By Todd Cohen
GREENSBORO, N.C. — The discovery last November of the alleged theft by its former bookkeeper of at least $520,000 triggered a year of self-scrutiny, financial discipline and organizational change at Habitat for Humanity of Greater Greensboro.
To pay nearly $500,000 in bills that were due or overdue and to continue its construction pace and fundraising for a big expansion effort, Habitat has worked to maintain donor confidence, reduce costs, strengthen financial controls, and delay expansion plans
“This has been a tough year for us, and we have had to expend a tremendous amount of energy and time and resources getting to the bottom of this and getting our house in order,” says Gerard Davidson, Habitat’s board chair and an attorney at Smith Moore.
With an annual budget of $3.2 million and a staff of 20 people, Habitat now is reworking its strategy to increase annual production.
Early year, as part of the quiet phase of a capital campaign, Habitat was tested the idea of building 150 houses over three to five years at a cost of $16 million.
“We are taking all of that and reevaulating what our goals are,” says Winston McGregor, Habitat’s new executive director.
When the theft was discovered, Habitat says, roughly 20 percent of its homeowners were making monthly mortgage payments in cash and in person at its offices.
Habitat immediately stopped accepting cash payments and instituted a permanent policy of accepting only checks or money orders.
It also launched an internal investigation of all financial transactions, an effort that included independent professionals outside Habitat, and it has turned over the results to the Guilford County district attorney’s office.
Because the theft drained the cash reserves it uses to cover projected operating expenses for three to six months, McGregor says, Habitat has met payroll and immediate financial obligations, and brought all accounts current by Jan. 31, 2006, through payment of pledges by major donors; an increase in giving at the end of 2005; record-high revenue from its ReStore that sells donated furniture, housewares and building materials; financial commitments from sponsors of new houses; cooperation from vendors; and a $50,000 low-interest loan from the Community Foundation of Greater Greensboro.
Habitat says it was able to keep building houses by limiting administrative expenses; cutting spending for contracts for fundraising and public-relations services; building only homes financed by sponsors, and foregoing construction of additional homes financed with operating revenues; delaying salary increases for December 2005 until July 2006; and postponing plans to add three staff positions and not filling three other openings.
Habitat also has adopted a series of financial controls ranging from divvying up the handling of mortgage payments, bank deposits and revenue record-keeping among three staffers, to creating a finance committee to review financial activity and processes.
As it awaits results of outside audits for the past two fiscal years to learn full details of the impact of the theft, McGregor says, Habitat is ready to grow but still faces challenges.
Because it will have only 14 buildable lots by next June 30, for example, Habitat needs to acquire land for new housing.
“We are excited to be focusing all of our energies on the future,” says McGregor.
Other stories in series: Part 1: Greensboro affiliate regroups in wake of theft.