Director Says John Hope Settlement House Can Survive the Year
Tuesday, March 19, 2013
“I would comfortably say we have secured enough for another six months and I’m comfortable saying we will probably be able to end out this year if we are able to continue on this path that we’re on right now,” Pande said. “And that will give us enough time to do the restructuring that needs to happen.”
The newfound confidence is in sharp contrast to the tone from the organization’s leadership over the past few years when a series of questionable decisions and the impact of the recession led to losses that threatened to close the center for good and led local lawmakers to demand answers from those in charge.
The Perfect Storm
According to Pande, the John Hope Settlement House’s financial troubles were created by a series of decisions dating back before she or her predecessor, Peter Lee, ran the organization.
First came a number of moves by the agency’s then Board of Directors to close “certain programs that were either underperforming or not aligned with the mission,” Pande said.
For instance, the organization closed a program where it ran residential group homes that were funded by the Department of Children, Youth and Families (DCYF). That decision, Pande said, cut out $1 million of revenue.
A second program with DCYF and other service providers was a “partnership with family services,” and when that was shut down, it cut out another $900,000 a year.
“When the board made the decision to cut those programs, they were not anticipating major loss of revenue like what they actually experienced,” Pande said. “I think they were trying to do the right thing and bring the agency to a place where the work was all mission-driven but as a result of it, they seriously cut their revenues.”
Losing the money was bad enough but it didn’t help that the recession led to funding cuts which Pande estimates brought the John Hope Settlement House from “about a $5.5 million entity down to about a $3 million entity within a year.”
“And because we were in a recession, it was very difficult to make up for those lost revenues,” she said.
At the same time the organization was seeing less revenue, its expenses were ballooning and, Pande says, the costs just to maintain the infrastructure in place were running in the “hundreds of thousands of dollars a year.”“It’s a large building, they didn’t have the programs that were supporting the organization and so slowly the agency started eating away at its savings to try to keep John Hope’s doors open,” she said.
Still In The Red
Pande says that while things aren’t nearly as bleak for the organization now as they were during the height of their troubles, the John Hope Settlement House still isn’t out of the danger zone yet.
At a community meeting earlier this month, Pande, who has been in charge of the organization since Lee stepped down back in October, said the current losses are $30,000 per month.
“Primarily it’s for the operations of the building,” she said. “The utility bills alone are astronomical. For instance, right now our outstanding balance on our utility bills is greater than $25K. Our health insurance costs are roughly $13K a month. There are just a lot of expenses the agency has and we’re not generating enough revenue to cover the expenses. It’s actually fairly simple.”
Currently, the organization is spending approximately $125,000 a month and slightly more than half of that cost--$65,000—goes to pay its staff of about 30 people. The bulk of the rest of the money, she says, pays for the building’s “inefficient” heating and cooling systems.
Pande says the organization can’t cut much more of its payroll than it already has because of various “staffing requirements” for many of its programs and believes the recent controversy surrounding the organization’s finances are overblown.
“It has been something that’s been going on a while,” she said. “The overall financial picture of John Hope has been very bleak for at least four or five years that I know of. I think it’s become more public over the last 18 months and I think at my community forum on March 4 that I held, I was very honest with the community and I said here’s where we stand and I presented a plan for moving forward.”
A Little Patience
Community Links Providence, a partnership between the organization and the Federal Hill House, meanwhile, may help reduce some administrative costs and help the agency expand its services in an attempt to garner stronger financial commitments from supporters.
Already, both are showing signs of progress as Pande says her organization has reduced what was a $45-$46K monthly deficit down to the currently $30K hole.
“I’m comfortable we’ll get it down to $20K in the next month or two,” she said.
Pande says she understands the community’s frustration with her organization’s struggles—recently community members called for a change in leadership—but says all she needs is a little more time to turn the ship around.
“Right now, there is obviously still concern,” she said. “The agency is still losing money but I think part of this whole restructuring of the organization would really be the first step toward repairing relationships with funders and trying to get new sources of funding into the organization and we are very optimistic that that would be the most successful path to go down.”
The trick Pande and her organization face are convincing the public and lawmakers that the $2 million they lost was completely above-board.
Being Open and Honest
Last week, Representative Anastasia Williams and members of the Rhode Island Legislative Black and Latino Caucus asked for a deeper look into the books of the organization and demanded answers as to where the money has gone.
“Suddenly, the John Hope Settlement House is on the brink of bankruptcy and there are a lot of people scratching their heads because of all the money that has gone into it in the last few years,” Williams said. “What is concerning to me is that taxpayer dollars and private donor money have gone to this organization and there’s no sign of how that money was spent.”
Williams said the organization needs to be transparent about its finances and where the money invested by taxpayers has gone and called on its leadership to come to a public hearing to discuss the current state of the organization.
Pande says her group will do whatever it can to be “open and honest” with lawmakers both at the city and state level.
“I know that there has been a lot of speculation of malfeasance in the organization and I said to them in November and I still believe this today, I really do not see after digging through some of the accounting stuff, I do not see anything that would suggest malfeasance at the organization.”
Further, she adds, the losses aren’t nearly as big as some would lead you believe given the size of the organization.
“I think the public perception is John Hope lost $2 million and I don’t know how to say this gently, but $2 million dollars is not a lot of money when you take a look at the general operating costs of the agency,” she said. “The $2 million mark is really one year’s worth of operations for an organization so if you take that and you multiple that by the years that the agency has been bleeding, $2 million is not a ton of money to save an organization. I know it sounds like a really big figure but if you think about it, it really amounts to one year’s worth of operations.”
As for the organization’s future, while Pande says the road ahead won’t be easy, she hopes community leaders and local lawmakers recognize the progress that’s already been made.
“When we first talked about Federal Hill House entering in this management agreement with John Hope, John Hope at that point was scheduled to close its doors in October of 2012,” she said “So in a very short amount of time, we’ve been able to turn things around where we’re now six months out and I already have some financial projections that will likely keep the agency open at least for the rest of this year and the goal of that is really to keep the doors open as long as possible.”