The Nonprofit Margin

By Bulgaro, Patrick J. | The CPA Journal, November 1996 | Go to article overview

The Nonprofit Margin

Bulgaro, Patrick J., The CPA Journal

When I was director of New York's Budget Division, I had control of $56 billion per annum and access to substantial financial, administrative, and technical resources.

Enter the world of the not-for-profit. In 1993, I took over the Albany-based Center for the Disabled, an affiliate of the national and state United Cerebral Palsy Associations and a resource for those with cerebral palsy, mental retardation, traumatic brain injury, etc. We are a comparatively small agency whose operating budget of $36 million depends upon fluctuating, and dwindling, revenue streams like Medicaid/Medicare, Social Security, and community fundraising.

The IRS categorizes such agencies under IRC Section 501(c)(3)tax exempt charitable organizations, nonprofits or not-for-profits. Our mission is not to improve upon last year's bottom line but rather to assist those in need. Revenues must first cover expenses for a wide range of programs-everything from halfway houses and counseling for those who misuse alcohol and drugs, or rehabilitation services for the physically disabled, to food pantries for the homeless-as well as salaries and wages for hands-on staff such as therapists, physicians, and nurses. Residual funds support operating expenses and overhead, certainly no easy task. Such a complex array of services, supported by diverse funding sources that require precise documentation for adequate reimbursement, necessitates numerous support staff. Contemporary nonprofits employ accountants to manage each dollar, systems analysts to handle complicated Medicaid billing procedures, and human resources personnel to process and train the teachers, bus drivers, and counselors who interact with consumers.

Unfortunately, what is left out of this equation is supplementary spending for reinvestment in immediate and long-term working capital needs-increasingly computer and related technology-for use in the workshops and classrooms of consumers wishing to enhance both their lives and potential. Such "luxuries" are not taken into consideration in an era of widespread reductions in Federal and state funding for human services and flat individual and corporate giving. This is truly unfortunate for the hundreds of thousands of students and young adults with disabilities. It is astonishing how even a few personal computers, and some initial technical assistance, can improve the lives of people with special needs who wish to become more independent by enhancing their vocational and intellectual potential.

We have recently seen a possible solution to this dilemma, one involving the direct transfers of computer equipment and in-kind technical support to our vocational and other consumer-based programs. This began several years ago when the local division of Proctor and Gamble gave the center four new networked personal computers, complete with CD-ROMs and educational software, for use in our secondary five classroom for children with disabilities. In addition to facilitating practice with the writing of research and opinion papers and other word processing tasks, this technology also provided a Compton's multimedia encyclopedia and voice output capabilities for several speech impaired and nonverbal students. This was complemented in 1994 when IBM came to us with 10 personal computers, which allowed our Vocational Training Program to develop a Technological Opportunities Program (TOP). TOP enabled a number of our young adults with severe physical disabilities to enhance their personal communication abilities and employment skills through pro bono technological instruction from IBM, 1:1 guidance from center vocational counselors, and hands-on operative experience with contemporary computer hardware and software. …

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