The Perfect Storm: How Nonprofit Aging Services are Surviving the Recession
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The Perfect Storm: How Nonprofit Aging Services are Surviving the Recession

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Introduction

Are you familiar with the book and movie The Perfect Storm? If not, let me recap. The Perfect Storm is about a fishing boat caught in a horrendous storm caused by many contributing factors colliding at the same time. The story focuses on how the fishermen on this boat tried to survive this unusual storm.

Nonprofit organizations are in a similar boat. We are trying to obtain resources for our organization at a unique time in our country’s history, where a number of colliding events and situations create a difficult environment that is not conducive to fundraising.

We are living in a time of unprecedented anxiety: Terrorism, anthrax, war, deficits, unemployment, increased demand for services, stock market declines, eroded trust in some institutions, and an economy that seems to be crawling along with little signs of recovery. All these issues impact each other, making it difficult if not impossible for many nonprofits to weather this storm.

But not all nonprofits feel under siege. Some have found shelter. Their organizations were set up to be able to buffer hard economic times through endowments, reserve funds, and diversified funding bases.

Other nonprofits that were not well positioned are quickly realizing that you cannot rely on the same old supports, but need new strategies to survive and thrive now and in the future.

They have sought out new opportunities and have decided to rethink their missions and their roles and retool operations and service delivery to better adapt to changing times. They have discovered remarkable and marketable opportunities by responding creatively to this storm. This report profiles five of these organizations.

With funding from the Robert Wood Johnson Foundation’s “Promoting Consumer Direction in Aging Services” Project, The National Council on the Aging (NCOA) conducted a survey of aging services and how they were adapting to the recession. Many community service providers have concerns about how the introduction of consumer direction may affect their financial viability. Will Medicare and Medicaid revenue streams be harmed? Will family members of current clients opt for less expensive home delivered services even though the quality may not be up to par with their own agency? Can they compete for future clients in an increasingly competitive environment? This report was developed to demonstrate strategies nonprofits have developed to respond to the difficult economic climate they face.

The five programs profiled in this report are a sampling of many more programs that were surveyed.

We hope after reading this report you are inspired to think and act differently about your nonprofit organizations. So stay in touch. We want to know about your creative ways to survive the perfect storm.

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Best Practice Profiles

Area Agency on Aging Repositions to Create Caring Communities in Western Massachusetts

Highland Valley Elder Services

Robert Gallant, the Executive Director of Highland Valley Elder Services, would never describe himself as a visionary or innovator. He dislikes the term “out of the box.” He prefers the word “repositioning” because this word implies an evolution, not a revolution. His agency for the past 26 years has been shifting its management approach from a “warehouse model” to a “green house model” of service delivery. This model has the underlying principles that 1) All care is local, 2) The best care is that which flows from what people want, and 3) Citizen input to programming is critical.

Highland Valley Elder Services, Inc. is a private not-for-profit AAA (Federal) and the Aging Service Access Point (State) for 24 towns in western Massachusetts. The catchment area covers 500 square miles of rural, suburban, and urban communities. Its budget is $6.3 million.

Ninety four percent of its budget comes from Federal and State sources. The Board (a confederation of member Councils on Aging) has incorporated consumer direction strategies into its nutrition sites, community-based long-term care (the Take Charge Program), and for Caring Communities, a citizen-directed comprehensive and coordinated local service delivery system. The state-designated Hyland Valley Elder Services is a consumer direction pilot for the Take Charge program.

The agency started with a federal mandate, state support, and local control by elders and its constituents. Now, with state and federal budget cutbacks and more restrictive policies, the system turned into what Gallant calls “federally abandoned, state controlled, and locally obeyed.”

Downsizing took its toll on both programs and staff. One approach that seemed to make sense was to give older consumers more control over programming. Gallant stated, “Our best recipes are those that empower elders to discover their own strengths, their own talents and their own solutions.” Since 80 percent of elder care is provided informally through family, friends, and neighbors, Highland Valley Elder Services decided that’s where the resource should go.

This profile looks at how one AAA can reposition itself so federal and state dollars are most efficiently utilized, and where an AAA does not behave like the “new kid on the block,” but instead allocates resources to every block, according to Gallant.

