can be replaced by non-profit employees. With 80% of such services already provided by non-profits, that seems a stretch.
Has the state issued any documentation of that assertion? That’s a significant factor in the state budget.
Also, the increase in the minimum wage is likely to be a major expense for non-profits. Assuming that non-profits have to continue to rely on government, the legislature and Governor are going to be required to pay for their actions.
The question becomes only When will non-profits have to cut back on people served in order to reduce staffing and thus expenses?
One more problem being ignored as long as possible.
The budget has to be cut. Stay strong on this Ned. We the tax payer are behind you.
Most of these “non-profits” are in fact businesses operating under a tax dodge. A bit of investigation will reveal that most have a number of extremely well paid executives. They are not charities and that is why people are reluctant to donate to them. The fact is that state should be providing these services – since they fund them anyway. It is fascinating how many of these “non-profits” are owned and operated by current and former state Legislators.
There are charities like the Boy Scouts, Boys and Girls Club, Camp Courant, Salvation Army and so many others. They are charities who live in the real world of providing services that the market place( donors) supports or doesn’t based on quality of service and perceived need.
These other agencies are quasi state agencies. There is a big difference.
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