Magnolia Therapeutic Solutions Case Study

Magnolia Therapeutic Solutions Case Study

Financial Management in Human Services

BSHS/373

June 23, 2013

Tracey Lutz

Magnolia Therapeutic Solutions is a nonprofit organization in New York City that specializes in psychotherapy for individuals diagnosed with Post Traumatic Syndrome Disorder (PTSD). The organization was created in 1998 by Mary Stewart. Mary recognized a significant demand for therapeutic services in NYC for individuals suffering from PTSD (University of Phoenix, 2013). Magnolia provided services to the victims of September 11th and was given a grant to help meet the needs of the victims. Mary assumed that the grant given 2001 would be renewed the next year as well but unfortunately the grant was not renewed and her organization took a loss which resulted in lay offs to one third of the staff. This had a very large and negative affect on the remaining staff and caused the organization to stagnate over the next few years.

Board decision and my decision

The board of directors chose to approve the budget despite the failing economy and based on last year budget. If I was on the board of directors, before approving the budget, I would have asked Mary for more information such as documents that supports her budgets. I would have also asked Mary to put together a budget without including the city grant and a budget that includes the city grant. With both budgets, Mary would have seen the differences between the two budgets and she would have been prepared for whatever happened. Mary made her organizations budget based on the year previous grant, fundraising, and 2001 anticipated grant revenue. She did not take into consideration that there's a chance the grant may not have been renewed. Mary also placed steeper demands on the development department to raise even more money than 2001 when she was not sure about the grant being renewed. Mary should not have assumed that the organization grant was going to be renewed because of her 2011 service performance. Organizational infrastructure had little effect on my decision. Organizational infrastructure is all about the functions of an organization. When it comes to the Magnolia organization, I think the organization is functioning correctly because if not it would not have received the many prestigious awards and accolades for the services that they have performed for NYC. My decision was based off of the information that was given. I think Mary has done a good job running the organization but made a horrible decision when it came to the budget.

Main causes

There were a few causes that were behind the problems that Magnolia suffered. One was the lack of financial management. According to the text, financial management involves a variety of concepts, principles, and tools designed to improve the use of resources to accomplish in an efficient and effective manner the mission, goals, and objectives of human service agencies and programs (Martin, 2001). Mary constructed a budget on belief that the city grant would be renewed for 2002 and she even based the budget on development department to raise even more money. Since Mary based their budget off of a grant that was not even given yet, it resulted in the organization a $500,000 shortfall and some staff members were laid off and it caused the organization to come to a stand