Question:

This question is directed to Dan Bartley as president and Kevin Connors as treasurer. Can you provide VOTF members with three things? 1. An explanation of the events leading up to the financial crisis last summer. 2. A list of all the specific steps you have taken to ensure that such a crisis is less likely to occur in the future. 3. Additional actions, including minimum annual contributions per member that VOTF members must take to place VOTF on a sustainable financial foundation for long-term growth. Thank you.

 

Answer:

1.BACKGROUND ON THE CRISIS - The early years of VOTF were “heady.” Revenues flowed in essentially from quarterly snail mail membership appeals. Net assets provided a healthy cushion that supported annual budgets in the range of $700,000 plus. The lush times were not wasted. VOTF established a national headquarters with a full-time executive director and PR person, and a small, but effective part time support staff. We also put in place strong member communication assets, and broadened member participation with the addition of a National Representative Council (since replaced with an affiliate core team). Beginning in 2006, however, shock and aw from the scandal began to fade from the media and in the minds of the Catholic community in general. Member donations as well as the cushion provided by net assets began to deteriorate. In fiscal 2006, and again in 2007, VOTF experienced operating losses. In 2007, the operating loss was just short of $107,000. A professional fundraiser was engaged to help reconnect with large donors.

Donations continued to deteriorate in fiscal 2008, and even with extensive cost cutting, we still experienced an operating loss of over $8,000 for the year. By the time fiscal 2009 (June 2008 thru May 2009) came around, the economic down-turn began to hit like a jack-hammer, further reducing donations that just two years earlier were averaging $50,000 per month, to as low as $15,000 in the month of August of 2008. Our strategic reserve continued to deteriorate.

The officers, executive director and board of trustees coordinated closely during all of fiscal 2009 to engineer a turnaround, and by April of 2009, VOTF had a revised budget in place that reflected: relocation of national headquarters to a smaller less costly facility; substantial reductions in staff and contractor costs; renegotiation of certain contracts; significant changes in our approach to fund raising that resulted in less dependence on costly quarterly snail mail appeals, and a host of other measures. Nevertheless, the problem of eroding donations, and deteriorating reserve continued unabated into the summer of 2009.

2.STEPS TAKEN TO REDUCE THE LIKELIHOOD OF ANOTHER FINANCIAL CRISIS- One major component of VOTF’s revised business plan requires that the officers, the executive director, and Board of Trustees monitor Liquidity (i.e., the cash and cash equivalents available to fund daily operations). Liquidity is classified by the number of months of average operating expenses available for immediate use. Movement up or down within a specific classification provides an important “heads-up” to emerging changes in VOTF’s financial condition. There are four Liquidity classifications: VULNERABLE ADEQUATE, SAFE and PROTECTED. In any month that Liquidity falls into a VULNERABLE classification, the President is mandated to implement specific measures within 30 days. These extraordinary measures can only be suspended by virtue of VOTF exiting the VULNERABLE classification, or by majority vote of the Board of Trustees,

Another component of the revised business plan involves a monthly cash flow analysis that helps VOTF project available cash levels in relation to Liquidity classifications, thus providing decision makers with still another “heads-up” on if and when in the future VOTF might fall into a VULNERABLE classification.

3.ADDITIONAL ACTIONS MEMBERS CAN TAKE TO HELP PUT VOTF ON A SUSTAINABLE FINANCIAL FOUNDATION- In the past, VOTF relied for funding to support operations almost exclusively on quarterly appeals to the membership. The revised business plan provides for a wide array of funding options, and members and supporters are urged to embrace one or more of these options that best suit their circumstances. Here’s a list:
• Appeals to major donors
• Private and foundation grants
• Planned giving, such as bequests and endowments
• Joint ventures with affiliates, such as the recent joint national conference on Long Island.
• Merchandising and advertising offers (primarily through member communications such as the website, In the Vineyard and Focus).
• Targeted membership email appeals to help fund a new or ongoing project undertaken by a Voices in Action platform team, the affiliate core team, or VOTF’s Marketing and Communications committee.
• Periodic member snail mail appeals, such as the annual Christmas appeal and membership dues.

Kevin Connors