Here are some examples:

  • The Nutrition Site Council Management Model

The nutrition site is called the dining center and is run by participants, not staff. Each center has a council of older participants who run these sites like church suppers. Participants count donations, take reservations, set up, and clean up. Technology helps streamline management. Participants have flash cards that electronically count the number of people eating and a touch screen that allows elders to make reservations on site.

The dining centers use Title 3 funds that require sites to request “voluntary” donations. To ensure there is a voluntary spirit and participants don’t feel strong armed, the dining sites give everyone an envelope with a meal ticket. Participants can then discreetly place a voluntary contribution in the envelope and place the envelope in a wooden box, not a metal box that can indicate by sound how much of a contribution was made. “We don’t want to drive low income people away, nor do we want them to feel cheap,” stated Gallant. A sign says, “You are invited to contribute a voluntary contribution against the $4.50 meal.” Such contributions account for $200,000 a year.

  • Consumer Direction in Senior Housing

Like the dining centers, two low-income and public housing projects have a Resident Quality of Life Council comprised of residents. Through the use of Older Americans Act Title 3 funds, residents participate in the Caring Community Coalitions and take charge by gathering and posting people’s needs and offers for services on the Highland Valley Internet-based geographic Information System, called the Caring Community site map. The council matches people together from this inventory database. The matchmakers are called “mappers.”

  • The Caring Community Coalition Program

The Caring Community Coalition program has an interesting twist. Highland Valley Elder Services and its contractors distribute Citizen Chip Cards, similar to Visa credit cards, to people who earn chips through community service, which in turn can be redeemed at local retail merchants.

Basically, a local complimentary currency system that is taxable is established. Taxes are paid with normal currency when a purchase is made with chips. Participating merchants and other members redeem these credits for merchandise and services and spend them in turn for goods and services or donate them back to the distribution system for a tax credit.

Businesses can use this system to promote community service among employees and/or to enable employee caregivers to “buy” elder services for their loved ones. Each chip equals one dollar. Highland Valley also receives a 2% transaction fee to help the program be self supporting.

A community generally needs about 500 people earning chips and 100 merchants to make the system work. Once a community is successfully engaged in this service/product exchange, it can classify itself as a “Caring Community.” This is similar to being classified as a “crime watch” area. There are specific criteria a community has to meet, but once they meet the criteria, they can use the classification for marketing purposes. For example, an exit sign off the highway could say, “Welcome to Smithville, designated by the Office on Aging as a ‘Caring Community.’”

Within the Consumer Directed Home Care program, called Take Charge, vendors such as homemakers, home health aides, companions, drivers, and the like are enrolled as Citizen Chip merchants. Consumers either earn or apply for subsidized credits to spend to purchase these services. Merchants in turn spend the credits they earn for goods and services in the inventoried offerings of the system.

Transactions are Web-enabled via the agency’s Web site, which also enables (via a Geographic Information System interface) consumers to place their needs for service as well as offers of their gifts, talents, and services on the Caring Community Map.

The beauty of this system is that older people whose service plans are being cut for lack of state and federal funding are being encouraged to put themselves on the Caring Community map and shop for replacement services via the Web site. This exchange network can also be applied to supplies such as wheelchairs that are no longer needed. You can exchange a chair for a certain amount of chips, then purchase some service or product with your chips.

Community-based services are finding it more and more difficult to handle the growing needs in the community. This complimentary system helps alleviate some of this pressure when traditional funding sources are declining for nonprofits.

How does Highland Valley reposition the use of existing programmatic dollars? Massachusetts has a performance rate system that allows nonprofits using state dollars to keep any money they save through efficient programming for reserve funds. Over the years Highland Valley was able to squirrel away unrestricted funds to weather hard economic times and test new forms of service delivery.

Highland Valley does not conduct traditional fundraising efforts. Charity is not charity, it’s civic engagement. Volunteers are not volunteers, they are citizens mobilized for caring communities. Community and civic mindedness are not just concepts in western Massachusetts. Highland Valley Elder Services transcends the usual players, and maximizes informal and formal service delivery. They have the faith that consumers can handle it, and they do.

