Crains New York - April 1, 2013 - (Page 4)

IN THE Nonprofits see brighter future MARKETS as local economy recovers by Aaron Elstein BY THERESA AGOVINO Executives at nonprofit groups in New York City are feeling more confident about the future, with an increasing number saying they plan to add new programs and serve more people this year than they did in 2012, according to a new study. This year, 61% of nonprofits surveyed planned to boost services, while 57% expected to add clients, according to the study by the Nonprofit Finance Fund, which makes loans to charitable organizations. Last year, only 53% of the groups said they had expanded programs while 44% served more people. The executives’ optimism likely stems from their organizations’ improved financial picture. According to the study, 31% of nonprofits surveyed ended their 2012 fiscal year with a deficit while 22% broke even; yet 23% predict they will end their 2013 fiscal year in the red, while 38% believe they will break even. Despite the brightening picture, executives say many organizations are still struggling in the aftermath of the recession, which increased need and decreased funding. “I think they are getting used to the new normal and accepting that the money they used to get isn’t coming back,”said Anjali Deshmukh,director of knowledge and information for the Nonprofit Finance Fund.The organization surveyed 224 charities in New York City as part of a bigger survey of 6,000 nonprofits in the U.S. in such sectors as health, the arts and human services. Raising record sums Ms. Deshmukh said that some organizations are also simply learning how to raise money more effectively and managing resources better. That’s what Brooklyn Commu- Groups are ‘getting used to the new normal’ nity Services did. Last year, its annual gala raised a record $500,000. But it has made a point of reaching out to younger donors through social media and has put auction items online to expand the pool of potential buyers. Meanwhile, the Brooklyn agency broke even in its most re- cent fiscal year after logging three years of deficits. Its executives made some tough choices to get its financial house in order, like closing a homemaking program designed to help families stay together. It also laid off staff from other programs, eliminating about 70 positions, bringing the total number of employees to 375. “You have to take a look at whether your program made sense,” said Marla Simpson, executive director of the agency that provides a broad range of social services. Some groups are growing after retrenching. At Sunnyside Community Services, Executive Director Judy Zangwill said she plans to add four or five people to her staff because the organization initiated two health care-related programs. However,that may not happen if the city’s budget is passed in its present form because it will result in $1 million of cuts to the organization. The city accounts for about 60% of the group’s budget. The organization, which provides a variety of services to about 14,000 people ranging from children to adults, is already smaller than it was three years ago when it served 18,000 people. That year it also laid off about five people and cut a food stamps program. “The financial picture is better, but I don’t feel we are out of the woods yet,” said Ms. Zangwill. Ⅲ ROBERT WILMERS, M&T Bank CEO patrick mcmullan.com Lingering effects of Great Recession remain, survey finds Buffalo banker wings into NYC I n the coming months, New Yorkers will see many more signs for M&T Bank Corp., a Buffalo, N.Y.-based institution that’s poised to add 135 branches locally when shareholders later this month sign off on its $3.7 billion acquisition of New Jersey’s Hudson City Savings. M&T didn’t follow the herd by making crazy real estate loans during last decade’s bubble, although it took grief from some Wall Street analysts for not being more aggressive. But its strategy paid off big-time, with its stock price returning 43% during the past five years, while its peer index has sunk by 50%. One of its largest shareholders is Warren Buffett. “This company has always maintained it will protect the integrity of its balance sheet at the expense of earnings growth,” said Gerard Cassidy, an analyst at RBC Capital Markets.“The result is that over the past 20 years, three banks have consistently outperformed: Wells Fargo, U.S. Bancorp and M&T.” Besides outstanding performance, what interests most about M&T is Chief Executive Robert Wilmers,who has run the bank for 30 years. His annual shareholder letters read unlike anything written by any other bank CEO. In his latest, from early March, Mr. Wilmers noted that fines, penalties and legal settlements cost the six largest banks $29 billion last year, more than double 2011’s toll. “To the average citizen, these figures imply that the problem [with large banks] is getting worse—and at an accelerating pace,” he wrote. To restore public confidence, Mr. Wilmers suggested, one step bankers must take is reducing their “astronomical levels” of pay. “The 6 time is right for boards and executives to right-size compensation and make clear to the public what the new limits will be.” Mr. Wilmers was awarded $3.4 million in total pay last year.That is one-sixth the amount awarded JPMorgan Chase CEO Jamie Dimon, whose bank during the past five years has generated shareholder returns precisely half that of M&T. On regulatory reform, Mr. Wilmers wrote: “The most effective regulation must be based on clarity and simplicity. Put another way, when the rules are easy to understand and follow, there’s a greater likelihood they’ll be followed.… Indeed,we might consider [complex new rules] a kind of misguided regulatory chemotherapy—where the treatment meant to eliminate cancer cells damages healthy ones in the process.” Can Mr. Wilmers maintain his honorable stance amid the bright lights of the big city? At 78,he probably doesn’t care what the New York banking crowd makes of him. Ⅲ THE NUMBER OF DAYS’ NOTICE that Berkshire Bancorp CEO Steven Rosenberg gave after handing in his resignation on March 25. It isn’t clear why Mr. Rosenberg said he’d leave after 20 years at Berkshire, but the New York-based bank last week said it would be late filing its annual report because of delays in “obtaining certain information.” A call to the bank wasn’t returned. 4 | Crain’s New York Business | April 1, 2013 http://www.crainsnewyork.com/events-rebuildingny http://www.crainsnewyork.com/events-rebuildingny

Table of Contents for the Digital Edition of Crains New York - April 1, 2013

IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
BUSINESS PEOPLE
OPINION
BOB PREVIDI
GREG DAVID
REAL ESTATE DEALS
HEALTH CARE REPORT
CLASSIFIEDS
SMALL BUSINESS
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - April 1, 2013