Transformational Change Module 10: Creating or Improving Financing Strategies (Funding Diversity and Service Offerings)

MODULE 10: Creating or Improving Financing Strategies (Funding Diversity and Service Offerings)

Overview:

If an organization gets most of its funding from one source, and only offers one service, it can be very limiting. One old axiom is: The greater the number of funding sources, the greater the protection against unanticipated funding disruptions. There hasn’t been a lot of “new money” available for quite some time. The funding that is “in the queue” has simply been moving as community priorities shift.

Very few organizations can survive without a strong measure of diversity in their funding sources. Many achieve their funding diversity by understanding and then responding to the changing priority needs within their communities. Those organizations that are seen by their communities as being flexible and responsive to community needs are the organizations that are most likely to be able to diversify in this way. Organizations that feel responsible to help support community needs are often very present and attuned in their communities.

Sometimes organizations are not as diverse in their funding sources as they need to be because they have been relatively narrow in their view of what they are willing to do. We can’t really talk about diversifying our funding sources without also talking about diversifying our service offerings.

The more diverse service offerings are, the more an organization may be seen as a good partner for delivering any “next door” services. If we’re providing a wide array of services that support families, for example, we might also be seen as a natural choice to be a provider of employment and training services. The second axiom is: The more diverse our service offerings are, the more diverse our funding sources will probably be. We need to be willing to be flexible and responsive.

Recommendations

• Study the Trends in the field to determine where priorities and emphasis are shifting. Plans are local but the national trends are often connected to shifts in federal funding stream priorities.
• Educate your Board of Directors and Senior Leadership about these trends
• Become aware of and be willing to consider helping to address the highest priority needs in your community. Sometimes the organization’s Mission may need to be reviewed and adjusted.
• Be willing to consider partnerships with governmental entities and other service providers as plans for systemic changes are explored to facilitate addressing the highest priority needs.
• Consider piloting a collaborative initiative with another service provider organization. “Sharing” is a skill that we can learn but it often takes practice and considerable leadership support.
• Begin to share the vision of “Community Partnership” with staff so they can come to understand and support the shift from internal to external focus in planning for the future.
• Reconsider existing patterns of supervision, support, and training to ensure that all staff feel adequately prepared as new ventures are being introduced and as new skills are being learned.
• Diversifying funding streams and service offerings usually requires a shift from what has always been done before to some new area where additional capacities will have to be developed.

2. FOCUS ON FINANCING STRATEGIES

The following recommendations in Section B come from the work BBI has done on identifying essential fiscal strategies for oversight agencies and provider organizations. More detailed information can be found in each of the three individual BBI publications, but this toolkit will highlight some of the key information from each.

Recommendations

(from, “Residential Interventions for Children, Adolescents, and Families”….(Beth Caldwell, Gary M. Blau, Robert E. Lieberman. (2014). Residential Interventions for Children, Adolescents, and Families: A Best Practice Guide. Taylor & Francis.))

Various funding options (with services covered and BBI Best practices for use identified) as well as methodologies, benefits, and limitations for various funding approaches are explored.

Funding Options

• Medicaid Authorities and Demonstrations (Ex: Rehab option; 1915 waiver and 1915(c) waiver PRTF bridge waiver; 1915 (b) waiver; 1115 waiver; Money Follows the person (MFP) 1951 (i); Section 2703 Health Home; EPSDT (mandated benefit).
• Child Welfare (Ex: Title IV-E; Title IV-E Waivers; Child Welfare Demonstration Projects)
• Mental Health (Ex: SAMHSA Block Grants; Children’s Mental Health Initiative Grant (System of Care)
• Substance Abuse (Ex: SAMHSA Block Grants)
• Education (Ex: Individuals with Disabilities Education Act (IDEA)
• Juvenile Justice (Ex: Title IIB Formula Grants; Justice Assistance Grants)
• State General Funds (Ex: Legislative or Executive Allocations)
• Private (EX: Foundations; Private Insurance; Others)

Methodology

• Realignment of Existing Funds (Ex: Blended/pooled; braided; flex funding)
• Payment (EX: Per diem; case rate; can include risk sharing)
• Contracting (Ex: Performance-based; Reinvestment of savings; Measure improvement over time; Other)

Recommendations

(from, “Implementing Effective Short-Term Residential Interventions” (Building Bridges Initiative, Inc. (2017). BBI Short-Term Residential Intervention Guide [PDF online file]. https://togetherthevoice.org/wp-content/uploads/2024/06/BBI-Short-Term-Residential-Intervention-Guide1.pdf))

