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Albrecht had called the CFServices’ Director again with the purpose of restating her organization’s value to that referral agency. “Please tell us what you need,” she said, “and we can respond.” Albrecht had great confidence that not many local organiza- tions had the ability to assist CFServices as Watson could. She felt that, especially during these tough economic times, Watson was one of few organizations that was proactively asking what CFServices needed and one of even fewer that had the capacity to adapt to the needs of the agency.

Albrecht had worked tirelessly since she was hired in 1997 to build the organiza- tion as “the shelter” for children in need in western Montana. Watson’s mission was to provide, on a short-term basis, a safe, nurturing environment for victims of abuse, neglect, abandonment, or family crisis. By all accounts, Watson accomplished many of the organization’s goals, but the change in CFServices’ philosophy was a major cause for concern, as the result was an underutilized new facility.

Albrecht’s thoughts turned to her Board of Directors meeting scheduled in two weeks. She felt blessed to have the board members she did, but she wondered how

Copyright © 2015 by the Case Research Journal and by Bambi Douma, Jeffrey P. Shay, and Michael Har- rington. An earlier version of the case was presented at the 2012 Annual Meeting of the North American Case Research Association in Quincy, Massachusetts. fte authors would like to thank Fran Albrecht for her participation and Deborah Ettington and the CRJ and NACRA reviewers for their valuable com- ments and recommendations.

these changes in CFServices’ philosophy would affect the Board, Watson staff, and the communities of Missoula and western Montana. Albrecht had many questions run- ning through her mind:

All of our work conducting research, completing due diligence, and writing a business plan led the Board and me to the same conclusion: We needed to build a second facility to meet the needs of Montana’s children. And now people are saying we jumped the gun because it’s underutilized. How did we miss the potential for a change in CFSer- vices’ philosophy? How can we assure that something like this doesn’t happen again? And, most important, what can we do now that the playing field has changed?

After considering an array of options, Albrecht identified three to discuss with the Board: maintaining operations while advocating a policy change, diversifying Watson’s services, and closing a facility.

NoN-Profit iNdustry iN MoNtaNa

From 2001–2008, the number of non-profit organizations in Montana grew by approx- imately 36 percent, and the assets and expenditures of those organizations increased 70 percent and 32 percent respectively. fte growth in registered non-profits continued in the state despite the recession, and in 2010 there were more than 5,000 operating in Montana and more than 1,200 in Missoula alone.1 Missoula was even listed in Forbes magazine, several years running, as one of the nation’s cities with the highest number of non-profit organizations per capita.2

Shelter and Children’s Services in Western Montana/Missoula

In 2010, there were approximately 218,000 children living in Montana, with 20 per- cent (44,000) of them living in poverty.3 Known victims of child abuse and neglect totaled a little more than 1,400 and there were another 1,700 living in out-of-home care.4 fte state had also seen an increase in the use of methamphetamine and alcohol by parents and persons acting as guardians of children, which historically led to an increase in the number of children needing shelter.

Referral and Placement Process

Children in crisis (i.e., neglected, abused, or abandoned) were once sent to orphan- ages, but by 1975 all orphanages in western Montana had been closed. For several years following, children in crisis were taken to an open jail cell, a hospital bed, or a police officer’s or social worker’s home until a safe home environment could be secured. fte need for homes or shelters dedicated to caring for these children was evident, and a system developed between governmental agencies and caregivers. Teachers, doctors, police officers, and other caregivers typically identified children in need and then passed the information to referral agencies such as Tribal Social Services, mental health centers, and ultimately CFServices. It was then the responsibility of referral agencies to evaluate whether the child was in danger and in need of placement with a provider (shelter, foster home, group home). Referral agencies would contact providers with services that matched the needs required by the situation, considering such factors as age, gender, type of care required, and whether siblings were involved. Consideration of parental rights was also important and required that children be placed in shelters in close proximity, meaning within a 1–2 hour drive of the parent’s home to facilitate

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visitation. Referral agencies also considered the cost of care since they were constantly concerned with budget limitations.