Contact:

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The Gold Standard in Sustainability

Ohio Presbyterian Retirement Services Foundation Profile

Who could ever imagine that the tragic death of Dorothy Love, a seven-year-old girl in rural Ohio, could create a multi-million-dollar not-for-profit organization that helps older people throughout the state? To honor Dorothy’s memory, friends and family donated 294 acres 80 years ago to create the first site of the Dorothy Love Retirement Community, a continuing care retirement community (CCRC) developed and managed by what is now called Ohio Presbyterian Retirement Services (OPRS). There are 10 additional retirement communities, of which seven are CCRC’s. OPRS also operates a division called Senior Independence that offers a full line of home and community-based services, including adult day care, home health care, senior centers, and a multitude of other services.

OPRS Foundation, through its Life Care Commitment, works to support residents who cannot afford their full cost of care. The Foundation recently established the Commitment to Seniors program that provides sliding fee support for community-based service clients. Ohio Presbyterian Retirement Services had the foresight in 1986 to start a foundation to strengthen charitable giving and volunteer involvement and provide increased exposure in support of the Ohio Presbyterian Retirement Service mission. This support includes building volunteer leadership, seeking and receiving financial contributions, and managing financial assets now exceeding $40 million. The Foundation’s operating budget is $2.9 million and the OPRS budget is $110 million.

Together the Foundation and OPRS have developed a fine-tuned philanthropic operation entailing the solicitation of gifts, including cash and cash equivalents, marketable securities, real estate, personal property, gifts-in-kind, and life insurance policies.

In addition to outright gifts, will bequests and planned giving are also a major area of focus. “As fundraising programs build for the future, especially in long-term care, it is critical that the estate and deferred gift components be given priority status. As this type of program is built over the years, it can help strengthen the financial position of Ohio Presbyterian Retirement Services and the Ohio Presbyterian Retirement Services Foundation,” stated Thomas Hofmann, President of the Ohio Presbyterian Retirement Services Foundation.

The OPRS Foundation has a strong infrastructure of fundraising staff located not only at the corporate office, but also at three regional sites supporting the retirement communities and the Senior Independence locations.

The Foundation has a major emphasis on solicitation with residents, clients, and their families and in addition is building stronger networks for fundraising in the general community. The key is the cultivation process. Fundraising staff has to ensure that donors’ philanthropic interests are truly being met and that there is appropriate follow-up and recognition. Hofmann believes the secret to successful solicitation is to listen very carefully to the donor’s interests and not to redirect their interests; to make sure the follow-up and recognition is what the donor wants, not what staff want; and most important, to ensure that donors have confidence in the financial structure of the organization and that their donations will go to exactly what they requested.

When this is achieved, donors end up talking positively to other potential donors, and philanthropic goodwill grows. Careful stewardship is also important, because in clustered communities like CCRC’s, a bad reputation travels just as fast as a good one, if not faster.

It is easier to generate support among the retirement community residents because peers ask peers. It is also easier to generate support among family members in retirement communities because they are very grateful that their loved ones will be well taken care of for the rest of their lives. Residents and family members often have long-term associations with OPRS.

The opposite is true among OPRS Senior Independence clients. Services tend to be episodic, and clients tend to be isolated in their own homes. Family members appreciate staff, but may not associate the staff, like a home health aide, with OPRS. These factors have made it a challenge for the community service division to raise funds only from individual donors. They have opted to focus more on foundation and corporate support in addition to developing individual contacts.

Whether it’s fundraising for the retirement communities or community services, OPRS has taken a new tactic to fundraising by becoming more team oriented. In teams of both staff and volunteers, a decision is made as to who is the best person to solicit and cultivate prospective donors. Recently, family members have been solicited to become volunteers on these teams. OPRS is trying new ways to engage families, residents, and clients in the fundraising process by giving them a multitude of opportunities in which to get involved and feel connected to the organization. For example, OPRS has a “Thank-A-Thon,” where resident volunteers call donors from the general community to thank them for their contributions.

OPRS has conducted a needs assessment at each of the retirement communities and community service programs. This information will be given to the fundraising staff so they are better informed of unmet fundable needs and are in a position to articulate these needs to corporations, foundations, and individual donors.

Like other not-for-profit organizations, OPRS has felt the pinch of the recession. Direct mail appeals, although a small part of the Foundation’s program, have declined considerably since September 11th. The deferred gift and estate programs of the foundation have remained strong overall. But the size of some estate gifts have been affected by poor market performance.

