YWCA closure points to need for better oversight

Edward M. Rose
Edward M. Rose

Edward M. Rose

When you log on the website for the YWCA of the Greater Triangle, you get a one page “obituary,” the first three paragraphs of which are as follows:

“The YWCA of the Greater Triangle ceased program operations on February 29, 2012.

“The YWCA has served the Greater Triangle community for more than 110 years and we attribute this history to the dedication and support of people like you.

“Like many nonprofits in our community, the YWCA of the Greater Triangle suffered several financial challenges brought on by the recession. A shrinking pool of available grants and a decrease in government and corporate funding forced us to downsize and eliminate programs that are no longer financially viable.”

As reported by the News & Observer in an article on March 6, 2012, “the YWCA served about 12,000 people, with much of its work centered around after-school programs, programs for seniors, and career services classes.”

Twelve thousand people! That is a huge impact upon so many in our community, and I am pleased to see that Ret Boney of the Philanthropy Journal has begun an effort to respond to the natural question of “How could this happen?”

The financial decline of the agency appears to have begun as far back as 2008, based on a review of publicly available information obtained by Ret Boney, and referred to in her article published May 10, 2012.

There is a question that must be raised: Where were the staff and board leadership needed by the agency, going back at least to the year ended June 30, 2008?

Based on actual results from the Forms 990, one could assume the board and staff didn’t develop realistic budgets, or take sufficient needed action steps during the past few years to reduce or eliminate programs that were generating significant losses.

One might also assume they didn’t consider different ways to deliver needed services, perhaps through collaborative efforts with other agencies with similar missions.

In retrospect, a brutal assessment needed to be made at least three years ago, and tough changes enacted to stop the increasing losses that have since taken place.

One very encouraging observation was made by Kevin Cain, president and CEO of the John Rex Endowment, in the Philanthropy Journal article.

“From my perspective, this is a call to us to say ‘how do we monitor the financial well-being of organizations over the course of a funding relationship,'” he observed.

I couldn’t agree more. The power of the purse-strings should enable, and indeed require, that major funding organizations call for a review of financial oversight by an independent, competent financial professional.

Significant weaknesses should need to be corrected before grants are disbursed.

A recent study from the Center on Philanthropy at Indiana University provides telling information.

Of more than 500 nonprofits surveyed that have annual budgets of $1 million to $5 million, only 27 percent reported that their board participated in efforts to shape how the organization would respond to a range of threats and opportunities.

It is unfortunate that, when the need is the greatest for direction, nonprofit board leadership often is most lacking.

It might be assumed that our YWCA of the Greater Triangle suffered this fate.

It would be unfortunate if our nonprofit community, and indeed our broader general community, did not make this a constructive learning experience.

This would be not for purposes of pointing fingers, but for purposes of understanding when and how strong board and staff leadership needs to be proactive during challenging economic times.

A start could be to convene a discussion group that would include representatives of major funding agencies, executive directors and finance directors of nonprofits, and finance professionals to explore how another YWCA of the Greater Triangle can be avoided.

As it is said, “those that ignore history are doomed to repeat it.”

Edward M. Rose is a retired CPA, former partner with KPMG and now is a consultant with the Executive Service Corps of the Triangle in North Carolina.

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