The (Not-So) Secret Financial Lives of Nonprofits Part 3: Our Services and Operating Reserve

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Welcome to Part 3 of our series exploring the ins and outs of nonprofit finances. In case you missed it:

  • Part 1: “Our Approach” is available here.
  • Part 2: “Where Does the Funding Come From?” is available here.

In this installment, we’ll look at what our funding actually pays for – the range of services we provide as a community mental health center (CMHC).

When you think of “mental health services,” what comes to mind? Someone talking to a therapist? Maybe a group of people, also talking to a therapist? Those are both core to what we offer, and there is so much more.

Each year, we serve more than 20,000 people from across the lifespan – infants, children, teens, adults, families, older adults – who each have unique strengths, goals and needs. To truly meet people where they are and provide the kind of support they need, we offer a range of services that generally fall within five main “buckets” that are core to all CMHCs (keep reading for links to two game-changing new programs you’ll want to know more about).

  1. Inpatient Services
    While “inpatient” commonly means overnight treatment at a facility, many services provided by WellPower and other CMHCs are considered inpatient, including Residential, Acute Treatment Units (ATUs), Crisis Stabilization Units (CSUs) and services provided at Residential Child Care Facilities. These facilities are staffed 24 hours a day, 365 days a year.
  2. Outpatient Services
    “Outpatient” is more straightforward: individual, group or family therapy; psychiatric rehabilitation services; case management; supported housing/employment; and other specialty programs not involving overnight stays. All of these are based on individualized treatment plans and include a multi-disciplinary treatment team made up of case managers, therapists, medical providers and more.
  3. Partial Hospitalization Services
    This bucket includes a wide range of services that could be considered in-between inpatient and outpatient, such as assessment; psychological testing; family, group and individual psychotherapy; medical and nursing support; medication management; skill development; psychosocial support; education and training; and expressive and activity therapies.
  4. Emergency Services
    Like inpatient services, Crisis Services are staffed 24/7/365 regardless of whether or how many people access these programs at any given time. This ensures that staff are always available on-site and on-demand, rather than just being “on call” at another location. In partnership with Colorado Crisis Services, we operate the Denver 24/7 Walk-In Crisis Center located at 4353 E. Colfax Avenue. 24-hour help is available at this and several other statewide locations and by calling 1-844-493-8255 or by texting “TALK” to 38255, or visiting
  5. Consultative and Educational Services
    This large area is comprised of non-clinical services that enhance care coordination and the health and well-being of the community, including:
  • Benefits coordination,
  • Screening, assessment and referrals to other community-based services,
  • Education to build the capacity of other providers,
  • Partnership with schools, law enforcement, hospitals and other systems that serve as a first point of contact for people needing behavioral health support.

As promised, two of our newest programs that are changing the way that we as a community approach behavioral health:

  • STAR program, which sends a social worker and paramedic to mental health emergency calls rather than armed police – find out more here
  • Behavioral Health Solutions Center, which provides a place for first responders to bring people in mental health crisis rather than jails and ERs.

Now, as you can imagine, all of these programs are funded slightly differently – you’ll recall from last month that a mix of grants, contracts, Medicaid reimbursement, contributions from donors and more all combine to allow us to do what we do.

These funding pathways are important for supporting these programs in the long-term, but what about covering costs in the short-term, especially when reimbursement doesn’t reach us until months after services are provided?

And what happens when costs suddenly increase and program income decreases – say, in a global pandemic?

Operating reserve: how we cover costs and handle emergencies

One misconception floating around these days is that WellPower is sitting on a multi-million-dollar “rainy day fund.” This “fund” is actually our operating reserve, and it enables us to continue providing services in two key ways:

  1. Meeting our balance of payments requirements. Because of delays in receiving reimbursement for services we provide – often several months up to a year afterward – it is important to have enough cash reserves to cover costs, from employee salaries to vendor invoices to keeping the lights on, while we wait for reimbursement to be fulfilled. Our board mandate is to have at least 90 days of cash on hand, and ideally up to 120 days (many other organizations have 200-300 days’ worth of reserves). This means that if all revenue were to suddenly stop coming in for whatever reason, we could continue offering services for 90 days – and even this could have serious consequences for the well-being of people we serve.
  2. Handling emergencies where costs dramatically increase beyond our normal revenue. Sometimes we do need to tap into our reserves if we face sudden expenses or drops in income. Most recently, we had to use some of our operating reserves to get through the early days of the pandemic. During those months, the organization lost money because of sudden changes to funding with some of our programs, as well as significant investments in technology to make sure people could still access care remotely. Fortunately, we had reserves to use, which allowed us to continue providing services with no layoffs, furloughs or cuts in staff salaries. Many organizations had to make difficult decisions around laying off employees or cutting pay because they didn’t have sufficient reserves.

For more information about our operating reserve, check out “Myth #4” in this month’s Report to the Community.

After talking about our approach to serving the community, where our funding comes from and the range of services we offer, you might be wondering:

How does WellPower compare to other providers?

You’re in luck – join us next month for the final installment in this series, where we’ll give an insider look into how we compare across the state of Colorado.