Inflation saps nonprofit sector in Bloomington-Normal
Some common themes emerge among social and human service agencies around McLean County. Clients suffer disproportionately from inflation because they have the least to start with, and very little ability to absorb rising costs. Not-for-profit agencies must scrimp. Workers at the agencies are under inflationary stress as well.
All these factors amplify challenges for the sector that existed before inflation took off.
People served by not-for-profit agencies
Bloomington Salvation Army Social Services Director Sarah Idleman said the agency saw a 5% increase in people coming to the food pantry last month.
“I really think it's increased food costs across the board. Looking for another way to make things meet,” said Idleman, adding her agency also sees the effects of housing inflation as leases turn over.
“Just a lot of people that just don't have the income to support the housing costs. And we ended up seeing those people in the shelter,” she said, noting the Salvation Army is getting more requests for emergency financial assistance from families.
“We're seeing people who have had increases in daycare expenses unable to pay their rent because other expenses are going towards their gas bill, towards their electric bill,” said Idleman.
Over at Children's Home & Aid in Bloomington, Regional Vice President Mendy Smith said they are seeing a 20-year high in demand for basics at the Crisis Nursery: diapers, wipes formula, and cleaning supplies. Smith said that started during the pandemic and inflation is making it worse. She said Children's Home & Aid has given out $90,000 in supplies already this year.
“After a record year from our Stuff the Bus Campaign. Those supplies last us the whole fiscal year. We're not going to make it to the end of the year, even with a record year,” said Smith.
There are increases in family stress that go with inflation, Smith said. Pleas to the nursery for parental support and relief are up.
McLean County Center for Human Services Director Joan Hartman said inflation hits directly in ways that also threaten mental health care.
“Especially clients being able to afford medication co-pays, which are really critically important for them,” she said.
Hartman said in one program, center workers guide clients during shopping to help them stay organized and self-sufficient and to teach how to economize where possible. That experience, she said, shows clients face a larger impact from inflation than finances alone. Higher costs mean higher stress.
“Anytime you have individuals who are experiencing mental health crises or emergencies, having one more straw on that camel's back has a great impact on people with mental health instabilities and mental health issues,” said Hartman.
McLean County Habitat for Humanity builds houses to turn low and moderate income renters into homeowners. Executive Director Roger Scott said inflation and supply chain issues have increased the cost to build a $120,000 home by $20,000. Scott said one example is particle board.
“A three-quarter inch piece of OSB probably four or five years ago cost us somewhere around $10. A sheet today is sometimes $70,” said Scott.
Of course, higher construction costs will mean a higher home value, a higher mortgage payment and a higher tax bill. These things can undercut the very premise of Habitat — that owning a house and building equity also builds financial stability. Scott said out of 180-plus homes Habitat McLean County has built over four decades, there are still 109 mortgages.
“Before the pandemic, we wanted people to have an interest-free mortgage and pay for their mortgage, their taxes, and their insurance about $500 a month. Today, we're trying to put them in the same mortgages for $600 a month. It's just gone up that much,” said Scott.
Habitat has not yet seen an unusual number of missed payments in this inflationary period. But Scott said he wouldn't be surprised if mortgage defaults increase the longer elevated inflation continues.
Social service workforce
Workers at not-for-profit agencies are not finding it much easier to deal with inflation than the clients they help.
Brian Wipperman is the CEO of Marcfirst, which serves people with developmental disabilities in central Illinois. Wipperman said Marcfirst raised gas mileage reimbursement rates for the final six months of the year based on federal recommendations. But even that won't make those who drive whole.
“We are being told by staff, ‘I'm struggling. I want to stay here. I love working here. I love what we do.’ But you know, we have staff who drive in from Decatur and Peoria and things like that. So, you've got to navigate whether some people can work from home and those kinds of things,” said Wipperman.
Likewise, Mendy Smith at Children’s Home & Aid said the situation is bad because their home visit people have to drive 250 miles per week and yet they are some of the lowest paid around.