Placement with a provider was a temporary solution, with the length of stay depen- dent on many factors. fte shelter or home’s role was to provide care for the child while CFServices, in conjunction with the courts and professionals involved, determined the best placement for the child. fte providers served at the will of CFServices and the courts, which had the ultimate decision on whether to move a child from placement for further evaluation or to be sent home. Assessments of the mental, emotional, and physical condition of the child, along with assessments of the parents, determined what, if any, treatment was required. In cases when the treatment of parents was not possible, did not achieve the expected results, or other risks to a child still existed, the provider began trying to match a child with foster parents. Careful consideration of the fit of foster parents and their families was important. Once foster parents were selected, the provider and CFServices assessed whether the child was ready to move into a new home environment, with the primary concern being that the child would no longer have multiple trained professionals in close contact. fte goal of all involved was to move the child into a safe home environment so the child could have as normal a life as possible.

Finding placement options for children in crisis was often a difficult task for CFServices due to the lack of options for age appropriate and desirable shelter facili- ties. Referral agencies desired more room for emergency shelter placements as well as placements for young children from cities other than Missoula. Many cases required additional opportunities for respite care, therapeutic care for behavioral issues, foster care services, and in-home support. ftere was also a high demand for more placement options for physically challenged and high medical needs children, as well as children who were victims of sexual predators. Child protection workers also noted they wanted to see organizations offering more cultural opportunities, prevention services, over- night visitation, and in-house assessments.

Demand and Supply

From 1990–2000, western Montana counties experienced an average population growth rate of 20 percent, much higher than the growth in eastern Montana counties. Along with this growth, there was a correspondingly increased need for shelter capac- ity in the region. Most community leaders viewed organizations such as Watson as providing a much-needed service to the community and its constituents. However, the existence of shelters in a community was not without strain. Due to their emotional and psychological condition, children living in shelters often required additional care and services from the public education system, including special aides who attended school with the children. State and federal allocation of funds to cover these additional costs were not always consistent with actual costs. As a result, many public schools incurred additional costs that may not have been budgeted. Providers such as Watson, therefore, took great care in placing students in schools and made every possible effort to assure that no particular school was assuming responsibility for all of its children. Watson believed that it went to great lengths to achieve a positive relationship between the organization and the public schools in which children enrolled.

By 2006, western Montana had several providers (see Exhibit 1). Most facilities had a capacity of four to sixteen children and served children between the ages of ten- and eighteen. Watson recognized the gap in providing shelter to younger children in

Watson Children’s Shelter 3

crisis and was the only non-Native American reservation shelter providing emergency care for the infant-to-fourteen age group. As more child protection services became necessary, more funds were needed to support children in crisis, and individual orga- nizations began to compete more intensely for grants and funding. A slowing state and national economy also put pressure on private donors, as they had less discretionary funds available for philanthropy.

In general, children’s shelters such as Watson received fees from CFServices com- mensurate with the number of children placed at the facility. Group homes such as Youth Homes and AWARE, Inc. were similar to Watson in many respects, but they typically allowed for longer stays and drew from different sources of financial support which included a federal match.

WatsoN ChildreN’s shelter history/BaCkgrouNd

Watson Children’s Shelter was a private, independent, charitable, non-profit organiza- tion providing emergency shelter to individual children. It was established in 1977 as Watson’s Receiving Home when Janice Watson, who had operated a nursery and daycare since 1968, opened her home to children when police and state child protec- tion services needed to place a child in safe care. fte daycare facility closed in 1997.

Since then, Watson evolved into an emergency shelter that served 80–100 abused, neglected, or abandoned children annually. fte children had often experienced physi- cal, sexual, or emotional abuse, and some were also severely emotionally disturbed or learning disabled. Other children were victims of secondary abuse, from situations in which they observed domestic violence, substance, or sexual abuse. As part of its mission, Watson sought to ensure that children placed there experienced a sense of normalcy with respect to childhood: attending school; participating in recreational and cultural activities, including hikes, movies, and camping; as well as eating meals together in traditional “family” settings. Watson took pride in providing a staff-to-child ratio better than minimum state requirements and in employing twenty-six individu- als in direct care or program administration positions, and hundreds of volunteers in non-direct positions annually.

