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Does Your Backbone Organization Sustain Itself Without Relying Entirely on Grants?

Kim Farris-Berg, Director, Communications | 03/03/2017

Do you know of any backbone organizations that are getting paid for the value they provide in their communities? If so, we want to learn from you!

Back in November, I wrote in the ReThinkers’ Blog that multi-sector partnerships’ (MSPs’) focus on fundraising as the primary means to support their backbone organizations is simply not sustainable. If transforming population health is the ultimate goal of their activities, there could never be enough grants and individual donations to sustain and scale the work. We need to find ways of getting beyond the “let’s get a grant to finance this” mindset, I asserted. And, as I speak with more and more MSP and backbone leaders, it turns out many agree. Moreover, it’s a central challenge.

Don’t get me wrong–there’s no doubt that grant funding is helping many MSPs to improve health on a short-term, activity-by-activity basis. But grants are not–and were never intended to be–a routine, long-term source of income for the MSP to facilitate its activities. Grants cannot, on their own, transform population health in a community. Grantmakers expect their investments will serve as seed funding as the community determines its longer-term financing plan.

That seems reasonable enough. And it leads to a new question: where to begin?

Presumably, the backbone organization will lead the MSP in determining how to bring about health transformation, including how transformation will be financed. But to do that well, the backbone itself needs to secure routine sources of income (aka sustainable income). If backbone leaders are constantly worried about keeping the lights on, and where their own salaries will come from, then facilitating the community’s efforts to determine a portfolio of activities, and how to finance it, will necessarily slip to a secondary line of work.

Some community leaders have figured this out, and have made a priority out of developing a business model for their backbone–a plan to secure its own sustainable sources of income. Working with backbone leaders around the country, our sustainable financing team has discovered that–no different from other fields–building a business model is a multi-step process. 

Building a Business Model

The very first of those steps is to get clear about core functions that the backbone already serves, or could serve. By “core functions” we mean the central roles the backbone plays that are of value to the community. The second is to articulate the value to your MSP and broader community, and the third is to determine an appropriate “price,” or how much people will be willing to pay. In order to get to these latter two steps the backbone first needs to clearly articulate what it does that is valuable–and potentially worth paying for.

This is not necessarily a comfortable or familiar task. Many backbone leaders harbor fears about telling their MSP members they want to start down this road at all. They often find themselves facing a few “paralyzing” questions, to which I offer some (hopefully) mind-opening, emboldening answers:

  • Will my MSP members see the backbone’s pursuit of sustainable financing as threatening?

Answer: Perhaps some will, depending somewhat on how competitive what you are doing is with something their own organizations do. Or perhaps you can articulate a value that will enhance, not threaten, their work (even if, at first, what you are doing seems like competition)?

  • Will MSP members worry that the Backbone is getting distracted from the community’s shared purpose (mission, vision, values, and goals), or be perceived as too focused on money over mission?

Answer: They might. But, as I wrote earlier, having a business plan can be a means to making the shared purpose the backbone’s true first priority.

  • Is our existing culture, without any MSP members financially contributing to a backbone, already so entrenched that this work will not result in sustainable financing for the backbone?

Answer: Maybe. But you won’t know until you’ve thought through and made a value case to them. You might end up showing them how their up-front investment will lead to more returns!

  • Things are so complex, how will the backbone efficiently go about this process?

Answer: Good news! ReThink Health is in the process of preparing a financing workbook, called “Beyond the Grant,” to help you and a small team (such as a finance committee of the backbone or MSP) work through the task of creating a business model, among other things.

Articulating Value

As part of our work preparing this workbook, we’ve connected with a handful of backbone organizations that are not only clear about their core functions, but have already articulated (or are deeply into the process of articulating) the value case and are getting paid for carrying them out. In doing so, they have found positive ways to confront many of the questions above.

In one of these examples, backbone leaders have articulated the backbone’s value as a neutral convener to bring about information sharing and cross-sector collaboration among MSP stakeholders. They approach each stakeholder with a specific, itemized case to demonstrate how it has helped the organization be more successful in achieving their own mission, and leveraging funding, and how that merits ongoing participation and investment (arguably a small investment for the monetary gain). This has resulted in corporate contributions to the backbone and its affiliate organization (aka “Friends of the Backbone”) in the annual total amount of $225,000 – $314,000 to fund its core function operations.

In another example, an MSP approached the state legislature and gained formal recognition as the governing body of the local Medicaid coordinating care organization (CCO). In this role, the MSP would be able to enter into a joint management agreement with the CCO to cover the backbone’s operating costs. The CCO has since agreed to pay forward 0.325 percent of what it takes in from the state’s per member per month payment to the backbone, on a monthly basis, for its role in developing and managing a regional health improvement plan for the Medicaid population.

The agreement also provides for “gain share,” which caps the CCO’s profit at 2 percent, with any additional profit paid to the backbone for reinvestment into the regional health improvement plan (the backbone manages reinvestment, monitoring, and evaluation). The CCO and other MSP members realize that the backbone helps bring about better coordinated care for the Medicaid population, and relieves them from having to become experts in coordination themselves. With the backbone handling things, they don’t necessarily need to step outside their organizational role when they come to the table.

Share your Examples with us

The ReThink Health sustainable financing team wants to investigate and potentially include more examples of backbones that have identified and are getting paid for carrying out core functions. The greater the diversity of our examples, the more potential for backbone leaders to see a way forward that will work well in their own context.

If you know of any examples, please connect with us and tell us more! (We’re moving quickly on the workbook, so the sooner the better!) We are also interested in knowing what you think about the “paralyzing” questions. Have we captured those well? What do YOU think the answers are?

Please share your comment below or find me on Twitter @farrisberg. My email is kfarrisberg@www.rethinkhealth.org.

My team is looking forward to learning with you!