This commentary is by Morgan Webster of Essex Junction and Emma Paradis of Barre. Webster is director of Common Good Vermont; Paradis is the organization’s senior policy and program coordinator.
For decades, Vermont’s government has relied on nonprofits to provide vital services to communities. This social contract has been eroding, with nonprofits increasingly filling the gap in state services, but funding for these services has not kept pace with rising costs.
Wages and inflation continue to rise, yet many state-funded organizations have not seen their funding increase in years and most government funding agreements do not adequately cover the necessary administrative costs associated with implementing direct services to the community.
Pandemic and economic pressures have exacerbated pre-existing challenges for nonprofits as organizations struggle to retain and recruit workers, keep up with rising costs, and meet increased demand for services while funding sources continue to stagnate.
To ensure that our communities’ needs are met now and into the future, Vermont needs to reassess our social contract and work with nonprofits to find solutions to fund the full cost of nonprofit services.
At this critical juncture, it’s important to understand the gravity of the situation and what’s at stake.
—Vermont nonprofits have been underfunded for years; urgent relief is needed now. The same challenges Common Good VT’s founder, Lauren-Glenn Davitian, reported on in 2014 still persist today with greater urgency. Nonprofits are increasingly reporting widespread calls for support and action. We must listen and respond to urgent calls for help from youth service, child care, and health care providers. If we value the system of care we have created, it is time for Vermont to make good on its obligation to our social contract.
—Vermont nonprofits are experiencing a workforce shortage. None of the work nonprofits do would be possible without the sector’s most valuable resource: our people. In 2021, state social assistance workers made more than twice as much as their non-government peers. This disparity in pay makes it difficult for nonprofits to recruit and retain skilled employees for what are often demanding positions, with 53% of 2022 Report on Vermont Nonprofit Wages & Benefits survey participants reporting job vacancies, most frequently due to compensation competition. Our upcoming Workforce Shortage Survey with the National Council of Nonprofits will provide additional data and information to guide this discussion.
—Vermont’s economy depends on nonprofits. Despite workforce shortages, nonprofits employ one in seven Vermont workers, making the nonprofit sector the largest industry in the state after the government. We contribute $5.7 billion per year to the economy through wages paid, retail and wholesale purchases, and professional service contracts, equivalent to nearly 20% of the gross state product (VT Nonprofit Economic Impact Report).
—Vermont nonprofits are struggling to meet demand for services, which impacts us all. When funding does not cover the full cost of services, that “savings” does not exist in a vacuum. It is not just a few less beds, a missed meal, or a gap in care — when needs go unmet, a manageable situation can quickly snowball into a dangerous, and costly, emergency. This places additional strain on their support system, our network of care, and ultimately, our communities who must pick up the pieces, and the bill. Investing fully in our community service organizations is a proactive measure that, while difficult to quantify, yields significant public benefit.
— Vermont nonprofits are valuable partners to the state and want to work collaboratively toward solutions. Delegating government responsibilities to nonprofits should not be viewed as a cost-saving measure. Yes, nonprofits are uniquely positioned to fill these roles effectively and efficiently: They are connected to the communities they serve, can respond agilely to evolving needs without bureaucratic red tape, and are neutral third parties insulated from political shifts.
They should not be expected to deliver at the same level of service year after year without increased funding and make up the difference when administrative costs associated with the services provided aren’t covered. Nonprofits are eager to work collaboratively toward long-term solutions that will sustain our system of care.
We aim to use findings from our recent report to work with state leaders, policymakers and nonprofits to collaboratively address structural challenges and inequities with government grants and contracting. By creating efficiencies, strengthening relationships, and expanding access to financial resources, we can drastically improve the quality of life for nonprofit employees, provide organizations with the stability, capacity, and resources they need to be effective in their missions, and, ultimately, stop shortchanging nonprofits, the people they employ, and the Vermonters they serve.
We call on organizations across the state to sign our letter calling on the government to fund the full cost of nonprofit services — because Vermont nonprofits deserve better.
We call on state leaders and policymakers to read our report and work with nonprofits to find statewide funding solutions to fund the full cost of nonprofit services — because Vermont employees deserve better.
We call on community leaders and stakeholders to convene local conversations about ways to Fund the full cost of nonprofit services — because Vermonters deserve better.
Common Good Vermont is a statewide program of United Way of Northwest Vermont.