“The salary isn't keeping up with the inflation rate for sure. We have staff that are working two jobs, to be able to hit rent, hit their utilities that have gone up, the cost of groceries, just like the families that we're serving,” said Smith.
It's hard to maintain a strong social service workforce in the first place because of low pay and high stress. Times like these raise the difficulty level. It could even create a hiring crisis. Smith said they have 210 open positions now in the Central Division of Children's Home & Aid — up by a third from last year (140).
“We're not getting the applicants to be able to even do the job because it just can't keep up with inflation. So, they're going to either higher-paying jobs or you know, leaving the field altogether,” said Smith.
Worker shortages are not just a money issue. It’s stress.
“Staff are feeling burned out, and whether that's from the demands of the job or inflation could be which day you talk to them. But I do feel the inflation has put the burnout rate at new levels,” said Smith.
Then there's fundraising. It's down at several agencies. Habitat for Humanity's Scott said he has noticed a 10% to 15% drop in philanthropy that he suspects is due in part to rising food and energy costs.
“We go to churches, we go to various places and ask for funds. In the past, they were very gracious and provided some nice funds for us. And then this year, they're like, ‘Well, we're having some difficulties. We just don't have those funds right now,'" said Scott.
The Salvation Army feeds people in its homeless shelter through volunteers. Idleman said community members pay for, make, and serve those dinners.
“You know we used to have a waiting list for that. And now we have I would say about 28 openings between now and the end of the year where we don't know what we're going to do about dinner those days,” said Idleman.
So what's an agency to do?
Scrimp and cope, mostly. Many human and social service agencies operate on a fee-for-service model. They bill Medicaid or other governmental entities and inflation is moving faster than those fee rates do. McLean County Center for Human Services head Joan Hartman said the state did just hike its reimbursement rates, but she's already seeing inflation eat that up. She said it feels like one step forward, two steps back, adding the agency will try to seek more grants to offset costs.
“We are squeezing in every way possible. We tried to eat as much of the increased costs and health care and pass on as little of that to staff as we could. We raised all of our minimum or starting pay. Now, we've just got to be able to hit our numbers from a revenue standpoint,” said Brian Wipperman of Marcfirst.
He's also wary of the longer-term effects moves such as pay raises may have on cost structures. For instance, he said it will be hard to reduce mileage reimbursement rates, even if gas prices do go back down to $2 a gallon.
Habitat for Humanity is pushing through this year despite the increased costs and lower philanthropy. Next year though, Scott said if they don't have the resources, they may build fewer homes than hoped.
Some agencies also may try to find more revenue through additional government fees for service contracts. And Mendy Smith at Children's Home & Aid said at times like this, agencies tend to find ways to share the burden.
“Well, we're gonna get out there and we're going to work with other community partners and see how we can solve this problem together. It’s not just one agency, but how we can use our resources effectively. If we can provide this and another agency can provide that, then that's the best way to serve the family,” said Smith.
One potential adaptive measure is something Bloomington-Normal social service agencies started talking about before the pandemic — combining back-office functions such as payroll, billing, and technology costs under a separate 501(c)(3) with agency heads as board members of that separate entity.
Wipperman said the pandemic stalled that conversation, but it might be time to revive it.
“And there is a model that we have a blueprint for with that exact same purpose in mind, the business plan the road map, the bylaws, the whole nine yards. We have all of it, it's just a matter of getting to that point. It's just economies of scale,” he said.
He said a group of six agencies that serve those with developmental disabilities in Chicago have banded together, and are now attracting interest from not-for-profits that are not related to that segment of the population.
All the not-for-profits contacted for this story said they are OK for now. They're trimming where they can and are watchful for ways to adapt. Counterintuitively, some said if the economy gets worse, and there's a significant recession, it could help address at least one problem: History shows that when recession comes and the business sector lays off workers, those newly jobless may look to where there are vacancies and come to the social service sector that is hiring.