Simulation Case: Mental Health Resource Center

Why Retiring Programs Mattered More Than a $3.1 Million Grant

Black Acre Creek was ready to accept $3.1 million to launch two new programs. We built a systems dynamics model of the center’s strategic plan to test the potential outcomes. The model showed that no option would avoid running out of money, while uncovering that the highest leverage point was one the organization had never used: retiring programs on purpose.

Background Information

Black Acre Creek is a statewide mental health resource center offering counseling, crisis support, and community programs. The center’s own clinicians and program staff, paid through each program’s grant, deliver the services, while an eight-person central office does the work behind every program: writing grants, managing the funding, meeting reporting requirements, tracking data, and fundraising.

Four years ago, the state ended its general support, which made up 40% of the center’s unrestricted funding. The board put pressure on the staff to win more grants. Programs grew from 13 to 24, and total revenue went up. Now a funder has offered $3.1 million over four years to launch two more.

But the Center’s own records told a different story. Every new dollar came with restrictions, and each new program added about $15,500 a month in central office costs that its grant did not cover. Savings made up the difference, dropping from 6.5 months of expenses to less than two. No one was laid off; when staff left, their positions simply went unfilled, and the office shrank from 8 people to 5.8 while the number of programs it supported nearly tripled. The option of retiring programs was never considered.

The rising line shows the number of programs the central office supported, from 9 to 24. The falling line shows central office staff, from 8 to 5.8, over the same eight years. The board’s reports show these on separate slides, so the strain between them doesn’t show up.

The Simulation

Strategic decisions are often made without fully understanding how they will impact the organization systemically. Before executives commit, we:

•      Understand how all parts of the organization function currently, and identify which numbers explain its results and which only describe them.

•      Work with professionals from across the organization to map how the parts affect each other, and find which cycle is driving results right now.

•      Turn that map into a fully functioning systems dynamics simulation to test all viable options, including the current strategic plan and initiatives.

A Screenshot of the simulation dashboard

Two cycles explain eight years of results. In the first, each grant adds a program whose uncovered costs drain savings, which sends the office after the next grant. In the second, lower savings mean open positions stay empty, and a smaller office raises less money, which drains savings even further. Both cycles were already running when the state cut its support.

What the Model Showed

When we tested the organization’s options in the model, none of them avoided running out of money within six months. The decision only determined how deep the drop would go and what would still be standing afterward.

Taking the newly proposed grant on its own, the same pattern as the last eight years, produced the deepest drop and a hollowed-out organization. Savings recovered to six months, but only because the crisis forced programs down to one or two, with just seven running a decade later.

Then we tested a different approach: taking the same grant while retiring four programs by choice and rebuilding the central office with two new hires. That cut the drop to a third of the depth and kept fourteen programs running, though with lower savings.

The lesson for growing nonprofits: Before you add more programs, decide which ones to retire. For Black Acre Creek, the grant was never the problem. The real decision was what to let go of to make room for it.

Twelve years from the decision. Both plans run out of money at month 5. Taking the grant alone (dashed line) rebuilds savings to six months, but only because programs collapse to one or two and then recover to seven. Taking the grant while retiring four programs and hiring two staff (solid line) bottoms out at negative half a month of expenses, keeps fourteen programs running, and holds about two months of savings.

Summary

Black Acre Creek was ready to keep growing the only way it knew, one grant at a time. Through simulations like this, we can identify potential outcomes that help organizations avoid unintended outcomes, saving them thousands of dollars in investments, time and resources.

Interested in bringing this to your organization? Email us to set up a complimentary meeting today. [Link to info@wellledstrategies.com]

Disclaimer: Black Acre Creek is not a real organization. We built it from public nonprofit records and made-up details. The numbers above come from our model and show the kind of work we do.