April 19, 2012; Source: TemeculaPatch
In a spate of bad timing, the YMCA in Temecula, Calif. opened a $4.8 million new building in May of 2009 and lost $45,000 a month during its first two fiscal years and $25,000 a month during its third. The Y provides scholarships for families that cannot pay membership fees, generally covering those with dues from paying members, but when the economy tanked, the number of members able to pay full freight declined and those needing scholarships increased. Meanwhile, the organization began receiving late payments on a contract with three local school systems to provide after school services and a “hiccup” resulted in a late payment for childcare services in the amount of $65,000. Despite a heavy round of layoffs, at one point 200 staff paychecks bounced all at once and apparently paychecks have been bouncing since September, though the Y always makes good on them, including handling any penalties.
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Jackie Fielder, the Temecula Y’s CEO, says that, in retrospect, the new facility was likely a mistake in that it drained the reserves of the agency, making it impossible to front money on contracts. And selling the building would be nearly impossible since it is a multi-million dollar building owned by the Y but sitting on city-owned land. Fielder, who took over leadership after the building was a done deal, says she believes that the organization’s leadership got swept up in the euphoria of expanding. “It feels good to build a new facility,” she says. “I think we grew too big, too fast.”
NPQ published an excellent article on this very topic in Clara Miller’s “The Four Horsemen of the Nonprofit Financial Apocalypse.” Please consult Horseman #1 in the article. –Ruth McCambridge