Watson’s facility was designed to maximize flexibility, but still had constraints. fte facility had four pods (each providing accommodations and bathroom facilities for four children), a commercial sized kitchen, central eating and play areas, a meeting room, and office space. For a child to be placed, there needed to be a room avail- able with a same gender (sometimes siblings of different gender were placed in the same room) and relatively same-aged child (most rooms were shared by two children). Moreover, Watson’s staff needed to consider the profile of the child to be placed and the child with whom he/she would be sharing a room. Shelters such as Watson, there- fore, were often run at less than full occupancy even though there might be open spaces and children in need of shelter care.

Watson’s focus on children in crisis from infants to age fourteen had certain ben- efits. First, the shelter was able to attract and retain staff members with interests, competencies, and training for working with children in this age range. Providers who offered services to older children required different competencies and services to meet the needs of children who may have experienced longer periods of neglect and/or abuse. Second, Watson was able to provide an environment with activities suitable for this group and more consistent with the typical family (i.e., families with 2–3 children

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spaced 1–2 years apart). And third, assigning rooms to children based on age, gender, and particular needs became more difficult with older children. For example, assigning an eighteen-year-old male child to a room necessarily meant that his current or future roommate would have to be within 1–3 years age, the same gender, and not have par- ticular needs prohibiting having a roommate.

In non-fundraising campaign years, Watson received a majority (approximately 60 percent) of its funding on a fee-for-service model from CFServices, Tribal Social Ser- vices, and other referral agencies. Other funding sources included grants from agencies such as the United Way (approximately 10 percent), annual fundraisers (10 percent), and private contributions from donors (20 percent).

Leadership and Governance

When Albrecht joined Watson in 1997, she took a struggling organization that needed immediate capital and helped to transform it to a growing organization focused on meeting its mission. Her initial push had been on improving community relations, educating the public, and developing strategic relationships—but she also focused on providing additional support to the program staff because Albrecht recognized them as the core of the mission. In 2000, Watson increased the licensed capacity to sixteen children with the construction of a new facility. By 2011, Watson enjoyed strong name recognition in the Missoula community, and Albrecht’s relationship with the members of the Watson Board of Directors was—as put by Dr. Larry Gianchetta—“nothing short of exceptional.”

Gianchetta, Dean of the University of Montana School of Business Administra- tion, served as a Watson Board member from 1997–2006 and was Board President from 1999–2000. He also served on the Watson Capital Campaign Advisory Com- mittee from 2007–2010. Gianchetta commented that Albrecht’s concern for children made her stand out as an extraordinarily talented leader. “She always has loved the kids, and they have loved her,” he stated. “We all knew early on that she was an excel- lent administrator and manager, but her passion for the kids is so genuine and real that you can’t help but be fascinated by it.” Albrecht herself stated, “I am so transparent with the Board for good reason. fte Board needs to see that these children are not languishing in our care and are continuing to blossom.” Gianchetta’s feelings reflected the observations of other board members. Colleen Powers, an insurance executive, entrepreneur, and member of the Board since 2002, stated: “Fran’s reason for being is those kids. She presents child profiles at each meeting and there isn’t a dry eye by the time she is finished. Board members share her passion for the children.”

Gianchetta likened Albrecht’s relationship with the Board and other community stakeholders to her relationship with the children. “She always is so sincere, commit- ted, and effective at conveying the vision and mission of the organization that you find yourself excitedly jumping on board to help push initiatives forward.” Powers agreed, saying, “Fran has worked hard to earn the respect of the Board and of the community. It is so easy to become committed to the shelter because of Fran’s passion. She’s a dynamic leader who has great ideas, and there’s no doubt that she’s there for the kids. It has been a real privilege to serve on the Board, and I think it speaks volumes that nearly every Board member remains engaged for three 3-year terms.”

Albrecht, when discussing her strong relationship with the Board, stated that she viewed her role as a connector and her best asset was “to know my own weaknesses and depend on others for expertise.” She considered the members’ diverse array of

Watson Children’s Shelter 5

experience to be Watson’s main strength: “We always have been very fortunate to have had a broad cross-section of experience as far as the members of the Board are concerned. We’ve benefitted tremendously from the guidance offered by so many members who gave of their time and talent to serve. I really believe that the diversity of our Board helped us deal effectively with our different challenges.”

