The NonProfit Times - January 1, 2008 - (Page 6)

NONPROFIT BUDGETS Continued from page 1 Goodwill’s member services center in Rockville, Md. “It’s a direct impact when the law changes. When people make a dollar more than minimum, they probably go up too,” he said. “It’s an immediate hit.We can’t raise used clothes prices right away,so it hits the bottom line right away,” Barringer said. Goodwill’s North American retail stores had $1.7 billion in revenue last year, with labor accounting for $673 million of costs.“Labor is a big part of any business, but for retail especially.” Goodwill stores range from 3,000 square feet to 25,000 square feet,and in Total Expenses American Red Cross U.S. Golf Association Special Olympics Campus Crusade for Christ (NPT 100 median) MAP International U.S. Fund for UNICEF Catholic Medical Mission Board NPT 100 total by-community, government is changing the way it’s charging for trash disposal,” Barringer said. “When you’re unable to re-sell, some percentage still goes to trash, so we continue to look for ways to reduce that” as tipping and dumping fees are increasing. INCREASED EXPENSES = GOOD NEWS? Goodwill’s North American retail stores had $1.7 billion in revenue last year, with labor accounting for $673 million of costs. 25th anniversary. During the next three to five years, Komen seeks other areas to grow, including expanding globally, Speirits said.“We really want to try to become a global leader in health awareness in breast cancer,” he said, which will require investments domestically and overseas. Memphis-based Ducks Unlimited (DU) is in the business of wetlands yond is a greater focus on major gifts, said DU Controller Bob Mims,as part of its comprehensive campaign, Wetlands for Tomorrow. “Related program expenses correspond to the growth in major gifts to accomplish more wetland habitat conservation,” he said. “Each nonprofit struggles with balancing accomplishing more and more of their program while managing the financial position (balance sheet) of the organization,” Mims said.“Most nonprofits that struggle during tougher economic downturns try to maintain their programs and freeze compensation or cut/reduce personnel expenses.” Organizations with large endowments have fluctuating investment income based on market results, Mims said, but also can weather economic pressures better than those with no endowments for operations. “We’d like to expand our revenue sources from a number of areas,” Komen’s Speirits said. Most of Komen’s revenue comes in small donations,from events like Race for the Cure and its cause marketing efforts and one area they hope to expand into is planned giving. As investments are made toward planned giving and global expansion, Komen also expects to invest within the organization to keep up with its growth.“We’ve been growing phenomenally,” Speirits said, with revenue at a compounded rate of 22 percent during the past five years.To keep pace with that growth,the organization will boost the dollars it spends on infrastructure. “Some of our infrastructure,IT capabilities, finance capabilities haven’t kept pace,” Speirits said, with investments expected mainly in and around securing hardware capability, and a need to upgrade software applications. With 125 affiliates nationally,“the demands and growth have been fantastic.” Asking donors for cash contributions is routine for a typical nonprofit, but at Goodwill, it’s actually an avenue for another revenue stream. Fundraising is a very small percentage of revenue, unlike most other large charities. “We’re getting more wills and bequests,” Barringer said.“It’s not that uncommon for someone who has given us clothes for years and years to leave us money in their will.” Most affiliates didn’t have any programs except for the occasional capital campaign, said Barringer, but these days are putting more resources behind fundraising.“We’re asking a different audience to provide us with financial support. It’s a new set of expenses for a lot of Goodwills,” he said. “Communities really like what we do. They want to support us,we just never asked.” NPT Revenue and contract work is up at Goodwill’s thrift stores, Barringer said, and that’s good news as it shows up as expenses after the nonprofit puts those revenues into services. Susan G. Komen for the Cure, headquartered in Dallas, had expenses jump by 8 percent (from $200 million to $218 million), including 15 percent FYE 2005 $3.43 billion $94.8 million $117.0 million $434.5 million $319.5 million $464.7 million $188.6 million $51.0 billion FYE 2006 $5.63 billion $129.8 million $228.2 million $467.1 million $248.2 