The (Not-So) Secret Financial Lives of Nonprofits

Part 1: Our Approach

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As a 501(c)3 nonprofit organization, WellPower (WellPower) exists for the purpose of serving the public benefit in the City and County of Denver. Our mission is to enrich lives and minds by focusing on strengths and well-being; we are the community mental health center (CMHC) for the people of Denver.

While nonprofit organizations are driven by mission and public benefit rather than by profit, fulfilling this mission requires sound financial management. Being a “nonprofit” does not mean that the organization can lose money year after year and continue to operate; if it uses more money serving the community than it is able to piece together to cover costs, it won’t be able to serve the public benefit for very long. This is true for WellPower.

What does this look like in practice? Where does the funding come from? How much does this cost taxpayers? Does WellPower really have a “rainy day fund”?

This is the first installment in a short series where we’ll cover these and other questions about the not-so-secret lives of nonprofits.

A quick note before we dive in: because WellPower is a 501(c)3 nonprofit organization committed to full transparency and responsible financial stewardship of the resources entrusted to us for the benefit of the people of Denver, our financial information is publicly available on our website. If you’d like more information, feel free to contact us.

Our approach: find out what is needed, then make it work

We’ve put together an array of layered services that are entirely focused on meeting people where they are, whether they need counseling, help with food, housing, well-being support in the school system or nursing home, all the way to complex psychiatric services. We serve the full age and clinical spectrum, from infants to older adults at all levels of care.

Some of those services are billable and others are not. Much of our work in housing and shelter programs, for example, is not billable and thus not reimbursable from our traditional funding sources; however, because having a safe, stable place to live is so critical for a person’s recovery, we operate a full range of housing programs and then find a way to fund them. Another significant service we offer that is not fully reimbursable is case management, which helps people we serve access additional resources to support their social determinants of health and overcome obstacles along their path toward recovery.

In a for-profit business, the focus is on – you guessed it – profits. It is not uncommon for businesses to be expected to maintain operating margins of up to 20% or more. Of course, many of the most successful businesses fill a real need for their customers. Still, they are expected to have a higher operating margin, which can influence the decisions they are able to make in order to stay in business.

If WellPower were a for-profit business, all of the programs we offer that lose money wouldn’t exist.

Additionally, if these programs were profitable, a range of businesses would already be providing them and the need would be met. Instead, it is up to us, the community mental health center for the people of Denver, to find a way to make these programs work – they are that important.

How do we do make them work? Tune in next month for a look at where our funding comes from.