Nonprofits Navigate A Tough 2023 With Less Money, More Costs

Jim Hanophy, CEO of Ability Connection of Dallas, speaks with NBC 5 about an issue so many nonprofits are dealing with across North Texas and beyond.

Last year was a difficult year for nonprofits.

They were already stretched thin since the pandemic due to labor shortages, financial strain, and fewer donations. Inflation throughout 2022 made it worse and now, the financial setup for 2023 isn’t looking too good, either, as many of nonprofits rely on grants and support from foundations.

The reason why has to do with the economy.

The amount of money available for those entities to give is directly tied to the performance of the financial markets, which weren’t performing well in 2022.   The stock market declined by as much as 25 percent from a peak at the end of 2021 and it has only recovered a fraction of those losses.

That means less money will be available for grants and donations this year.

"What you see in an area like North Texas is you see more competition for less dollars,” said Jim Hanophy, president and CEO of Ability Connection in Dallas. "There's more and more nonprofits going to the same number of foundations who have less money. And so they're having to prioritize to whom they give money to as well."

Ability Connection is one of many nonprofits in the area trying to navigate these uncertain waters, some of the toughest in their 70 years of service to Texas.

They specialize in care for adults and children with intellectual and developmental disabilities, a unique service to families in the state. The organization serves nearly 1,000 people across the region at no cost to families.

View this post on Instagram

A post shared by Ability Connection (@ability_connection)

“We have eight group homes where we provide exceptional care to folks that need assistance on a daily basis,” said Hanophy. “We have Medicaid waiver programs where we provide services and supports that help people keep their family member in the community. And we have foster homes for some folks, group homes and then family care homes.”

There are over 160,000 people on the Medicaid waiver waitlist, which is why Ability Connection is expanding to a larger campus to be able to help even more people.

They providing 24 hour care in some cases, with huge resources put towards medical, personal and enrichment programs that operate about seven days a week at times. From after school programs, caregiver relief, and independent living training – the services to the special needs community are imperative and far from cheap to operate.             

With an annual cost of about $12 million to operate, Hanophy said he has watched their costs go up by 17 percent this past year on food, fuel utilities and more. There has also been a 50 percent increase in overtime pay for staff due to worker shortages.

“We have incredible caregivers here that do work that most people just couldn't do and they do it willingly,” he said. “And if it weren't for their willingness to work overtime, we'd be in a real pickle.”

NBC 5

Those increases literally amount to hundreds of thousands of dollars more that Ability Connection has spent to operate. That’s money Texas is not making up for, since a good portion of their funding comes from state contracts.

“About 80% of our revenue comes from contracts with the state through Medicaid waiver programs. And unfortunately, the rates haven't gone up and over 10 years, in some cases, more than 10 years. And so that's part of our challenge,” said Hanophy.

The gap between what they're paid and what they spending is widening. Hanophy said its even worse for nonprofits that do not have as large of an operation as Ability Connection.

"There's also challenges with the state system and billing, they converted to new systems. So a lot of nonprofits were owed a lot of money and couldn't afford to continue to operate. That's been a challenge. And that's separate from the inflation issue. A lot of them just couldn't survive,” he said.

Partnerships have helped Ability Connection get by.

“The key is leveraging relationships. We're finding partners where we can team up and maybe instead of me trying to do everything, we work with a partner who's able to do certain things,” Hanophy explained. “We have a therapy partner, for example, and instead of us having the therapists – we're able to work with them to use their therapists and at a cost savings to us, that still provides the same quality of care.”

It’s something he said other nonprofits can look into doing as well.

“There's too many nonprofits chasing too few dollars. And so if you're able to partner with somebody and say we're working together on this particular project, then then foundations are more likely to support that, because that's a good use of their dollars,” Hanophy said.

Bottom line message to the community – just be aware of what your neighborhood nonprofits and beyond are going through.

“For your average person who wants to support us, as their expenses have gone up, their donations have gone down. During the pandemic, a lot of agencies or foundations that support have been focusing on [direct] pandemic relief, versus organizations such as ours,” said Hanophy. “And so we just have to be really creative, and really good stewards of the dollar to make sure that we're stretching it as far as we can.”          

Hanophy said volunteers and local fundraising can help fill the gaps this year.

“Look in your community. Look and see who's doing something that you're interested in, whether it's helping feed people, helping kids or helping animals, whatever it is.  Contact them and see what they need, see what kind of help you can provide,” he said.

To learn more about Ability Connection, click here.