A nonprofit’s abrupt closure puts access to public benefits at risk

A key nonprofit that works closely with governments to connect people with essential benefits like food assistance and health care is abruptly shuttering, and the impact could be far reaching. 

The Philadelphia-based Benefits Data Trust, or BDT, which advocates for streamlined access to government assistance, said last month in a message posted to its website that it would close after what it called a “thorough review of our finances and business operations.”

“This decision has not been made lightly,” the message continued, “and it comes after much reflection on the best path forward for our valued employees, the people who receive our services, and our funders and partners." 

BDT, which has worked with numerous state governments through contracts from the U.S. Department of Agriculture, said that it has helped deliver more than $10 billion in benefits since its inception in 2005.

Just earlier this year, the trust had announced that it would collaborate with agencies in seven states—Illinois, Iowa, Minnesota, Nevada, Oklahoma, Tennessee and Vermont—to help them establish or improve ways for Supplemental Nutrition Assistance Program applicants to sign their paperwork. The nonprofit used technology to make it easier for people and families to apply for benefits, often helping them over the phone or online. 

The sudden closure leaves these collaborations up in the air and comes at a time when governments are under pressure to use artificial intelligence to ease some of the administrative roadblocks delaying the distribution of food stamps and other critical benefits. It also means that more than 250 people will lose their jobs, while hundreds of thousands of benefits recipients will lose the help the trust provides. 

An open letter from around 120 of those employees lays the blame for the nonprofit’s closure at the feet of its executives and board of directors, which they accuse of “gross financial and organizational mismanagement and negligence.”

“We served more than 120,000 people in 2023 alone and were on track for similar impact in 2024,” the letter says. “This work was achieved in large part by us, the people of BDT, who showed up every day for our communities—with the understanding that our leadership team were acting as good stewards for our efforts and the good we were creating. Because of this, we believe you owe us and the thousands of people we served answers.”

In the letter, the signatories requested transparency on how the trust “ended up in this position.” The questions they are seeking answers to include when executives noticed financial strain, when the board was notified and when will the nonprofit’s tax paperwork, as required by the Internal Revenue Service, be released (it was expected in March).

The letter’s signatories allege that something “fundamentally shifted” between May and June, as BDT was still onboarding new staff.

The former employees have also requested a “clear plan” to secure the trust’s legacy and ensure that those who relied on the nonprofit for help are not unduly impacted. “BDT’s work is not done; the benefits access gap remains a challenge to low-income communities across the country,” the letter says. 

Those behind the letter asked what plans are in place to ensure continued support for those that rely on BDT’s services, and what will happen to its various resources like toolkits, projects, initiatives and chatbots, as well as its custom-built benefits screening applications.

The signatories also requested a process to ease the transition for BDT staff. Former CEO Trooper Sanders, who was relieved of his duties in early June before the board’s decision to shut down, declined to comment.

Staff had asked for a response by Wednesday, July 10.

“The closure of BDT has profound and far-reaching consequences for the vulnerable populations we serve, the dedicated staff who have worked tirelessly to fulfill our mission, and the many partners, government agencies, hospitals, schools and nonprofits that relied on BDT as a lifeline for their communities,” the letter says. “We are calling on you to provide immediate transparency. BDT staff, our loyal partners, and the communities we serve deserve to know the truth.”

Organizations in the public benefits arena lamented the trust’s closure. Rey Faustino, CEO at nonprofit One Degree, which looks to connect low-income communities with assistance, said it is a “harsh reminder of the precarious nature of our work in the nonprofit sector,” and called BDT a “kindred spirit and partner in arms to One Degree in the collective work to improve our nation’s safety net.”

Faustino said an “ongoing commitment” to funding nonprofits that work to innovate and connect people to the social safety net is essential. He called on philanthropic funders to “embrace the ups and downs” that come with the nonprofit sector and said only with long-term financial commitment can change occur. He warned of the ripple effects of BDT’s closure, too.

“The immediate impact of the closure is unmistakable: The reduction in BDT’s services will likely result in fewer people receiving the benefits they desperately need. However, the indirect effects could be more troubling,” Faustino wrote in a LinkedIn post. “Over the years, BDT emerged as a leading voice in benefits access innovation, and their shutdown signifies the loss of critical advancements in this field. So what can we do to make sure that BDT’s closure doesn’t cause additional shockwaves in the larger work of safety net innovation?”