million $358.0 million $143.8 million $55.9 billion Change +39% +27% +22% +6.98% -29% -30% -31% +7.87% FYE 2006 $5.3 billion $119.1 million $171.5 million $804.0 million $244.9 million $322.2 million $137.5 million $48.3 billion Seattle Goodwill Program Expenses American Red Cross U.S. Golf Association Museum of Modern Art Volunteers of America (NPT 100 median) MAP International U.S. Fund for UNICEF Catholic Medical Mission Board NPT 100 total Fundraising Expenses U.S Golf Association Museum of Fine Arts, Houston Trust For Public Land Ducks Unlimited (NPT 100 median) Art Institute of Chicago Public Broadcasting Service Operation Blessing Int’l Relief NPT 100 total FYE 2005 $3.0 million $1.7 million $3.5 million $22.8 million $8.8 million $471,766 $979,152 $2.5 billion FYE 2006 $5.8 million $2.6 million $4.8 million $24.6 million $5.7 million $306,704 $407,919 $2.7 billion FYE 2005 $3.13 billion $87.7 million $131.3 million $755.0 million $316.0 million $427.0 million $182.6 million $44.0 billion Change +48% +33% +27% +7.5% -53% -54% -140% +6.7% FYE 2005 $319,581 $7.2 million $37.7 million $15.3 million $32.7 million $5.0 million $1.2 million $4.5 billion Change +41% +26% +23% +6.1% -29% -32% -33% +8.07% Goodwill of Greater Washington Seattle Goodwill Administrative Expenses Marine Toys for Tots Foundation WGBH Educational Foundation Smithsonian Institution March of Dimes Foundation (NPT 100 median) Art Institute of Chicago Institute of International Education MAP International NPT 100 total FYE 2006 $686,796 $13.8 million $56.6 million $16.8 million $20.4 million $2.7 million $575,011 $4.8 billion Change +53% +47% +33% +8.39% -60% -86% -102% +6.7% Source: 2007 NPT 100 Note: To achieve a median, one charity whose FYE 06 data were not available was not included. one case 40,000 square feet.During the past five years, the number of stores added has not changed much, maybe opening 50 a year.But,the size of stores has been getting bigger.“We’re replacing 6,000-square-foot with 12,000square-foot stores,” Barringer said.“Your employees don’t double when you do that but there is a significant (expense) increase obviously.” Energy costs will have a huge impact when you’re talking about 2,000 stores. Goodwill transitioned away from home pickups toward donation centers starting during the 1970s and the initial oil crisis. “We realized we have to change our business model,” Barringer said.Now a donation component is part of most every store. But if donations to Goodwill can’t be used, the charity has to deal with the cost of trash removal.“Community 6 more in program expenses (roughly $150 million to $172 million). Other support categories such as administration and fundraising, dropped from 2005 to 2006.“That’s part of an ongoing strategy” of prioritizing based on mission and expenses, said CFO Kevin Speirits, a concept several nonprofits echoed. The pattern repeated itself during 2007 with total expenses rising 23 percent -- from $218 million to $269 million. While most of the increase again was in program expenses, supporting services also rose 18 percent, from $46 million to $55 million, according to Speirits. The additional expenses in the last year have been driven by a couple of things, Speirits said, including the sheer growth of the organization and a rebranding initiative for its JANUARY 1, 2008 conservation and receives donated land easements,the appraised value of which is revenue but on the expense side counts toward program services. Such donations can swing significantly from year to year. A dip in donated easements caused a 22-percent drop in total expenses ($200 million to $165 million), 27 percent in program ($173 million to $136 million) during FYE 2006. Figures for 2007 and 2008, however, are expected to reverse course considerably in both revenue and expenses. IT TAKES MONEY TO MAKE MONEY For many nonprofits, the story is no different than for corporations: diversifying revenue streams. And, that can cost money. Driving upwards on the revenue and expenses for DU in FY2007 and bewww.nptimes.com THE NONPROFIT TIMES http://www.nptimes.com

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The NonProfit Times - January 1, 2008 Expenses Continue To Put Stress On Nonprofit Budgets Insuring Donors’ Goodwill Volunteers On Firing Line Contents Who...When...Where...How...What? Red Cross Audit Comes Up Clean Exit Doors Rear And Aft Calendar A Fresh Look Special Report: Accounting APIs Opportunity Is Knocking Middle Management Barrier Memorial NPT Jobs Resource Directory

The NonProfit Times - January 1, 2008

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