Fade to black – Is government leveraging homeless agencies out of business?

Written by Joel John Roberts

I sometimes long for the heydays when nonprofit homeless agencies flourished. It was in the 1980s; I was just becoming an adult.

Most of the homeless organizations in the Los Angeles region were created in that decade when compassionate and generous people—many from faith groups—created shelters, food banks, and transitional housing programs in response to the growing homeless population.

If you’re familiar with nonprofits in Los Angeles, you’ve certainly heard of Chrysalis, Beyond Shelter, PATH, and LA Family Housing. All agencies that started in the 1980s. Those were the days when hearts were moved, and purse strings opened. When even the federal government began to invest significant resources into addressing homelessness.

Those were the days… But reminiscing will get us nowhere.

Closed SignA few decades later, during the worst economy since the Great Depression, and oh how times have changed. We are entrenched in an environment of scarcity that sometimes pits typically good-hearted people and groups against each other. Competing for dwindling funds is becoming as harsh as the Coca Cola and Pepsi rivalry.

But hawking cans of carbonized sugar water is so much more insignificant than promoting programs that save people’s lives.

The days of free flowing government funding for homeless programs are over. Even when the latest federal stimulus program pumped in $1.5 billion into homeless prevention programs. Why? Because there is a catch.

Let me explain.

In most of today’s government funding programs, there is a quiet policy of “serve now, pay later.” Basically, private homeless agencies that win a contract to house or serve homeless people have to perform their services first, then bill for those services a month later. That means an agency pays salaries and operating expenses for a month, then waits a month or two to get paid.

Let me explain this in basic terms—nonprofit organizations have become the “line of credit” for government funding. For some agencies it could run as much as $50,000 to $300,000, plus interest if the agency is borrowing the funds.

Here’s another catch. Contract execution means payment delays. Every year, a contract has to be renewed and executed. It doesn’t happen overnight. Sometimes it takes months for renewed contracts to be executed, while agencies are not allowed to receive payments during that time. Can’t get paid if there’s no signed contract. But housing and services have to continue. You don’t shut down your shelter or housing program for a few months until a contract is signed. No one with any moral character is going to put homeless people back on the streets while they wait for a contract to be executed.

And then there’s this. Many, if not all government homeless programs now require a cash match. If you receive $100 dollars of government funds, you have to match that with $10 to $25 of private funding. It makes sense in a perfect world. Leverage public funds with private dollars.

But when every level of government funding requires this, many agencies just can’t afford to receive such funding. Especially when separate government agencies won’t allow an agency to use other government sources as leverage.

Let me put it this way. You have public funding to support 80 beds, only if you can find private support for 20 beds. But if you cannot fund 20 beds, then all 100 beds go away.

Cash match, is more like game, set, and match. Where government wins, and private agencies lose. And most importantly, there are less resources for hurting people on our streets.

Many organizations in Los Angeles, like GLASS and Women’s Care Cottage, have shut down their operations because of this.

You could say this is just the result of the survival of the fittest agency, but let’s get real. This is not about how many nonprofit agencies can survive. This is about how many people we can save from the streets.

This is not a debate on whether government funding should help hurting people, or whether the private community should. This is about people suffering on our streets.

And while there are still people languishing in alleys, parks, and along our freeways… then our society should do everything it can to help them off.

That means dispelling ideals, and just allow the funds that are already approved, to house and serve homeless people. Whether a nonprofit agency can leverage those funds or not.

Otherwise, more and more organizations created by compassionate community members will just fade to black.

(Pic from www.madsenlawoffice.com)

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