Common Tasks

• Used the power of the budget to make the desired changes by re-directing funds
• Identified/clarified what was important to the organization and invested in it such as aftercare, decreased workloads so staff can work in the family’s home, hired family advocates, increased training in clinical practices
• Created flexible funds to cover concrete supports for families: a) during the residential intervention to be able to visit, stay connected, and reunite as quickly as possible; and b) after the residential intervention to sustain outcomes post-discharge
• Sought new funding and/or fundraising for such activities as testing/evaluating new models/approaches, implementing evidence-informed and evidence-based practices with fidelity, and tracking positive sustained outcomes post-discharge
• Created new service lines when necessary complimentary services did not exist
• Worked with funders to elicit their support for budget flexibility and/or adjusting the rate
• Pilot tested new approaches; tracked outcomes to show it worried, and then went to the funder for fiscal support

Recommendations

(from, “Transforming Residential Interventions Practice Strategies and Future Directions” (Beth Caldwell, Robert Lieberman, Janice LeBel, Gary M. Blau. (2020). Transforming Residential Interventions. Practical Strategies and Future Directions. Taylor & Francis.))

The following best practice strategies and checklists identify key actions for success, additional specific actions for state/county/communities and providers, and funding options, sources, and approaches that can be utilized by these four groups.

Key Actions for Success

• Respond to Need for Change (Ex: lawsuit; legislation; improved outcomes; right size residential/congregate care; policy change)
• Ensure Strong Leadership to Lead Transformation Effort
• Adopt a Reframe of Residential Services (Residential is an intervention and not a destination)
• Research, Review & Analyze Data to Determine Needs & Direction (Ex: Current performance; fiscal and outcomes data; specific populations; cross- agency and state/regional data trends; visit others with successful residential transformation)
• Identify General System Enhancements Needed to Support the Shift (Ex: What can be done without any new money, with new money, later with new money
• Get Expert Help (Ex: BBI experts; others with documented successful transformations, who have improved positive outcomes post-discharge; and developers of evidence-based practices/programs)
• Find Out What Others are Doing
• Work with Other Child Serving Systems/Agencies
• Create an Advisory Council/Group of Key Stakeholders (Ex: Residential and community provider leaders; family and youth peer advocates; families and youth; staff; community stakeholders; and other child and family serving systems reps
• Obtain Input from Key Stakeholders (Ex: Identifying service gaps in the community; overall model design; implementation strategies (for request for proposals, rate setting, training, outcomes & performance requirements); ongoing evaluation/CQI)
• Build on Prior/Other Efforts
• Embed New Expectations (Ex: Regulations; licensing requirements; requests for information/requests for proposals; contracts; policy and procedures; job descriptions; supervision and staff evaluation; training programs; data and reporting requirements)
• Embed BBI/SOC Principles (Ex: program practices; all program materials; funding; staff skills; etc.
• Train/Prepare of State/County Staff, Community Stakeholders Including Youth and Families, and Providers for the New Conceptual Framework/Redesign (Ex: Expert presentations; use of the BBI Self-Assessment Tool; identify /detail new expectations; train on BBI and best practices; adopt CQI approach)
• Start Somewhere — Act on at Least One or Two of the Best Practices and track the outcomes and learn from the results.

Additional State/County/Community Specific Actions

• Engage with Other Child and Family Serving Departments to Create Foundation of Trust and Find Workable Solutions for Youth and Families Served by More Than One System (Ex: Create common goals; streamline expectations for providers; address regulatory barriers; pool/braid resources/funds; maintain communication/information sharing; establish appropriate lead; work together to support the change; create online forum/listserv to have ongoing discussions & information sharing)
• Commit to a Collaborative Effort with the Providers (Ex: Involvement early and regularly; use data and provide analysis to help them learn)
• Prepare State/County Staff, Community Stakeholders Including Youth and Families, and Providers for the New Conceptual Framework/Expectations: (Ex: Use data to support provider transformation/performance improvements; create baseline (what they have done to date); establish transition period; provide supports for transformation & learning environment for the change; contract for results/outcomes)

Additional Provider Specific Action

• Adopt a Reframe (Ex: Do whatever it takes to help youths and families be successful; goal is success of youth and families in the community, focus of work is on skill and relationship building, and maintaining as much communication and contact between the youth and the family; incorporate research findings & do no harm)
• Get Support of Board of Directors and Staff
• Work with Funder(s) to Support the Shift
• Test New Approach(s)/Best Practice(s), Track Outcomes, and Then Go to Funder to Get it Covered
• Use Data to Support Transformation/Performance Improvements (Ex: Create baseline; adopt CQI approach; use data to target resources wisely)

“Develop credibility with funders. Hold Firm to values-based goals and prepare to cut anything. Think Creatively and flexibility”

