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April 3, 2018 - 11:24pm

YWCA finances: No credit, no reserves, no clear explanation of how it got this way

posted by Howard B. Owens in YWCA, batavia, news, notify.

Millie Tomidy-Pepper and YWCA board members spent the day hunkered down in an office trying to figure out how to keep key programs running after yesterday's announcement that the 150-year-old community support organization is buried under a pile of debt, has no cash reserves, and can't continue to operate the multiple services it provides to the community.

The situation appears dire but Tomidy-Pepper today said she wants to emphasize this may not be the end for the YW.

"The news to bring to the community is that just because we're going through a really rough patch right now, the board hasgrown and is committed to helping us get through this," Tomidy-Pepper said.

She became executive director of the YWCA on Feb. 5, replacing Jeanne Walton, who served as director from July 2011 until Tomidy-Pepper was hired to replace her. Tomidy-Pepper said when she started there were only four board members and she made it one of her goals to increase board membership and the board's diversity of experience. There are now 11 board members, including ministers, educators, and people with business and nonprofit backgrounds.

That's the good news.

The bad news is, there is no guarantee the YW can be resuscitated.

A source tells The Batavian there have been pay periods recently when the YW couldn't make it's more than $20,000 payroll; that credit cards are maxed out at $53,000; that the YW is behind in sales tax payments for My Sister's Closet, (there are, however, no tax warrants outstanding with the state); that grant reimbursement requests are behind; and that the city was recently close to shutting off the water for the YW's building at 301 North St., Batavia.

It's through the generosity of a local, unnamed donor, that some of these issues, including payroll, have been resolved.

Thanks to this donation, Tomidy-Pepper and key staff members are still working, but reduced to 20 hours for the week and only for one more week of work.

Tomidy-Pepper said she will be putting in a lot more hours than just 20 in the coming week and beyond trying to help get things turned around for the YW and working to ensure key services, one way or another, continue.

How the YWCA sunk to this financial low is unclear.

In a statement released to local media tonight, Walton said the financial struggles of the YWCA of Genesee County started long before she became director and that under tough circumstances she did her best to hold things together.

"Managing the finances of a nonprofit is a constant challenge," Walton said. "As with most nonprofits, the YWCA has not been sitting on a large reserve of money in recent decades. Due to this, the organization has had to live 'paycheck to paycheck,' just as many households do."

Walton said she rejects the suggestion that the financial condition of the YWCA is currently any worse than what she dealt with during her entire seven years at the helm. She doesn't believe it was necessary for the YW to pull the plug on so many key services in the community.

As a nonprofit, the YW is required to file a Form 990 with the IRS each year. These public documents, available online, provide a summary of revenue and expenses. It also lists "net assets or fund balances" -- how much money the entity has in the bank.

For tax year 2001, the oldest 990 available online, says the YWCA had $462,390 in assets. There was $850,650 in revenue against $782,823 in expenses, so in the year 2000, the YW was cash flow positive by $4,929. That year, the YW did spend $61,000 of fund balance.

The next year, the YW lost $31,900 on operations and also withdrew $111,612 from reserves (CLARIFICATION: A closer reading of the Form 990, this was a loss in value of the YW's securities investment (stocks)). Some fund balance was restored the next year but over the next 15 years or so, the YW has been slowly bleeding down its fund balance with only a couple of years of small replenishment, including two years while Walton was the director.

Here's a year-by-year breakdown:

  • 2001 fund balance: $462,390
  • 2002: $318,878
  • 2003: $365,632
  • 2004: $280,724
  • 2005: $237,785
  • 2006: Not Available
  • 2007: $210,566
  • 2008: $228,934
  • 2009: $124,799
  • 2010: $93,109
  • 2011: $122,391
  • 2012: $74,300
  • 2013: $77,783
  • 2014: $97,601
  • 2015: $70,003
  • 2016: Not Available
  • 2017: Would not be available yet

The tax returns show Walton earned from $48,400 to $52,400 during the years reported that she was executive director, which is comparable to executive compensation for prior directors. Barbara Hale, for example, earned $48,277 in 2008.

The picture painted by Tomidy-Pepper of the current financial condition of the YWCA is that there simply isn't enough free cash flow to operate and no available credit or line of credit to float expenses until expected revenue arrives.

Termination of YWCA services, however, leaves county officials, local school officials, parents, and others scrambling to find ways to meet community needs.

One of the biggest services provided by the YW -- 40 percent of $1.1 million in expenses according to the nonprofits 2015 tax return -- is providing daycare services for students at eight school districts in the county.

Tomidy-Pepper she said she realizes shutting down this program suddenly is a hardship on local parents, and she's received complaints about the short notice. But she said she hopes that with the announcement of the possible closure coming during spring break, parents will have a week to make other arrangements for their children if the YW can't come up with another solution.

She's hopeful the YW will find a way to fill the gap.

"We know it's a huge burden on families," she said. "We're working diligently with other service providers and hoping by Monday to have an answer. I want people to know we're not giving up. We're not throwing in the towel."

She thinks a solution has been found but can't announce it yet.

"If that happens, hopefully, that will keep our employees employed," Tomidy-Pepper said. "That would be wonderful. That would take 18 people off the unemployment line."

The county has $160,000 in contracts with the YWCA for the Care and Crisis Helpline, the Domestic Violence Safe House, and other programs. County officials were meeting today to figure out how to meet the needs of these programs without the YW but Tomidy Pepper said she and the board members are also working on these issues.

She said they expect Verizon to soon provide another number for the helpline and the board will meet with officials in Niagara County about helping with the safe house and the domestic violence program. (The County also has a domestic violence program available through Genesee Justice.)

