December 15, 2010; Source: The Oregonian | The YWCA is one of the mainstay organizations in Portland, Oregon. Over a century old, it has recently started to provide domestic violence services, a senior center, utility aid and a program for recently incarcerated women among other things. But last week it announced that it has released half of its staff, plans to sell its “iconic” building into which it lately poured a $8.2 million renovation and adopt out or close all but three programs. The director calls this “streamlining,” but it is all the result of significantly declining assets and revenues. The organization has suffered reported deficits in the past two years of $800,000 and $2 million through a combination of investment losses and government contract reductions.
Just the year before the organization had posted a $1 million gain.
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While we do not know the details here and details are important, we are hearing many such stories of organizations investing heavily in real estate before the downturn (in this case in 2003) and then running into trouble when revenue streams wane significantly.
A recent NPQ article by Clara Miller describes the problem of high fixed costs in the context of potentially declining revenue in “The Four Horsemen of the Nonprofit Apocolypse” . It is well worth a read.—Ruth McCambridge