Vignette

Meeting the Challenge of a Decrease in Funding

Mr. Malek fidgeted with his pencil and looked around the table at the twelve members of the Board of Directors of the nonprofit family planning organization of which he was the executive director. He took a deep breath and began to address this group. "Thank you for all coming on such short notice. As you know, I have just returned from a meeting with our major donor. They have informed me that it is their intention to cut our funding by 20 percent this year and to decrease their support gradually over the next five years. They have made this decision not because they are unhappy with our program, but because they have a new policy whose objective is to develop family planning programs that can meet the challenges of the future with their own resources. I've asked you to meet this evening so that we can develop a strategy to continue to serve our clients."

Mr. Malek rose from his chair and stepped toward the blackboard. "Our organization has done very well in the past five years and we should be able to draw on our past experiences. But before we talk about what we can do, let's review the strengths and weaknesses of our organization, which we identified during our strategic planning process last year. I must admit that we really didn't anticipate the loss of funds from our principal donor." He drew two columns on the board, one labeled "Strengths" and the other "Weaknesses." Referring to a copy of the strategic plan, he wrote:

"Unfortunately, we didn't anticipate this change in funding. In order to continue to provide services as we have in the past, we are going to have to make some major adjustments in the way our organization functions. It is important to keep these strengths and weaknesses in mind as we discuss the kind of changes we're going to have to make in order to serve our clients in the way we have in the past. Now I'd like to open the floor to discussion. What kind of changes do you think we can make?"

The board members looked troubled. Mr. Aziz was the first to speak. "This is a very serious problem for us. If we are to continue to exist, we will have to cut our losses. It seems to me that the easiest way to do this is to close down the clinics in areas where our clients can't pay and to increase prices in the clinics that remain open."

Mrs. Angona sat up abruptly, "We can't do that. We have a responsibility to provide services to everyone, even to those who can't pay."

Mr. Halim raised his hand to speak. "Perhaps we could use revenues generated in some of the more successful programs to subsidize our clients who are too poor to pay."

Mr. Aziz interrupted, "That won't work. People who can afford to pay will say that they can't, just to get free services."

Mr. Mollah broke in, "I agree with Mr. Halim. Look at our strategic plan. We have the best clinic facilities in town. Perhaps we could develop some services that people would be willing to pay for, like comprehensive laboratory services."

Mrs. Angona turned toward Mr. Aziz. "You know, a sliding fee scale might help to collect more form those who can pay and more money overall than we are collecting now."

Mr. Halim spoke again, "I agree. People value the services we provide. They will buy contraceptives. We already have a mechanism to charge fees."

"That's a good point," Mr Malek said. "Our problem is that we only charge a token fee. What we need is to determine what our services cost and how much we can charge for them without losing clients." He turned to Mr. Tawfik, the financial manager of the organization, and said "I know you have been working on a system to assign costs to each of the services we provide. How soon can you give us some figures?"

Mr. Tawfik replied, "This is going to be a long process. To find out what our services cost is going to require a major overhaul of our management information system. Another problem is that to institute a system for partial cost recovery, we need to keep better track of the money we generate. We need to be sure that all the money that our programs generate comes back to the organization."

Mr. Mollah said, "There is something else we should think about. Our most recent client survey showed us that we aren't very well known to a large number of the people in our service area. Furthermore, many of our current clients don't know about the other services we provide. Obviously, we need to develop better promotional materials."

Mr. Malek turned to the group and said, "We have a number of good ideas here, and having heard you talk, I think there are several things we should do. First, we have to agree that our mission is to provide high-quality services to all our clients. To do this, we need to do three things: we need to continue to serve those who can't pay, we need to broaden our resource base, and we need to improve our financial management. I suggest that we organize working groups to address each of these issues. The first could explore strategies for cross-subsidization, and the second could look at new ways to generate income with particular attention to marketing and the development of new services. The third could look at how we can determine what each of our services costs and how much we can reasonably charge for them."

Mr. Malek looked around the table and asked, "Are there any other areas that we should include?"

Mrs. Angona responded, "This sounds like a good way to begin. I'm sure as we look into these areas we will come up with additional things to consider."

The working groups were formed and the board agreed to meet in one month to begin developing a detailed strategy to face the new challenges that this crisis in funding presented.