Layoffs and Employee Benefits and Funding and Charities and Diversity Groups and Philanthropy and Diversity

Cash crunch hits Indianapolis Urban League

October 28, 2010

Indianapolis Urban League is facing a cash crunch after its leaders spent more than a year trying to save a program that lost its funding source.

Now the civil-rights organization finds itself in a precarious financial position, something that’s become increasingly familiar for not-for-profits in recent years.

“It’s at the point where you have to stay with it on a weekly basis,” President and CEO Joseph Slash said of the agency’s finances.

Earlier this month, west-side community center Christamore House said it had laid off seven of its 19 staff members and might have to suspend services before the end of the year because of a funding shortage.

Both Urban League and Christamore House receive money from United Way of Central Indiana, which cut its distributions to all agencies by 10 percent last year. United Way CEO Ellen Annala said she and other grantmakers expected to see widespread financial problems in 2009. As it turns out, she said, many did not reach the breaking point until this year. “We know there are several organizations who are concerned going forward,” she said.

Indianapolis Urban League’s budget last year was about $1.8 million, and revenue fell short of expenses by about $70,000. This year, Slash said, the shortfall will be about $112,000 on a budget of $1.6 million—after tapping a line of credit and other sources of reserves.

In addition to playing watchdog on issues of racial equality, the Urban League provides a variety of social services. One of its most successful programs has been what Slash described as “wrap-around” services for ex-prisoners.

Until July 2009, the Urban League received a $202,500 contract from Marion County Community Corrections to work with offenders recently released from jail or serving sentences on home detention. Participants would check in at the Urban League’s offices at 777 Indiana Ave., where they could get help finding jobs and making the transition back to society.

Community Corrections changed the way the program operated in 2009 by having its service providers work out of jails. Slash said he didn’t want to compromise the Urban League’s method, which had lowered the rate of recidivism, and let the contract go.

At the same time, he didn’t want to lose the two staff members who had experience working with offenders. “There are roughly 550 people being released back into Marion County monthly, and they still come here,” Slash said.

So he decided to keep the two employees, who were supported by other, smaller grants, on the payroll while looking for alternative funding sources.  

The new funding never materialized. Meanwhile, another grant that propped up the payroll came to an end. Slash laid off the two staff members and a part-time clerical worker at the end of August, leaving 16 employees on the payroll.

One of those former employees, Dennis Jones, said Urban League failed to remit three months’ worth of withholdings into his retirement account. He made a complaint to the Labor Department’s Employee Benefits Security Administration, and the $600 showed up in his account earlier this month.

Slash chalked the incident up to general cash-flow problems. The Urban League, which handles other city and state contracts, has to wait for reimbursements,  compounding the problem, he said. That was not the first time Urban League had to catch up on remitting an employee's retirement money. United Way Director of Agency Services Christie Gillespie said she was aware of a similar incident in 2008, but it was remedied.

“To be responsible financially, you really just have to retrench,” said Michael Twyman, director of Indiana grant programs at the Nina Mason Pulliam Charitable Trust, which has provided some funding to the local Urban League chapter.

Though many charities are dealing with reductions in government contracts, grants and donations, Twyman said he hasn’t heard of any others that failed to follow federal rules on the timely remittal of retirement funds.

It’s common for charities to survive from one grant to the next, Twyman said, but that’s not a sustainable business model. To avoid crises, charities have to look for ways to lower their cost of operations and “continue to beat the drum for individual giving,” he said. “You have to do it all at the same time.”

The Urban League's largest sources of funding have been its United Way allocation, followed by its county contract and a deal with the Indiana State Department of Health to provide testing and prevention services for HIV and other sexually transmitted diseases. 

Many charities have stretched their budgets to avoid laying off employees, Gillespie said.  “If non-profits are guilty of anything, they’re probably guilty of trying to be as humane as possible with their own staff.”

Christamore House was in jeopardy months before interim Executive Director Tina Sullivan let go seven staff members this month. “Since June we were aware they were in trouble,” Gillespie said. The previous executive director, Dionne Leslie, went on maternity leave in August and later resigned.

With an outpouring of support from the Christamore House Guild and other community members, Sullivan said the community center—which serves the depressed Haughville neighborhood—likely will make it to the end of the year without shutting its doors. Next year, its budget will be reduced from $1.3 million to about $650,000.

“We’re very pleased with how the board is stepping up,” Gillespie said of Christamore House.

United Way conducts regular evaluations of the charities it supports, but it doesn’t make the results of those reviews public. The reviews are conducted every one, two or four years, depending on the agency's previous score.

Christamore House was on a four-year review cycle, while Urban League gets an annual review, Gillespie said.

The Urban League has been one of United Way’s largest grant recipients over the years. This year it will receive $343,689, making it 20th out of 103 charities in the size of its allocation.

The Urban League’s leaders are looking to beef up their fundraising and their profile in Indianapolis. Board Chairman Jerry Martin said younger generations aren’t very aware of the Urban League’s role in the national civil rights movement, or the local chapter’s work in race relations.

“He does a lot, and he doesn’t get a lot of pub for it,” Martin said of Slash.

Slash, 67, was a deputy mayor under Bill Hudnut and a vice president at Indianapolis Power and Light before working at Urban League. He took over as CEO from the local chapter’s iconic founder, the late Sam Jones, in 2003.

The Indianapolis Urban League hasn’t conducted a major fundraising campaign since 2001, when it raised nearly $5 million for the current headquarters building.

Urban League chapters elsewhere have been successful in drumming up widespread support, Twyman said. The Pulliam trust recently funded a two-year pilot program at the local chapter to coach fathers on parenting skills. The grant ended this summer.

“I would like to see the Indianapolis branch get in lock step with the creativity at the national level,” Twyman said.

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