Human services providers furnishing essential services — such as child protection, affordable housing assistance, job training, and support for people with disabilities — face an existential question: how to sustain their mission-driven work amid financial, administrative, and structural pressures?
In an effort to evaluate the impact of state contracting structures and processes on human services providers (HSPs), the Washington State Department of Commerce, on behalf of the Legislature, commissioned a comprehensive legislative study, Impacts of Contracting Structures on the Sustainability of Human Services Providers.
As the external consultant for this study, the Atrómitos team engaged with direct service providers (from small community nonprofits to large regional HSPs); state and local government agency staff; tribal organizations; and both in-state and out-of-state subject matter experts to capture diverse perspectives and experiences of individuals interacting with the state contracting system.
The one consistent message among all engagement participants outlined in the Human Service Provider Study Engagement Report: the system we have is not the system we need.
After conducting interviews, focus groups organized across all nine Accountable Communities of Health regions, and a statewide electronic survey, Atrómitos found remarkably consistent feedback.
Providers describe a contracting environment where the administrative burden of the contract application process, the financial hardship of reimbursement delays, and the rigid structures of contract compliance often overshadow their goal of serving communities. Specific insights include:
- Reimbursement-only models force providers to float payroll costs while waiting months for payments, virtually eliminating small, community-based HSPs without cash reserves or access to credit.
- Complex and inconsistent application processes lock out new and emerging community-based organizations, particularly those led by and for Black, Indigenous, and People of Color (BIPOC).
- Onerous reporting requirements consume precious staff time, diverting focus from service delivery.
- Indirect cost caps (i.e., general and administrative expenses) and outdated rate structures make it nearly impossible for providers to cover operational expenses.
State agency staff spoke candidly about staffing shortages, outdated systems, and inconsistent contracting policies that make it difficult to move funds quickly and fairly. They acknowledged that even well-intentioned processes can create barriers for community-based organizations serving historically marginalized populations.
Experts from Washington and across the country added their own perspective:
- Reimbursement-only funding models are financially unsustainable for most providers.
- Indirect cost caps and rigid compliance rules erode long-term stability.
- Non-standardized contract reporting requirements waste time and divert energy away from direct service.
The report’s most powerful recommendation is to rebuild trust and collaboration between government funders and service providers. A partnership-centered approach would emphasize long-term sustainability, shared accountability, and mutual respect. Providers want to be at the table—not just as contractors fulfilling compliance checklists, but as co-designers of transparent, flexible, and equitable systems.
Real-life examples of partnership-centered contracting reform include:
- Moving toward multi-year, advance payment funding models that offer HSPs financial predictability and stability.
- Simplifying and standardizing application and reporting requirements across state agencies to foster continuous improvement —not just documentation.
- Shifting audits and monitoring from punitive oversight to capacity-building and learning.
- Investing in training, technology, and technical assistance to ensure accountability while addressing HSP and government agency capacity constraints.
- Recognizing that quality, equity, and community connection matter as much as cost when awarding contracts.
Historically, Washington State has been at the forefront of innovation in a variety of sectors. Policymakers, government officials, and human service provider leaders are positioned to shape system reform and replace transactional relationships with real collaboration.
The Human Service Provider Study is more than an assessment—it’s a roadmap to not only fix inefficiencies, but also reimagine a system that values people, partnerships, and purpose.