IFAW is latest wealthy animal charity to lay off staff due to cash flow crunch

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From ANIMAL PEOPLE, June 2009:

 

 

IFAW is latest wealthy animal charity to lay off staff due to cash flow crunch

 

YARMOUTHPORT, Mass.--The International Fund for Animal

Welfare in early May 2009 was identified by Sarah Shemkus of the Cape

Cod Times as yet another of the growing number of animal charities

with huge financial reserves to introduce deep budget cuts because of

declining cash flow.

" A recent internal message from IFAW president Fred O'Regan

to employees, obtained by the Cape Cod Times, cited a need to cut

the organization's operations budget from $53.6 million to $36.1

million, " reported Shemkus on May 9, 2009. " Net revenues for

fiscal 2009, which ends on June 30, are down by 32% from what was

budgeted, the message says. " IFAW had total income of $25.6 million

in the preceding fiscal year, and entered the 2008-2009 fiscal year

with $41.6 million in total assets, despite net losses of $4 million.

" Throughout last fall, " Shemkus wrote, " IFAW trimmed its

operations budget without reducing staff. In January, IFAW laid off

10% of its worldwide work force, " including 26 employees at the newly

built IFAW head office in Yarmouthport. The office building was

constructed with the help of a $10 million bequest from Juliana

Kickert, 64, of Sedona, Arizona, who died in March 2006.

" Those cuts left a staff of approximately 140 working at the

headquarters, " said Shemkus. Shemkus anticipated " further layoffs, "

based on the O'Regan memo to staff.

" We now need to find additional structural ways to reduce

expenses so that we operate in a way that is proportionate to our

substantially decreased budget, " the memo said, to make IFAW " a

smaller, more flexible and financially secure institution. "

IFAW did not answer Shemkus' questions before her deadline,

she said, and has apparently not disclosed particulars about the

downsizing to other reporters, but Shemkus did receive a statement

from " IFAW's executive team. "

" At this time we do not anticipate that our finances will

recover during the coming year, " said the executive team statement.

" According to the executive team, " summarized Shemkus, IFAW

has adopted a three-year plan which " will include efforts to

consolidate program and operational services, leverage program work

to generate revenue, rely more on partnerships with other

organizations to deliver program services, diversify sources of

revenue and expand the revenue base in the United States. "

The plan appears to involve outsourcing program activity to

overseas charities such as the Wildlife Trust of India, a longtime

IFAW funding recipient, which can perform high-profile projects at

less cost than staff directly employed by a U.S. organization.

IFAW presently has offices in 17 nations. Most of the

offices have local program partners. Partnership arrangements may be

financially attractive to the parties involved, but as more overseas

charities develop programs attractive to U.S. donors, many are

preferring to work with U.S. affiliates that are focused on the

overseas charities' programs-- like Wildlife SOS.

Founded at about the same time as the Wildlife Trust of

India, Wildlife SOS has had a longstanding philosophical conflict

with WTI over how best to rescue and rehabilitate bear cubs, who

usually are confiscated from poachers and smugglers, or are

surrendered by dancing bear keepers getting out of the trade.

Focusing on obtaining bears by helping former dancing bear

keepers into other occupations, Wildlife SOS now houses more than

500 bears at sanctuaries near Agra, Bhopal, and Bangalore.

Favoring returning bears to the wild, IFAW and WTI in late

May 2009 jointly announced only their third release of orphaned

Asiatic black bear cubs. One of the first two cubs they released was

killed by a leopard in 2005, WTI acknowledged to ANIMAL PEOPLE,

after the Assam Tribune alleged that leopards killed both. Two

released in 2007 survived for at least seven months before losing

their radio collars. Their release was disclosed in March 2008.

 

Financial structure

 

The source of the IFAW cash flow problem--beyond the weakened

state of the U.S. economy--is believed to be essentially the same as

for the Massachusetts SPCA and the Massachusetts Audubon Society,

which disclosed big cuts earlier in 2009: Massachusetts is among

about two dozen states that prohibit drawing down reserve funds that

are invested in stocks and other growth-oriented investments, if the

value of the investments falls below their original value.

Meant to protect charitable endowments against gambling in

investment markets, such legislation has cumulatively put billions

of dollars out of reach of the charities that raised the money.

Educational and medical charities have been far harder hit than

animal charities, few of which have built reserves large enough for

interest and dividends to be a major part of their revenue.

But the MSPCA, Massachusetts Audubon, and IFAW, among

others, came to depend on interest and dividends to underwrite their

operations. A formula popular among charity managers is that

interest, dividends, and profits from securities sales should

ideally be enough to finance the public fund-raising that pays for

program work.

