Nonprofit plight: Some agencies soared during recession, while others faltered

Brad Nettles // The Post and Courier

Lowcountry Orphan Relief Cothing Closet supervisor Regina Sharpe gathers clothes that will be sent to a child in need in the Charleston area.

As donations faded during the recession, Florence Crittenton Programs director Lisa Belton agreed to work for 30 percent less than her predecessor, just to keep the nonprofit for poor young mothers afloat.

"I feel strongly about the organization surviving, so I took a personal hit," Belton said of her $43,000 starting compensation in 2008.

Just a few miles away, Goodwill Industries of Lower South Carolina raked in money during the recession, posting double-digit revenue increases during the worst of the downturn. The nonprofit agency did so well in 2009 that it rewarded its president with a $31,375 bonus on top of his yearly compensation of $228,417.

The bust and boom stories of Florence Crittenton and Goodwill Industries reflect what the recession has done to most of the Lowcountry's nonprofits that combat poverty.

It has been feast or famine, with a host of nonprofit organizations competing for an ever-dwindling pool of dollars during the recession that officially began in December 2007 and lasted 18 months. Some thrived; others barely survived.

The winners were able to roll out new programs and expand services. Some rewarded their leaders with plump compensation increases at a time when one in 10 South Carolinians was out of work and many

others struggled with wage freezes and furloughs.

Nancy Cook, for instance, saw her compensation double as director of the Good Neighbor Center to nearly $130,000. That happened at the height of the recession when her nonprofit's total revenue dropped 17 percent to $399,000.

The losers in fund-raising found themselves making cuts in payroll, programs and staff. Some had to dig deep into their reserves, bleeding red ink while trying to survive. And some didn't make it. The Charleston Breast Center was among the organizations to fold or be absorbed by others.

Some organizations, such as Lowcountry Orphan Relief, saw no loss in donations but were hit with a surge in demands from the needy. Its income held steady at about $378,000, but the group now serves nearly double the number of children it helped two years ago, director Lynn Young said.

"The economy has created such havoc with families who can't afford to feed and clothe their children," she said.

Nearly all nonprofits told stories of increased responsibilities and doing more with less, but some clearly weathered the storm better than others. Their accounts mirror national trends as well.

Shifting priorities

Belton, of Florence Crittenton Programs, said her board was looking seriously at closing the 114-year-old agency after revenues plummeted 22 percent during the recession. Instead, the agency laid off one-third of the administrative staff, turned two full-time employees into part-timers and cut janitorial services.

"I would say we're surviving, but it has been tough," Belton said. "I have had a number of donors say they plan to focus on basic needs --food and shelter."

Jermaine Husser, executive director of the Lowcountry Food Bank, has seen that shift in priorities among donors as well. The food bank took advantage by spreading the message that food is a priority.

The strategy paid off handsomely. The food bank's revenues rose almost 45 percent to more than $23 million from 2007 through the heart of the recession.

Husser, in turn, took home a 23 percent increase in compensation. He said he got the raise because his board determined that his compensation ranked below market level for executives in similar positions. His compensation was increased to $106,000 a year.

"We've been very fortunate in this economy," Husser said.

Charities with strong name recognition, such as Trident United Way, also did well. United Way recently announced that it had set a fundraising record for the 13th straight year, raking in $10.5 million in donations in its latest campaign.

"We are one of the few United Ways in America raising more money that it did last year and meeting its fundraising goals," spokesman Barry Waldman said. "I think the message of this United Way is we focus on issues people really care about."

The organization's latest tax records show United Way's overall revenues dropped about 8 percent to $9.8 million between 2007 and 2008. Waldman said donations remained strong in those years, but the organization did lose some investment income due to stock market losses.

Trident United Way President Chris Kerrigan's annual compensation declined about 2 percent in 2008, settling in at $228,459, records show.

Some organizations continued to reward their top officials even as revenues slacked off. East Cooper Community Outreach, which helps the poor with food, clothing and health care, saw revenue plunge nearly 36 percent between 2007 and 2009, when the agency brought in $971,605.

At the same time, Executive Director Jack Little's annual compensation climbed 26 percent to $69,148.

Little said the large revenue drop shown in tax filings mainly reflected lost investment income during the recession and changes in federal reporting requirements for donated services. He said community contributions and other revenue have remained strong.

The nonprofit has seen a double-digit revenue increase this fiscal year while continuing to serve many more people hard hit by the recession, he said.