In addition to attending directly to the business, Albrecht spent time networking with executive directors of other local non-profits, serving on advisory boards of for- profit businesses, attending workshops on “best practices” for care of children, and dealing with operational issues. Albrecht and Watson’s program director, Deboruah Baylor, were members of the CFServices’ Youth Advisory Council, formed in 2006 as a result of a federally mandated improvement plan for the region that included Mis- soula. ftat council met quarterly at CFServices’ offices in Missoula with a purpose to provide and receive feedback from community services involved with CFServices.

faCility exPaNsioN

In May 2004, Albrecht began thinking that the mission was not being adequately fulfilled. Watson had been at full capacity (all sixteen beds filled) since October 2003 and was turning away children at the rate of one to two per week because of space constraints. As one child was discharged, another was admitted. fte average length of stay for a child placed at Watson was approximately forty-five days. Social workers who learned that Watson was full would not even make a call for placement there, so it was unknown how many children were actually being turned away. CFServices allowed Watson to increase its licensed capacity to eighteen for a period of time, by adding bunk beds to several rooms to accommodate the need.

Albrecht brought her concerns regarding space limitations to the Board of Direc- tors. ftere was concern from at least one member that they wouldn’t be able to start another capital campaign because Watson had fairly recently finished the previous campaign for increasing capacity (improving the facility to sixteen beds in 2000). Gianchetta recalled that not everyone jumped on the bandwagon for a new campaign immediately: “ftere was a lot of back and forth with the Board, and there was a per- ception, albeit minor, in the community that Watson had ‘had its turn.’”

Needs Assessment

After discussion with the Board, Watson contracted with the Bureau of Business and Economic Research (BBER) at the University of Montana to complete a needs assess- ment, which launched in April 2005. fte goal of the research was to gauge perceptions and experiences with Watson and its emergency shelter services, as well as to determine any perceived demand for additional emergency shelter capacity. fte BBER research team conducted twenty-three confidential interviews with program administrators, other non-profit organizations, CFServices’ and Tribal Social Services’ personnel, vol- unteers, donors, and community members. In addition, it held two separate focus group discussions (ten social workers each) between June and August 2005. fte key findings are shown in Exhibit 2.

Comments from social workers who responded during focus groups were varied, but generally positive. Some felt that there were not enough emergency shelter facili- ties in western Montana. Some had positive responses specifically about Watson; one social worker stated, “It is pretty telling when a child has been there and years later they

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don’t have a negative memory of being there, which I have seen time and again.” Some expressed the need for more communication with Watson about the children placed in the shelter and also conveyed their desire for Watson to relax some of its rigidity in terms of scheduling and adherence to rules.

From these findings, the BBER recommended more hard data be collected on need and location for a new facility, that Watson talk to stakeholders, undertake a public education campaign, and fix any communication issues. fte final recommendation was that Watson should celebrate its remarkable reputation.

Business Plan and Capital Campaign Feasibility Study

Albrecht was encouraged by the needs assessment findings and started working with the Board on the initial planning phases of a potential capital campaign to build an additional facility, beginning with a business plan. Looking for assistance, Albrecht contacted Gianchetta, who referred her to one of his entrepreneurship professors who was also a business plan consultant. Meanwhile, referrals continued to be turned away from Watson at an average of one to two children per week.

fte consultant, along with a recent MBA graduate, worked with Watson staff and the Board and verified that not only was there a need for a second Watson shelter, but that two facilities would have enough demand to operate effectively and be financially viable. fte business plan outlined a $4.5 million campaign for building and operating a second facility. Albrecht and the Board decided to engage a local fundraising and philanthropic management consulting firm to conduct a feasibility study to determine if there was enough general support for a capital campaign that large.

ftose consultants gathered data in late 2006, and Watson received the recom- mendations in January 2007. fte feasibility study supported pushing forward with the campaign, as the firm found universal agreement that Watson achieved its mission and an absence of negative perceptions that would impede fundraising efforts. In fact, there were no negative issues raised by anyone in the survey, with fourteen out of the nineteen potential donors contacted, rating Watson in their “top five” contribution choices. Many of the people surveyed considered the needs assessment and business plan as positive steps, but the most overwhelming factor cited in support of building a second shelter was that the population of children in need would continue to grow. In addition, many respondents indicated that they were confident in the leadership of the organization to do the right thing and as a reason the capital campaign was likely to succeed. Respondents also agreed that $4.5 million was a tough, yet attainable, goal. fte consultants also discovered that many of the potential campaign contributors did not understand why there could not be another expansion to the current facil- ity rather than a new facility. ftis supported the BBER’s earlier recommendation of a public education campaign (as to licensing numbers and ratios, etc.). Timing was

favorable, as stated in the report:

First, the economy in Western Montana continues to experience strong growth and the stock market is somewhat stable and growing moderately. ftese factors can some- times impact the size of gifts you receive from some of your lead gift prospects, those who can set the tone for the eventual success (or failure) of the campaign. Also, several other high-profile community campaigns . . . are at or near conclusion. While new campaigns will always emerge, there seems to be a window of opportunity at this time if you can get out ahead of the curve.