OPRS does not conduct special events because they feel the investment of staff and money does not justify the financial outcomes. OPRS has well-entrenched roots in the community and does receive additional visibility through other programs and events done by retirement communities and Senior Independence.

The Foundation has restructured the endowment and annuity portfolios through the work of their investment and finance committee. This work has been done in order to address the challenges of the current market. Investment income is viewed as an important part of the overall Foundation program as it seeks to provide stable funding to the OPRS system. This source of ongoing funding can help weather poor economic climates. There are two investment managers to improve recommendations and hedge against any possible losses.

Leaner times require leaner organizations. To increase its effectiveness, the Board has been restructured. Its size has been reduced and its executive committee eliminated.

Fundraising is an ongoing process of review and evaluation. The approaches that work now may not work in the future. OPRS is conducting a public relations and feasibility study to further refine future fundraising campaigns and make sure they resonate with the times.

Sustainability means flexibility, but it also means putting your money where it can have the best return. Ohio Presbyterian Retirement Services and its Foundation have made a considerable investment of resources to generate resources. It seems to be working well for the present and the future.

Contact:

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Building Your Own “Homegrown” Philanthropic Base in Rural Wisconsin

Home Respite Care, Inc. Profile

Many nonprofit aging services are struggling for financial stability, but rural programs have an added challenge. Most of America’s philanthropy is concentrated in urban areas. Well-developed United Ways and a patchwork of foundations are just a few of the urban charitable advantages. Rural communities do not have the tax base to support many of the services that residents need. Transportation, for example, is a monumental obstacle to service delivery. The onus is on community-based programs to build a philanthropic base by pooling as many gifts from as many people, churches, civic groups, and businesses as possible.

One rural nonprofit does just that. Home Respite Care (HRC) in Oconto Falls, Wisconsin, has very little government support, but a tremendous amount of community support. It is a non-profit organization that offers in-home respite and phone pal reassurance, free of charge, to the citizens of Oconto County. It also has an adult day center located in Oconto Falls for longer-term respite needs. There is a sliding fee scale for this service. Most clients are subsidized. The agency’s annual budget is $61,000 per year.

Despite the strong community support, Home Respite Care needs to continually generate resources to sustain their organization. The nonprofit tries not to tap too often into the well; otherwise, fundraising could become a tedious obligation for supporters.

So how do you balance fundraising needs without depleting charitable goodwill? The answer is to convene only two stellar special fundraising events each year. The first is around Valentine’s Day. Home Respite Care invites anyone and everyone to their “No Ball” Fundraising Event.

“Home Respite’s No Ball still has the power to set our hearts pounding. Love is no puzzle at this imaginary fundraiser. Caring hearts know that love and commitment is the secret to the success of home respite.”

This signature event raises $15,000 a year, and all it requires is an invitation and a good mailing list. The invitation says please donate the money you would have spent attending a fundraiser ball (tuxedo rental, babysitter) and donate it to Home Respite Care instead. Staff and volunteers can concentrate more of their time and effort on services, and supporters can have fun in other ways.

The second signature event is The Annual “Taste of Oconto County” scheduled in the autumn. Twelve vendors and a winery participate at a tasting event. The restaurants provide sample dishes of their favorite recipes, and people purchase a $15 ticket ($12 in advance) to taste every- one’s wares. A local supper club provides free banquet space. Eight volunteers organize the event plus a silent auction, raffles, and door prizes.

There is a booklet printed with vendor ads, coupons, and lists of food offered by each vendor. The booklet also provides donation recognition for people who donated items and volunteered for the event. This past year, $16,000 was raised. Debbie Ardnt, the Executive Director, says the event works well because there are a variety of vendors to satisfy many tastes. She added that the auction works better with a few big or unique items than many little commonplace items. Ardnt emphasized that it takes both events about four to five years to get established in the community. It is a relatively stable source of funding once the fundraising events are well established.

In addition to the two signature events, Home Respite Care conducts direct mail campaigns. The mailing list consists of past contributors, local businesses, churches, and civic clubs like the Lions Club. September 11th and the recession have had an impact on donations, which Ardnt estimates to be 10% to 15% down. She mails to 1,600 people, and about 350 people respond with donations averaging about $9,000. Direct mail generated $16,000 this past year.