As for the bump in his earnings, Little said that was the result of a salary study that showed he wasn't being paid comparably to similar agency heads, who made an average of $73,000. "So I'm still not making what an executive director of what an agency with our staff and size makes."

A price on value

Executive pay can be a tricky subject for nonprofits. Organizations that depend on community contributions don't want to seem too generous in the eyes of donors, but they also must remain competitive with other nonprofits and for-profit businesses.

And value can be a difficult thing to measure. Ultimately, a top executive is worth what an organization is willing to pay, like everything else in a free market.

In 2006, pay for the chief executives of the biggest U.S. charities rose 4.6 percent on average, more than twice the rate of inflation, according to an annual survey by the Chronicle of Philanthropy. That all changed with the recession, and pay for nonprofit executives remained largely flat in 2009, the chronicle reported.

The highest compensation among local anti-poverty groups belongs to Goodwill's Robert G. Smith, who started out as a truck driver with the agency 30 years ago and rose through the ranks to become its regional president and chief executive officer in 1998.

He oversees an 18-county region with 20 retail stores and 10 job links centers, part of a training and employment network that assisted more than 22,000 people last year.

Smith said the compensation figures can be misleading. Of the $228,000 credited to him in 2009, $160,000 represented his base salary. The rest was made up of medical and dental benefits, retirement funds, a vehicle allowance and other perks, he said.

He said his income is appropriate for the work he does to boost earnings and expand Goodwill's reach.

During his tenure, revenues rose 10-fold, from $4.5 million in 1998 to a projected haul of $45 million this year. Even with his six-figure earnings, Smith said Goodwill returns more than 90 cents of every dollar in revenue to the community in the form of programs and services.

"I know I work hard and I make sure to put my best effort in every day," he said. "The growth of the organization and the thousands of people we are able to reach speaks for itself."

Smith said Goodwill has fared so well because it learned to operate like a business, generating revenue from ventures such as retail stores that sell donated goods. The organization, which receives no federal or state dollars, also understands that it needs to pay a decent wage to hire the best and brightest talent to sustain its rapid growth, he said.

"We have to make sure we are competitive for that talent," he said. "Performance needs to be rewarded."

Just getting by

William Jenkins understands that logic -- he just doesn't have the money to put it into action at his nonprofit, the Father to Father Project in North Charleston. The program, which helps non-custodial fathers get back on track with jobs and their children, saw revenue drop 15 percent during the recession.

Jenkins, whose salary is $44,854 a year, said he has tried to seek out new money to replace lost grants, but can't compete with larger organizations that have professional fundraisers to help their cause. "The competition for funds is pretty fierce," he said. "We haven't had layoffs, but there have been no raises in quite a while."

Rural Mission also has suffered from a low profile, despite more than 40 years of serving poor, elderly and immigrant families on the sea islands and in the Hollywood area, Executive Director Linda Gadson said.

The nonprofit has brought in more money in recent years, but debts and expenses have caused the organization to end those years in the red. The group's net assets shrunk from $265,878 in 2007 to $74,660 in 2009, records show.

Rural Mission recently had to lay off four employees, and Gadson has watched her annual compensation drop from $106,940 in 2007 to $91,130 in 2009. She expects that pattern to continue.

"We're talking about how, and if, we are going to survive," Gadson said.

Gadson acknowledged that the agency hasn't lived within its means for quite awhile. She said Rural Mission borrowed money just to stay alive in past years or to provide medication, home repairs and other assistance to people in tremendous need.

Heading into the recession, however, Rural Mission's top four employees were receiving $70,000 or more in compensation -- at least 47 percent more than the median household income in Charleston County.

One dollar out of every five the agency received that year went to pay those four salaries, records show.

Gadson makes no apologies for taking a six-figure compensation package before the recession, even if Rural Mission was running a nearly $268,000 deficit at the time. Gadson said she's single, has no pension and deserves compensation for the 38 years she had devoted to the organization.

"When you work anywhere that long, you want to be appreciated in some way," she said.

Some agencies took a more conservative stance on pay even though they weathered the downturn fairly well.

The Dee Norton Lowcountry Children's Center, for instance, managed to rebuild revenue through fundraising and grants, netting $1.8 million in revenue in 2009.

While spending on services to help abused or neglected children increased as well, salaries went up much less, and Director Elizabeth Ralston's annual compensation increased only marginally, to $90,640.

"Raising salary of our staff is not in our mission," Ralston said. "One does not look to increase our salary during a time of great recession."