Watson Children’s Shelter 7

Both Gianchetta and Powers recalled a unified Board in terms of moving forward with the second facility (see Exhibits 3a and 3b for a list of those involved during the campaign phase). “We had done a needs assessment, a feasibility study, a busi- ness plan,” remarked Powers. “We were convinced that the need wasn’t going away.” Gianchetta expressed confidence in Albrecht and the process leading up to the decision by saying, “She knows how to raise money better than anyone I know. We were not concerned because of all the due diligence.” At the end of 2007, the Board voted in favor of a capital campaign to build a second shelter. Expecting the capital campaign to produce positive results, the Board also voted in favor of beginning the expansion process at that time.

It was also fourth quarter of 2007 when the recession that affected so many parts of the country hit Missoula and western Montana, causing Missoula to lose a couple of significant employers. Although the recession “officially” lasted two years, Missoula remained mired in its effects, with some improvement by 2011.

Expansion Complete

Even with the economic downturn, the three-year $4.5 million capital campaign pro- ceeded without any major obstacles or challenges. Albrecht and the Board were elated that they could now meet the demand of children in crisis. In July 2010, Watson opened its second facility just south of Missoula. fte additional shelter doubled capac- ity, allowing for sixteen children in each facility. Although the average length of stay from July 2010 through June 2011 was approximately two months, some children remained at the facility until their family crisis was resolved or until a suitable home could be located.

uNderutilizatioN

In November 2010, the volume of children being served by Watson began to decrease, causing the facilities to be underutilized. Albrecht set out on a mission to determine the reason(s) underlying the decreased demand. She knew that if a perception spread throughout the community that the new facility was not needed, it would reflect nega- tively on her, Watson, and its Board, as well as other critical stakeholders. Albrecht and some of her Board members met with representatives from CFServices in Missoula in an effort to try to understand what Watson could do differently. “We were unbeliev- ably frustrated,” Albrecht said, “because we were convinced that a strong demand still existed. We were confident that we could adapt and adjust, but we needed to know what issues we were facing. We also were really concerned about the children who needed us and what might happen to them.” ftree Board members even met with representatives of CFServices in Missoula without Albrecht to ensure that changes were not due to personal issues involving Albrecht.

What they found both intrigued and frightened Albrecht: CFServices had changed its policy and practices (for undetermined reasons) to employ a “family preservation” model—which resulted in children remaining in their homes or homes of family members with the provisioning of in-home services and social worker visits to main- tain the family unit. In addition, CFServices had transitioned to a “one worker, one child” practice in which one worker was assigned to a child from first involvement with CFServices to a resolution and permanency planning. Previously, workers were trained in two units: (1) intake, which included first involvement with CFServices and

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possible removal from the home; or (2) intervention, which involved the social worker developing permanency planning for the child and family. CFServices’ social workers suddenly found themselves spending hours in court hearings with no time to conduct investigations, or lacking the appropriate training to effectively serve at intake when they previously had served in intervention. ftese changes had resulted in fewer place- ments at Watson. Albrecht made the decision to temporarily close one shelter to save on operational costs.

Albrecht and the Board discussed how “scary” these changes were, not just for their organization and the funding decreases, but also for the children in crisis. fte Watson mission was to serve the children, but CFServices was the gatekeeper. Watson couldn’t afford to break that relationship—even though, in Albrecht’s opinion, when the fam- ily preservation model failed and the children then required removal and placement at Watson, those children appeared to be even more damaged. Albrecht was also con- cerned that the decrease in placement was only affecting short-term shelter care, as a group home administrator had told the Youth Advisory Council in a recent meeting that there had been no change in his numbers.

