By: Ritchie Geisel (Guest blogger, Bienvenidos Children’s Center)

Southern California nonprofit social service agencies have faced many challenges in recent years, beginning with funding cuts resulting from the Great Recession and California’s budget crisis — many of which have yet to be restored. In addition, an increasingly onerous regulatory environment, with seemingly constant program and financial audits, as well as new HIPPA requirements and more restrictive contracts and grants, has placed an extra burden on already understaffed agency infrastructures. All of this has occurred at the same time that demand for safety net services has increased in the face of growing poverty, with many families just one or two paychecks away from homelessness.

A Portrait of California, a research study conducted several years ago in an effort to quantify the well-being of families living in all 233 communities in California, documented the extent of social immobility and economic inequality in our state today. And the hard truth is that with all the political fundraising being done to protect the wealth of corporate America, there are no Super PACs raising money to advocate on behalf of poor families.

In this difficult environment, two clear trends are emerging that may work in tandem to support the resilience of the families we serve and strengthen the fierce resolve of the organizations who serve them. The first began with the implementation of the Affordable Care Act, which is creating a more integrated approach to health and wellness. More recent has been the movement at both state and federal levels toward requiring both national accreditation and a more coordinated approach to the treatment of vulnerable children. As the focus begins to shift from child welfare to child well-being, we should see a greater emphasis on prevention and early intervention, and for the children in care, efforts to achieve permanency. In addition, there will be a more integrated system of support throughout each child’s journey from infancy to adulthood. In California, the likely passage of Assembly Bill 403 this fall promises to be a major step in this direction.

The second major trend is toward more collaboration among service providers, ranging from joint programming to shared administrative services, all the way to partial or full mergers. This trend began a couple years ago with the creation of the Nonprofit Sustainability Initiative (NSI) by four leading Los Angeles foundations. There are now a dozen foundations that are providing grant funding to encourage nonprofit organizations to pursue strategic affiliations.

The rationale for strategic restructuring is at least three fold:

1. Both public and private funders are strongly encouraging and funding collaborations
2. Agencies whose programs complement each other’s, filling in gaps in service, are well positioned to benefit from partnering in providing greater support for their clients
3. Many nonprofits currently don’t have sustainable business models, which may be the most significant issue. This is due partly to the fact that most grants and contracts don’t permit surpluses while also limiting indirect costs. In combination with the difficulty most small to mid-sized agencies have in raising unrestricted operating funds, this makes it almost impossible for them to fund their infrastructures. The so-called “myth of overhead” has also created a downward spiral for many nonprofits, who are constantly trying to do more with less, and by cutting their overhead, keep reducing their ultimate capacity to survive, much less thrive.

These organizations are best positioned to increase their ability to impact the lives of the children and families they serve and have bold and visionary leadership, willing to take prudent risks in order to adapt to the changing external environment. They will offer a diverse array of programs, and through strategic affiliations grow budgets that generate overhead sufficient to fund a full infrastructure. Such an infrastructure will include an experienced advocacy and a government relations team, as well as a strong marketing and communications program. And, they will have a chief strategy officer (CSO), accountable for expanding core programs and developing new ones where there is a need and an opportunity. Finally, they will drive the development of strategic affiliations, seeking to partner with like-minded, mission and culturally compatible agencies, with the resulting synergy serving the best interests of their communities.

About Ritchie Geisel (President and CEO, Bienvenidos Children’s Center)

Ritchie Geisel was chosen to lead Bienvenidos as its President and CEO in 2008. He brings over two decades of experience in senior leadership positions in the nonprofit sector where he helped lead two organizations through transformational change processes. Geisel began his career in academic fundraising and has since been focused on social service organizations.

After earning a degree in history from Princeton University, Geisel went on to obtain an MBA from Stanford University. He has a strong track record in leadership, fundraising and strategic planning, which was recognized when he received one of four Nonprofit Leadership Impact Awards presented by the Los Angeles Center for Nonprofit Management in 2013.