Would you invest $1 to save $11?
That’s the return rate for tax dollars spent on a variety of services provided by area nonprofit agencies, according to a new study by a local group of nonprofit executives.
The study by the Agency Executives Association examined programs at two dozen area agencies to come up with its government savings estimates.
Some of the savings occur in Medicare and Medicaid from programs that prevent hospitalizations or nursing home placements.
Taxpayers also save through services that reduce the number of kids who end up in juvenile detention and that move people from welfare into jobs.
For example, Meals on Wheels for Western New York serves meals to about 3,400 clients each year with a program budget of $4.4 million and a network of more than 1,500 volunteers.
The agency estimates that about 20 percent of those clients are able to remain in their own homes because they receive daily meals. Otherwise, those 680 clients would require nursing home care at an estimated $100,000 per year per client. That amounts to annual savings of $68 million from just one agency’s work, the study found.
Despite such data, Meals on Wheels is in jeopardy of losing funds due to the federal budget sequester that took effect in March, a scenario that ultimately would cost taxpayers more money. Many nonprofit agencies also are facing possible funding reductions in the state budget.
“The need has been growing every year,” said Tara A. Ellis, president and chief executive officer of Meals on Wheels.
In 2012, the agency distributed 5.3 percent more meals than in 2011, said Ellis.
“But the funding stayed flat, so if we were a business we would have lost money,” she said.
The agency filled its $350,000 funding gap by appealing to corporate donors.
But what would have happened had Meals on Wheels simply cut off services? Would some clients have ended up in nursing homes?
“The message we want to get out is there needs to be some smart policymaking here to invest in programs that save tax dollars,” said Jerry Bartone, executive director of Community Concern of Western New York and chairman of the Agency Executive Association’s leadership forum.
The AEA, an affiliate of the United Way of Buffalo & Erie County, represents 142 nonprofit agencies.
Looking at programs run by 24 area agencies, the study found that taxpayers save an estimated $200 million per year.
Some other nonprofits in the report included: the American Red Cross, Camp Good Days and Special Times, Compass House, Crisis Services, Goodwill Industries, Habitat for Humanity and Jewish Family Services.
Jewish Family Services’ refugee resettlement program, which costs $333,812 for 150 refugees, is estimated to save the government $2.5 million. Compass House provides shelter for 307 young people at a cost of $520,590, saving an estimated $10.9 million – the expense of housing those youth in a detention facility for a year.
The programs represent a broad cross section of services provided by an estimated 6,000 nonprofit organizations. Nearly 300 of those agencies operate with revenues of more than $1 million, generating a local economic impact of $2.7 billion.
“The whole intent was not to produce a definitive study on the issue. The whole intent was to begin the discussion,” said Paul C. Atkinson, chief executive officer and president of Consumer Credit Counseling Service of Buffalo and president of the AEA.
“We’ve just kind of scratched the surface of a lot of not-for-profits.”
The AEA hopes to meet with elected officials, foundations and other community members about its study.
Erie County legislators have not yet received a copy of the study and have not yet had a chance to review it. The county is asked to fund a lot of the agencies analyzed in the study.
Bartone and Atkinson said they were not advocating to increase funding for all nonprofit programs or to stop all cuts.
Atkinson acknowledged – as many funders have argued in the past – that the area probably has too many nonprofit organizations.
But an appropriate discussion should be held to determine adequate funding levels and to find agencies and programs that can deliver services most effectively and efficiently, he said.
Elected officials, added Bartone, “need to understand where to make investments and where to make cuts that benefit both taxpayers and the people who uses these services.”