Regardless of whether you are designing a new program/system or changing the financial practices associated with an existing program, it is critical to take the time to analyze your financing options. From the previous phases, you should now have a clear understanding of what needs to be funded, which will guide which funding streams you consider as you explore your financing options.
The first step in this phase is to list the funding streams you believe might be able to help you serve this population. Some of these will be in your organization already, while others will be external funding streams that organizations in your community or at the state level already access and might be willing to contribute to your program/system.
If you already have funding streams in mind, begin with those. If you need help identifying funding streams, the checklist below provides a framework to begin thinking about which funding streams may be appropriate for your population or program. Make sure to explore whether Medicaid is a potential funding stream for your program/system as it is not a capped funding stream. Rather, it is limited based on services and eligibility. When it is an appropriate funding source, Medicaid can be a key component of ensuring long-term, sustainable funding.
Once you have a set of funding streams to consider, it is time to analyze those funding streams and compare them to the needs of your program/system. You will want to carefully analyze each funding stream that appears to be a good fit for the population you want to serve, the services you want to provide, and the service delivery providers you are working with, to find out what parts of your program it can cover.
Analyzing funding streams can be intimidating! Most funding streams have detailed information available at the agencies that oversee the funding, but it is not always the most accessible information. You may want to undertake a mix of the following activities to collect sufficient information about the funding stream:
- Meet with your fiscal staff to collect and discuss any documentation they have received from your current funders regarding allowable expenses, documentation of expenses and reporting requirements.
- Download fiscal guidance from funders’ websites, including such things as state plans (which often outline eligible services and populations), rules and regulations, statutes and agency letters.
- Call your funders and ask questions to better understand the funding streams. Take the time to do a little background research first though!
- Talk to community partners currently funded through the funding streams of interest to you. Ask for documentation they have received from their funders.
With funding streams you already use in your agency (or agencies involved in your planning process), you will want to capture information not only about what the funding stream can be used for, but also what it is already used for. Find out the number of target population served historically (i.e. last two fiscal years) by the funding stream, what services were provided and what it cost per person or service. Find out if you have any waivers or other special permissions from your funder for how you currently use the funding. You may also want to review the reporting you have done to the funder in the past to understand their expectations.
With funding streams you don’t use in your agency, you will want to make sure there is a reasonable chance the funding can be made accessible to the program/system you are seeking to fund. Is there a competitive process to release funds to community providers? Do you have an existing relationship with the funder or local partner who manages the funding? Is your program/system meeting a core function of the funding stream? Is the funding available based on population and services provided (e.g. Medicaid funding)? If you believe you can access the funding stream, it is worth analyzing what portion of your program it can fund.
It is helpful to capture the information you collect on your existing and potential funding streams in an analysis tool. To create your analysis tool, use Template A: Analyzing Your Funding Streams (below). Template A is designed to allow you to take your answers to the questions asked in Phase II and make an analysis tool that can help you vet each funding stream against the design of your program. The template also includes questions about the timeframe for funding, the allowability of no-cost extensions and other funding stream specific information that will help you as you assess whether you can implement your program with the identified funding streams.
- The Community Pages: Analyses of Funding Streams section of this toolkit includes resources and toolkits designed to help identify and evaluate the appropriateness of funding streams for specific situations.
After completing your analysis of each of your potential funding sources, the next step is to explore the larger pattern created by the allowable and non-allowable costs with each funding stream. To identify the gaps in your funding stream, use Template B: Analyzing Your Gaps. You will need to populate the template with details about your population and their service needs.
As with Template A, Template B will need to have its row headers filled out by you, based on the possible gaps you observe when looking at your funding streams. As you fill them out, break down each issue into detailed pieces to make sure you will have the most comprehensive view possible.
By taking the information entered into Template A and translating it to a grid in Template B, you will be able to understand what populations, services, etc. are possible using the funding streams you have identified. You may realize you cannot fund some expenses from any of the funding streams you have identified. If the expenses are not in your list of priority services and supports, this is the time to decide you will not provide it or make the decision to continue to seek funding that can support it.
You are likely to find yourself engaging in an iterative process of selecting and analyzing funding streams, exploring gaps, assessing changes to your program design and deciding to identify new funding streams, and redoing the process of analyzing and gap finding. After you have reached the point where you are satisfied that you know your funding streams AND have adapted your program design as necessary to fund the full program realistically with the funding streams available, you are ready to move to developing a Coordinated Financing Plan.
Safe Homes, which proves services to youth and young adults to prevent and respond to homelessness, used the steps outlined above to analyze possible funding streams and their gaps. Through their analysis, they determined there are gaps in eligibility between the population they envisioned in Phase 2 and the populations their funding streams can serve.
Before you move on to designing your program, confirm the following is true:
- We have decided on our set of funding streams.
- We have a clear understanding of what each funding stream can fund, including eligible populations and eligible expenses.
- Our program design is redefined to be realistic and align with the available funding. These changes were made in partnership with all stakeholders involved in the planning process.
- Our fiscal staff (and ideally our funders) agree on our analysis of funding streams, either because they conducted it or they reviewed our work.