The YWCA also staffs a daycare center for Family Court in the County Courts facility. Tomidy-Pepper said she and the board members haven't figure out yet what to do with that program.

She did say the building at 301 North will remain open. Besides My Sister's Closet, which is staffed by volunteers, there are tenants in the building.

"We're not locking the doors and shutting down completely," she said. "We want people in the building."

When she started, Tomidy-Pepper, who has nearly 20 years experience in the nonprofit sector, said she was told of the YW had an annual operations budget of $1.2 million.

She did explain that there was another recent audit but that auditor was never paid in full so the auditor wouldn't release the results. Tomidy-Pepper tried to hire a second auditor but that auditor wouldn't do the job without seeing the first auditor's findings. A community member -- the donor mentioned above -- provide funds to pay the first auditor and hire the second auditor.

It was that second auditor who said there was no realistic way to complete an audit.

One issue Tomidy-Pepper said she uncovered is that the YW needed to apply for grant reimbursements but the vouchers needed for the reimbursements were either missing or not completed.

She said with the help of former and current staff, she has been able to resolve that issue and the grant reimbursements are in the works with the state.

"We've faced many challenges and we're meeting that challenge," she said.

Tomidy-Pepper said she really wants to see the YWCA of Genesee County come back strong and she is grateful for the help she's receiving.

"The board members, the people in the community, want to help," she said. "They want to help. They want us to succeed."

We also reached out to YWCA USA to try and find out more information about whatever oversight the national organization might provide and how one of the national organization's affiliates could reach the state of near if not total financial collapse.

A spokeswoman declined an interview request and issued this statement:

Statement by Alejandra Y. Castillo, YWCA USA, CEO
YWCA USA recognizes the critical role YWCA Genesee County plays in the community and we are dedicated to providing tactical support to help them during this difficult time. Our chief concern is for the women and families who rely on YWCA services and we are collaborating with our strong network of New York YWCAs to identify alternative programs and resources to assist through this transition.

Here is the statement released by Jeanne Walton:

The financial struggles experienced by the YWCA of Genesee County predated my tenure as Executive Director and continued during the nearly seven years I served in that capacity. Managing the finances of a nonprofit is a constant challenge. As with most nonprofits, the YWCA has not been sitting on a large reserve of money in recent decades. Due to this, the organization has had to live “paycheck to paycheck”, just as many households do. Over the years, I learned to manage this so that the organization remained solvent. The YWCA USA and Board of Directors of the YWCA of Genesee County were kept apprised of the organization’s financial condition. As required by law, independent audits were conducted annually. Corresponding tax returns (990s) were filed and these records are publically available.

Five months ago I announced my decision to resign as Executive Director and offered to assist with the process of selecting and training my successor. In January 2018 my replacement was chosen, and it was agreed that during my last weeks at the YWCA I would focus on working with the new Executive Director to educate her on all of the financial and executive level challenges faced by the organization. I felt this would be a great deal to accomplish in a short period of time, and was quite surprised when I was informed that, while I would be paid for my last two weeks, it would not be necessary for me to work with the new Executive Director. Nonetheless, I recently reached out to the Board of Directors Executive Committee, the auditor, the Executive Director and the YWCA USA to offer my assistance.

Nothing about the YWCA’s financial situation changed for the worse during my years of service. The challenges currently faced by the YWCA are nothing different than what I handled along with our Finance Manager the entire time I was there. Strategizing and having a full understanding of the cash flow are imperative to the financial health of the organization. The finances of this organization are extremely complicated and it is a necessity to have an individual familiar with them involved in the audit process and the ongoing financial operations. Prior to my departure, my leadership team suggested changes to my successor and the board President that we felt were necessary for the financial health of the organization.

After my many years with the YWCA and the expansion of services provided, I am heartbroken that the decision was made to terminate the programs that are vital to this community. I cannot understand how it makes sense to end programs that are 100-percent grant funded, such as Domestic Violence Crisis and Prevention Services, Care + Crisis Helpline and the Children’s Center at the Courthouse. I am shocked by this news and know that it is an extreme decision that could have been avoided.

John Roach
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Joined: May 29 2008 - 5:22am

What a mess.

Daniel Jones
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Joined: May 2 2008 - 9:36am

The money went somewhere, folks. It's time for people with badges and subpoenas to get involved.

Rich Richmond
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Joined: Mar 29 2011 - 4:50pm

It appears a forensic audit is in order for all involved. Who signed the checks, one person or two?

Howard B. Owens
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With the scanner going crazy, I can't make any of the phone calls I wanted today for a couple of stories in the works, so I'm just going through the Form 990s.

Regarding the 2001 return, mentioned in the story, and the $111,612 loss in fund balance, reading more closely: That was a loss in the value of the investments (probably stocks) held by the YW.

Candace Bower
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Ms Walton. If your books are such a mess that 2 auditors cannot decipher them, that is your responsibility. Did you have 2 co signers on your checks ?The stock market has soared this past year. Your investments should have increased. Did you search for grant monies to help fill your coffers?. Take some responsibility.

Tim Miller
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Joined: Jun 20 2010 - 9:51am

Just a quick thought on the market soaring... investments bled from $125k down to $70k between 2009 and 2015. Even with the market soaring, the constant withdrawals from the investment accounts did not leave a whole lot of money left to grow.

Sad, though, that the fund dropped from almost half a million dollars in 2001 to a negligible amount now.

Ted Wenzka
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Joined: Jan 13 2015 - 6:08pm

Two questions:
1. Who were the directors during this span of time.
2. What were they doing while Rome was burning? Sitting on their hands with blindfolds over their eyes? They sure weren't doing their job.

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