As a father of six children, I have personally experienced the monumental difference nine months can make in a life. Apparently that applies to charities as well. Over the last three fiscal quarters the leadership of the Boys and Girls Club of Door County has made dramatic changes and is successfully addressing its financial crisis.
Quite simply, the Club had become a victim of its own success. After opening the David G. Hatch Center in 2016, the Club had more activity space than ever before. With a good heart and the right spirit, the Club’s leadership threw their doors wide open and invited in every child who needed them.
Unlike a business in which new customers translate into more profits, whenever a new group of kids walk through the door, the Club loses more money. Most of its children/customers could never afford to pay the full cost of the services they receive, yet the Club must always maintain a ratio of at least 1 adult for every 15 kids. More kids mean greater costs but almost no new revenue. The Club’s a non-profit precisely because there is no profit to be made.
Throughout 2018, the Club was running an absolutely alarming deficit. It had to borrow money to meet its current obligations and was having difficulty covering payroll. That’s when the Club’s leadership came to visit us at the Door County Community Foundation.
After a painstakingly thorough evaluation of the Club’s financial crisis and proposed workout plan, we at the Community Foundation felt confident enough to encourage the people of Door County to join us in giving the Club a second chance to thrive. We sent letters to our friends and I wrote the column “Don’t You Quit.” I’m pleased to report that not only did our community give the Club that second chance, it’s now well on its way to thriving.
Since the crisis began, the Community Foundation has been receiving regular strategic and financial reports and has met with the Club’s leadership on several occasions. Our most recent meeting was just a few days ago with the Club’s Chief Executive Officer Julie Davis, Chief Financial Officer Cindy Neuville, and Board member Erich Pfeifer. I’m pleased to report that things are trending in a very optimistic direction.
On the revenue side of the ledger, consultants were brought in to help implement proven strategies to acquire new donors and a Stewardship Committee was created to better engage current donors. As a result, the number of donors increased by 29%. Nationally, the average donor retention rate (the percentage of last year’s donors that gave again this year) typically hovers around 45%. The Club’s is 61%.
On the expense side, the Club has consolidated operations and found efficiencies in how it deploys staff. As a result, payroll was cut by 14% and overall expenses were reduced by 17% as compared to the fiscal year before the crisis began.
Of course, all these changes come with a human cost. The Club cannot afford to serve the same number of children that it did a year ago. Then again, the reality is that the Club couldn’t afford to serve all those kids last year either. The only way it was possible last year was to borrow money and go into debt.
Gratefully, because of our community’s generosity over the last few months, the Club is now completely debt free.
The fundamental causes of the Club’s financial crisis were overly optimistic revenue assumptions combined with an exceedingly aggressive program expansion. While that was a strategic mistake and a long-term recipe for disaster, we should pause for a moment to celebrate the spirit behind those decisions.
Within the leaders of our Club is the compelling and sometimes overwhelming desire to help every child who needs them. That’s the kind of spirit we want in those who run our Boys and Girls Club. Yet we also need the leadership of human service organizations to make sure that their heart remains in balance with their head. While we might want to rescue everyone who’s fallen into the water, we must also ensure that we aren’t so overwhelmed that we end up sinking the boat.
The Club has used our community’s recent generosity wisely. It has plans for future growth, but those plans are realistic, appropriate, and should be implemented at a far more measured pace. Thankfully, it appears that the Boys and Girls Club of Door County will be here for our children for many years to come.
Bret Bicoy is President & CEO of the Door County Community Foundation. Contact him at firstname.lastname@example.org.