Impact on Watson

fte reduced placement numbers had a direct impact on cash flow and operations at Watson (see Exhibit 4). Reduced placement also decreased Watson expenditures because there was no need to pay for staff and other related variable costs for children’s needs (food, clothing purchases, etc.).

In addition to the financial effects, the staff experienced less predictability and consistency of work and training. Some staff members sought and obtained other employment opportunities during these “down” times. When placements increased again, Watson was not able to procure the services of these staff members. In addition, training—and thus care—suffered when staff did not receive enough hours to become well versed in effective practices.

Albrecht also spoke to the largest campaign donors about her concerns, receiving support and encouragement to continue her research and to work through the unde- rutilization issue. Powers stated, “fte community confidence was overwhelming. We all had no doubt that the demand for services would bounce back.” Gianchetta also pointed out that Watson had faced challenges similar to the current underutilization issue at various times during his tenure as a Board member. “Emergency shelters are subject to lots of different rules and regulations, and Fran regularly faced challenges involving some party essentially trying to shut things down. Her tenacity in doing what was best for the children always seemed to carry the day.”

In January 2011, Albrecht, Baylor, and Powers met with CFServices again to ask, “What can we do to help you help us help kids?” No direction was given, although Albrecht presented different program ideas. Powers recalled Albrecht’s concerns for the children and her emotional statement following the meeting, “We will see children die and then we will see changes.”

Albrecht’s Need to Make a Decision

Feeling extremely frustrated after her June 2011 telephone call with the Director of CFServices, Albrecht knew she needed to present the Board with several alternatives and a decision needed to be made soon. She opened a file on her desk that held papers

Watson Children’s Shelter 9

and notes containing suggestions and ideas about the underutilization. Some of the ideas were her own, some were from the Board members, and still others were from emails and phone calls from interested community members. As she sorted through the suggestions, themes started forming possible options. She sat back and reflected on the three most viable strategic alternatives.

First, Watson could continue to operate both shelters as effectively as possible under the changed CFServices’ philosophy while working to change that philosophy back to one focused on child safety first. Albrecht was confident that the numbers of children in crisis remained constant, and therefore children in crisis simply were not currently receiving proper care.

Second, Watson could increase its reach by extending its age limit, geographic region served, or services provided. Under this strategy, Watson could consider seg- menting ages and services on a by-shelter basis. Any of these moves would put Watson in direct competition with other providers and duplicate services. Albrecht did have concerns, also, as to what operational changes (in terms of staff training and services provided) would need to take place.

Finally, Watson could close, sell, or lease one of the facilities. Albrecht knew that the Board would raise this option. Albrecht was concerned about potential detrimental effects on community support of Watson, and she was skeptical about the prospects of finding a bona fide purchaser or tenant willing to pay market value.

Albrecht and her Board (see Exhibit 5) had to make a decision fairly quickly. Albrecht had heard rumblings that she had made a mistake with the new shelter and she felt ultimately accountable and responsible. She was concerned about her Board losing confidence in her and Watson.

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Watson Children’s Shelter 11

( Exhibit 2: Summary of Key Findings from BBER Interviews Key findings from the interviews included the following: Overall general agreement existed that a new facility was needed to provide emer - gency shelter for children, especially those up to the age of fifteen. The need to provide safe alternatives for children on both an emergency and a long- term basis was cont inuing to grow. CFServices personnel overwhelmingly had positive things to say about Watson and Albrecht’s management of the shelter. Differences of opinion, based on the system in which the respondent was employed, existed about Watson being a “team” player. All respondents agreed that Watson was committed to the well being of the children in its care. The interviewees foresaw several significant challenges for Watson if another shelter were to be built. Included among these challenges were the following: Ability to raise the necessary funds for construction and operations/maintenance of the new facility . Possibility of causing potential discontent among members of the community, includ - ing the non-profit community, if Watson were to move into the (long term) group home area. Staffing issues (including finding qualified staff with all appropriate license s and suf - ficient training). Serious challenge posed by the political culture and prevailing climate that might drive federal, state, and local policy decisions (with one CFServices administrator who noted this particular challenge not expecting Watson to face problems filling the beds, but expecting more legislation to be proposed to further the protection of parental rights). Source : BBER Summary Report for Watson, 2005 )

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Watson Children’s Shelter 13

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Notes