Funding Options

Funding Sources¹

• Use/Maximize Medicaid and SCHIP State Children’s Health Insurance Program)
• Mental Health Block Grants
• Substance Abuse Block Grants
• Child Welfare IV-E, IV-E Waiver or Demonstration Projects
• Juvenile Justice Title II B Formula Grants. Justice Assistance Grants
• Education, IDEA (Individuals with Disabilities Education Act)
• SAMHSA Grants
• NIMH/NIH Research Grants
• State/County/City General Funds (Legislative or Executive Allocations)
• Social Impact Bonds
• Private Insurance
• Private Donations

Common Funding Approaches

State/County/City/Managing Entity – Payment Methodologies²

• Realignment of Existing Funds (Ex: Blended/pooled – _use of funds from different systems/programs put together for a specific program/approach; braided – _funds from different sources remain in the same pots but are used to support a combined initiative that allows flexibility but also as integrated as possible; flex funding – funds that are used to support families such as concrete supports for families in crisis; provide flexibility in funding to cover transportation and for bed days when youth in residential services visit in their home with family; create Flex funding pool )
• Payment Strategies and Rate Setting to drive practice changes and support transition costs³ (Ex: Per Diem rate (for example initially increase then provide a lower rate when LOS extends beyond acceptable limit; case rate – _daily, monthly, or yearly or based on the severity of need of the child (tired system); include risk sharing with built-in protections as well as performance requirements; payment to providers are front-end loaded, or based on long-term needs of families, or not tied to placement; payments to providers are made very quickly so they have funds as they need to shift/develop community-based services; funding allows front-loading of services and moves to a service rate approach after a certain amount of time )
• Performance-Based Contracting (Contracting for results/outcomes, which can include incentives or penalties Ex: Fiscal incentives are tied to indicators of achieving goals; payments are based on the level of need of the child; measure improvement over time; providers are rewarded if there are improvements penalize if not; first-year providers are risk-free and paid the “earned” reinvestment dollars; agencies are able to transition to the new model and learn as they go without incurring any penalties; outcomes are increased with new contracts as the providers gain experience

State/County/City/Managing Entity Strategies

• Examine/Identify What Can be Done Now without New Money, later without New Money and Later with New Money from Identified Funding Sources
• Review Operations/Budget to Identify Potential Areas for Re-direction of Funds
• Work with Funding Agency for Special Approvals for Flexibility or Adaptations of Existing Budget
• Reinvestment of Savings in Preventative Community Services
• Time Limited Transition Funds to Support Shift to New Practice Model or Quality Requirements
• Adjust Payments to Ensure Creation of Only Funded Mandates – e.g., Parent Partners and Youth Advocates
• Identify Sustainable State, Tribal, and/or Local Match for Medicaid

Provider Strategies

• Review Operations/Budget to Identify Potential Areas for Re-direction of Funds
• Move Existing Monies from One Part of the Budget to Another on Own without Need for Funding Source Approval
• Work with Funding Agency for Special Approvals for Flexibility or Adaptations of Existing Budget
• Work with the State/County/City to Establish Rates
• Obtain Increase from Current Funder
• Create Flex Funding Pool
• Obtain Special Funding (i.e., Grant, Foundation, Donation(s), etc.

3. PRIVATE FUNDING/PHILANTHROPY

Organizations allowed to solicit and raise private and foundation funds to support their work should incorporate private philanthropy into their financing strategy. Private giving is not just about bricks and mortar and raising capital campaign funds. Donors will give to both programs and services that produce positive outcomes as well as general operating costs, though this is often a harder sell with donors. Donors will give toward what they care about, and the organization must educate the donor about their services and the outcomes they are achieving. It is also essential to know and understand your potential donor, and what drives their interest and desire to give, before making a general ask for a donation.

Recommendations:

• Ensure the organization has a strong reputation and is not the “best-kept secret” in your community; this is most often accomplished with a well-thought-out public relations program
• Marketing materials should be developed to support your organizational recognition and facilitate fundraising activities
• Develop a stewardship plan to cultivate donors and broaden the base of donors; consider tier levels of giving opportunities, and always ensure proper donor recognition.
• Actively involve your Board of Directors in identifying donors and donor cultivation and lead by example in their organizational gifts
• A typical mix of giving strategies will entail individual giving, corporate giving, foundations and family foundations, and community organizations. Planned giving and major gifts can also be a part of the strategy, and where appropriate to the organization’s capital campaigns.
• Direct mails campaigns can be an integral component of your fund-raising strategy for individual giving
• Special events can also be an important component of your plan, but are often costly to operate; donor cultivation should be the key strategy during these events and follow-up with key potential donors is essential
• Consider developing support groups led by community volunteers for your organization to help raise funds
• Develop a mechanism to submit grant proposals for the work your organization does; this can be an internal capacity or contracted out.
• Ensure you analyze the cost to raise a dollar for your organization and help donors understand that cost.