Ardnt observed that local civic groups are redirecting more of their funds to local charities and less to national ones, like the American Heart Association. She uses moving testimonials to increase response rates, but she doesn’t push too hard because she does not want supporters to feel guilty. They have been hard hit by the recession as well. Memorial donations comprise about half of all donations. She is looking into planned giving possibilities.

Local businesses have supported Home Respite Care in a number of ways. Two local food stores give 1% of sales to designated nonprofits. It’s not a lot of money, but it’s easy money. Local businesses have provided many in-kind donations, and Home Respite Care’s newsletter has a day center wish list that helps generate needed supplies.

As a result of the two fundraising events and direct mail campaign, Home Respite Care has been able to create a one-year reserve fund to help during lean times like the present. They will likely have to tap into this fund to keep service levels up to par.

Home Respite Care also tries to defray costs in a number of ways. A hospital donates free office space, utilities, and maintenance and repair costs. The Senior Center, where their adult day care center is located, provides free utilities and repairs, and the local office on aging provides a maintenance worker. They have cut back on advertising and whenever possible they do internal printing to save money.

Ardnt is trying new low-cost ways to market their program. She joined the local Chamber of Commerce and many task forces to help get the word out about the program’s services.

Special events and individual donations are the agency’s bread and butter, but volunteer support is their sustenance. One hundred percent of the respite and phone pal services are provided by volunteers. A few volunteers assist paid staff at the adult day care center.

Volunteer training is provided free through the Alzheimer’s Association and the Wisconsin Adult Services Association (they are members). The local technical college also provides staff and volunteer training.

Ardnt has noted some difficulties recently in recruiting and sustaining volunteers. Transportation is a major obstacle to recruiting volunteers. Clients and volunteers can live many miles apart in rural communities. Travel time and increasing gas prices have reduced the number of volunteers.

The agency would not have a problem getting a van donated, but they do not have the funding to pay for a driver, gas, insurance, and maintenance. Volunteers prefer episodic jobs rather than ongoing long-term ones as people’s lives get busier and busier. And after working with the agency for over 10 years, the long-term volunteers, quite frankly, are becoming clients as they age.

Ardnt is looking into more volunteer support from schools, churches and businesses. She is submitting articles about volunteers in local papers to gain additional exposure. Her newsletter also helps to replenish the volunteer pool.

Replenishing the volunteer or donation pool is getting more and more difficult, but Ardnt says she compensates by keeping all options open and always looking for new ways to keep interest in the program. For Home Respite Care, Inc., no stone is unturned.

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Senior Center Averts Cutbacks through Old Fashioned Politicking and Using Local Resources More Creatively

Stamford, Connecticut, Senior Center Profile

Being nominated “Community Leader of the Year” did not hurt Stamford Senior Center Director Jeanne Franklin’s efforts to ward off city cutbacks for her center. Franklin mobilized the data that showed her senior center was the most cost-effective senior center in Connecticut despite its small staff and youth. Stamford Senior Center started in 1996 after a 20-year campaign to create a center. Most senior centers in the state started in the 1970’s. The average number of senior center staff in the state is 10. Stamford has five. Its budget next year is $245,000.

Three fourths of the Center’s budget comes from city dollars. The remainder comes from membership fees and donations (15%), corporate giving (5%), and earned income, i.e., utilization donations (5%). Many of the programs offered are self-sustaining, such as computer classes and field trips. The Center occupies the entire second floor of the Government Center. This location helps increase access and awareness. The more awareness of what the Center does, the more successful it is at maintaining current funding levels.

Location alone is of course not enough. Franklin and the Treasurer of the Board of Directors go through a lengthy process of meeting with the mayor, the Stamford Board of Finance, the Fiscal Committee of the Board of Representatives, and finally the Board of Representatives. They conduct old fashioned politicking and “hit the street” to meet with key decision makers before these meetings. This process is strengthened by the fact that both the staff and Board represent the Center’s interests. What further strengthens the Center’s advocacy efforts is getting key people to visit the Center, which Franklin calls the “University for Senior Adults.” There they will discover a beehive of activity and socioeconomic diversity not seen in many Centers.

Even though the Center experienced growth in membership and utilization last year, Center leaders showed restraint and respect for current city budget constraints. They did not request more money; just enough to hold the line.

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