‘I Don’t Beg’ : Boys’ Home Takes Corporate Approach

Three years ago, the Pacific Lodge Boys’ Home, a 60-year-old charitable institution that houses and nurtures wayward boys, stood on the brink of financial ruin.

Though the Woodland Hills agency got about 86% of its $3.8-million expenses from government reimbursement, it spent $250,000 more than it took in that year, draining cash reserves to barely more than one month’s budget.

Government funding, derived primarily from the Aid to Families With Dependent Children program, had been frozen at $3,300 a month per resident since 1987 while costs continued to climb. A private giving campaign produced $100,000, but more than half of that was restricted to maintenance and repairs.

Another year of such operating deficits could have crippled one of the county’s three largest residential facilities for juvenile wards of the court. And the worst recession since the Great Depression was just beginning.

Yet, despite the shrinkage of its government support and the stagnation of corporate philanthropy in the following three years, Pacific Lodge has turned the corner.

After two years of severe budget-cutting and aggressive fund-raising, Pacific Lodge is ending 1993 in the black with more than $250,000 in private donations to supplement its government support.

If the success of Pacific Lodge represents a high mark in the struggle of Valley philanthropy, it is by no means a singular story. Even in the worst of times, nonprofit charitable organizations usually find a way to survive and some even prosper.

Survival is often not even an issue. The most dedicated groups, led by people with missionary fervor who are motivated by their awareness of unmet social needs, do what they can with what they have.

Increasingly, though, a shrinking economy and an eroding base of government support demand more than dedicated leadership from the nonprofit sector. To be successful, community-based charitable organizations must behave more like businesses, most observers think.

“My feeling is that in the nonprofit world, agencies are going to have to become more effective and sophisticated as it relates to their management,” said Michael Goodman, chairman of the Organization for the Needs of the Elderly.

This year, despite the recession, ONE completed a $2.1-million building in Van Nuys where day-care programs for children and the elderly will function side by side to bring the generations together. The project began with a $1-million grant from the Mark Taper Foundation. To complete it, the charity drew together an array of financial devices including a construction loan, small corporate and foundation grants and a series of volunteer-run events such as bazaars.

As anticipated, the capital campaign diminished the agency’s fund-raising for operating costs at the same time its government support sustained a $91,000 cut. Some services were sacrificed. The payoff was a cutting-edge program with the potential to attract professional interest and community support into the future.

“In the past, you had visionary and charismatic founders who were extremely good at getting people to respond to the work they were doing and the reason the organization was founded,” Goodman said. “But oftentimes they were not very good managers. As an organization evolves, the necessity for effective business management that you would associate with for-profit enterprise is going to have to be increasingly evident in the nonprofit world.”

The blending of charitable motive with business method is embodied in David Genders, who was hired by the board of Pacific Lodge in 1991 to rescue a foundering institution.

“One of the qualifications was someone that could run the agency as a business,” said board member Evie Greene, who headed the search. “With the state cutting us back and with the shortfall we’re going to have increasing every year, we knew we needed someone who could not only understand treatment but could understand fund-raising and fiscal management as well.”

Trained as a teacher, Genders picked up his fund-raising skills on the job during 15 years as a program director for Five Acres home for abused children in Pasadena and three more at St. Anne’s Maternity Home in downtown Los Angeles.

Just prior to hiring Genders, the board created a new position of development director, and together the board and new management team set out to recruit some big donors.

His secret is aggressive corporate fund-raising with an upbeat message.

“It’s not rocket science, but it’s a very deliberate program,” Genders said. “I don’t send, ‘Help-I’m-in-trouble,’ messages. I send very deliberate proposals. I don’t beg. I don’t play the charity word. I’m really a business. I’ve got a job to do. I’ve got these kids. I’ve got to change their lives. I’ve got to get them off welfare, off the system.”

Genders and development director Patricia Berman went out to the community with an upbeat story about an institution that has been around since the Bekins family staked it with a land endowment in 1927.

The 10-acre lodge houses a maximum of 76 boys age 13 to 18 for an average of 13 months each. About 75% are juvenile offenders with multiple misdemeanors and the rest are from broken or abusive homes. The primary goal is to return them home. Those who turn 18 in the home are emancipated into the community.

Before leaving, they have full-time jobs and are established in apartments with first and last month’s rent paid. The lodge is currently paying stipends to 22 alumni who are attending college.

After years of keeping a low profile, the board of Pacific Lodge decided to begin getting its story out.

“We didn’t want to become noticed in the community,” board member Greene said. “We didn’t want to call attention to ‘bad boys.’ We realized that given conditions today, we had a solution and we had to shout to the community that we are here and we are doing a good job and only if you support us will our communities be safe.”

Even as its message began to get through, Pacific Lodge encountered more hardship. United Way, which had given nearly $75,000 in 1990, cut its contribution to $35,000 in 1992. A large corporate supporter fell away when Transamerica sold its Valley operation.

Worse still, government placements slowed down during last year’s state budget crisis, Genders said. Because of state staffing requirements, he was not able to reduce payroll in proportion to the loss of revenue.

Consequently, he had to reduce his budget by $400,000, closing one unit that wasn’t efficient. The staff went without raises, and maintenance was deferred.

Genders is now crafting new programs that will expand the agency’s services to the community and deliver government support at a higher percentage of his cost. Pacific Lodge is applying for a license as a foster-family agency to recruit state-reimbursed foster families next year. He also plans to start a private school to handle youths who have trouble in public schools.

Still, the agency’s survival depends on an infusion of private cash.

The focus on large donors paid off last year when Pacific Lodge received more than $250,000, including three donations of $50,000 and one of $38,000, all from Los Angeles-based foundations.

Next year, the fund-raising goal will be $500,000, and, like an executive with a zero-based budget, he’ll be starting out from scratch to get it.

“We’ve struck some really nice relationships,” he said. “It doesn’t mean I can go into next year automatically assuming I’ll get a gift from any one of those foundations again. You clean the slate and you start all over. You make the approach and you hope you still have something to sell. It’s like selling widgets. If I’m a company and nobody needs those widgets, then I go out of business.”

He knows that other charities will be out there trying to take his sale away. That’s life today in the business of charity.

“I don’t like the word charity,” Genders said. “We’re really not anymore. We’re businesses.”

As the Need Rises, the Means to Help Declines Demand for the private social services supported by United Way funding has risen along with the unemployment rate over the past five years. But United Way’s contributions to the agencies that provide those services have dropped in almost direct proportion. Unemployment Rates Percentage of workforce who are jobless in Los Angeles County. 1989-’93 1989: 4.9% 1990: 4.6% 1991: 5.8% 1992: 8.0% 1993: 9.6% United Way Funds Totals given to community agencies and projects by North Angeles Region of United Way, 1989-’93. In millions 1989: $5.4 1990: $5.9 1991: $4.8 1992: $3.1 1993: $2.9 Source: United Way of Greater Los Angeles, North Angeles Region