According to their most recent available IRS Form 990

filings, the MSPCA was still achieving this formula as of the end of

2007, despite a 23% decline in endowment value since the end of

2006--but the MSPCA had an operating loss of $15 million in 2008.

Massachusetts Audubon, with financial reserves of nearly

five times the organization's total annual budget, received more in

interest, dividends, and net from securities sales in fiscal year

2007-2008 than it spent on fundraising plus administrative expense.

But the value of the Massachusetts Audubon endowment fell 28% in 2008.

IFAW in fiscal 2007-2008 spent about twice as much on

fundraising as the sum it received from interest, dividends, and

net from securities sales, but still had a net decline in value of

assets of about 8%. The losses included a decline of about $1.3

million in the value of IFAW-held securities.

 

MSPCA shelters

 

Downsizing for the second time in five years, the

Massa-chusetts SPCA on February 5, 2009 announced the impending

closure of shelters in Brockton, Martha's Vineyard, and

Springfield, facilitating layoffs of 38 staff, while eight vacant

positions were eliminated. The MSPCA had operated in Springfield

since 1933, at the present site since 1996; in Brockton since 1945,

at the present site since 1989; and in Martha's Vinyard since 1947.

The cuts left MSPCA with shelters and animal hospitals in Boston,

Centerville, Methuen, and Nantucket.

All three of the former MSPCA shelters are now expected to

continue operations under new management.

Fifty years after the MSPCA opened the first Katherine M.

Foote Memorial Shelter in Edgartown, 23 years after the present

shelter was built after an eight-year fundraising drive led by summer

Martha's Vinyard resident Anna Bell Washburn, the newly formed

Animal Shelter of Massachusetts opened on May 1, 2009.

" The MSPCA sign came down and the last remaining animals were

adopted or sent to the MSPCA shelter in Centerville, " wrote Jim

Hickey of the Vineyard Gazette.

The Animal Shelter of Massachusetts " signed an open-ended

lease with the MSPCA allowing them to rent the building and take over

most of the equipment at no cost, " said Hickey. " The building must

be used as an animal shelter in perpetuity, and the new facility

will no longer receive funding from the MSPCA. The shelter will for

now be owned and managed through a public-private partnership that

includes a nonprofit board and county government. Dukes County

Commissioners have agreed to provide funding to run the shelter for

the next six months. "

The former MSPCA shelter and animal hospital in Spring-field

has been sold to the Dakin Pioneer Valley Humane Society, already

operating an adoption shelter in nearby Leverett and an animal rescue

and rehabilitation center in Greenfield. The MSPCA had closed the

Springfield hospital in 2007, and closed the shelter on March 31,

2009. Paying $1.2 million for the property, the Dakin Pioneer

Valley Humane Society expected to spend several months in renovating

the facilities before reopening on August 1. The former hospital is

to become a sterilization clinic. The Greenfield site is to be

closed, with the Greenfield workload being moved to Springfield.

The MSPCA plans to leave the Brockton shelter on September

30. Brockton shelter manager Kim Heise in late April said " she is

among a group forming a nonprofit that would take over the shelter, "

wrote Maria Papadopoulos of the Brockton Enterprise News, and hoped

to continued operations as an open admission shelter.

But others " have a different idea of how the facility should

be used and we're not being allowed to participate in how the new

organization is going to operate, " ojected Brockton Cat Coalition

founder Marcia Motta.

Motta said " she is forming a nonprofit entity called the Bay

State Animal Cooperative, which would operate a no-kill shelter and

low-cost spay and neuter clinic in Brockton, " added Papadopoulos.

 

Pennsylvania

 

The Pennsylvania SPCA, coping with budget issues similar to

those of the MSPCA, in mid-May 2009 quit trying to sell the

Stroudsburg shelter that it closed in January, and announced that it

would instead lease it for $1.00 per year to either the Animal

Welfare Society of Monroe or the Pocono Animal Welfare Society.

Monroe County in March 2009 asked the PSPCA " to give the

property back to the community, " reported Pocono Record writer Beth

Brelje. " The PSPCA acquired the land for $1.00 in 1951. If it were

to give back the shelter, the land would be deed-restricted and it

would be operated by a nonprofit representing the community. "

" Giving it back is not an option, " responded interim PSPCA

chief executive Beth Ann Smith-White. " We put almost $1 million in

renovations into the building. If for some reason one group fails,

we'd like to have another group come in. Who knows, the PSPCA may

come back in there, " she said.

 

 

--

Merritt Clifton

Editor, ANIMAL PEOPLE

P.O. Box 960

Clinton, WA 98236

 

Telephone: 360-579-2505

Fax: 360-579-2575

E-mail: anmlpepl

Web: www.animalpeoplenews.org

 

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