Magnolia Therapeutic Solutions Case Study

Magnolia Therapeutic Solutions Case Study

August 12, 2013

BSHS/373-Financial Management in Human Services

Professor: Scott

According to the reading of Magnolia Therapeutic Solutions Case, 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 who is the founder and the executive director of

Magnolia Therapeutic Solutions realized that there were many people in New York City who

where suffering from post-traumatic syndrome disorder after the terror attack on September 11,

2001. with the unique position of the organization as well as the funding of several sources who

where willing to provide grants in order for Magnolia Therapeutic Solutions to start, the

Organization quickly grew. The city of New York granted the Magnolia Therapeutic Solutions a

one year grant in order to provide treatment to those who were suffering from PTSD. With the

grant that was granted to Magnolia Therapeutic Solutions Mary was able to expand her staff in

order to meet the demand for services. With the help of several grants Magnolia Therapeutic

Solutions was doing quite well. When it came time to do her budget, Mary was sure that she

would receive the grant that was given to the organization in 2001 once again in 2002. Mary

added the grant money to her 2002 budget. Unfortunately Mary did not receive the grant in 2002

and fell short $500,000, which in turn forced Mary to lay off one third of her employees.

The members of the board decided to approve the 2002 budget that was submitted by

Mary which she based on her budget from 2001 which was made up of fund raising monies as

well as several grant monies. The decision that was I would have made would be opposite of the

decision made by the board. The board's decision lacked funding documentation stating that the

grant would be renewed for the upcoming fiscal year. The decision was made based on the

assumption that the grant would be renewed for the upcoming fiscal year. Mary failed to make

her budget based on monies that she knew the organization was guaranteed to have from the

fundraising and various grants monies. Mary also failed to take into consideration that the

economy was declining after the terror attacks on 2001 and it would be difficult to keep up with

the demand that she made on her development department to raise more money than they did in

2001. The Magnolia's Therapeutic Solutions fiscal budget for 2001 was 1.3 million and the

budget that Mary presented to the board was one of 2 million dollars. Even though in many cases

budgets are needed to determine how much funds an organization may need, the organization

need to research the cost of the project and then put that into the grant as well as plan according

in the event that they do not receive. It seems that Mary or the board did not follow the fully

understand the grants term.

The main cause behind the problem that Magnolia ultimately suffered I feel is the lack of

understanding the terms of the grant as well as the lack of strategic planning when it comes to the

growth of the organization as well as the management functions. As the director of the

organization Mary failed to see that without the grant it would be difficult to continue to provide

services and continue to employ a large number of staff. Mary should have maintained

open communication with the organization that provided her with the grant that funded