In this week’s follow-up case study to the “pre-existing condition” vulnerability, we examine the closure of three locations in the Y.M.C.A. of Metropolitan Chicago network as a result of their pre-existing conditions. While the greater Y.M.C.A. organization is not in danger of closing at the moment, these individual organizations offer quality insight into how a pre-existing condition can suddenly cause significant financial strain and lasting damage to an organization. The Y.M.C.A. of Metropolitan Chicago was aware of the issues facing three of their locations but allowed them to operate at a loss for several years without making any large decisions (renovate, close, etc.). This lack of urgency resulted in the loss of resources and the near-instant need to permanently close three community Y.M.C.A. locations when COVID-19 shutdowns began. There is some nonprofit strategy that organizations can glean from this case study.

The History

Announcing the temporary closure of all Y.M.C.A. locations in Chicago on March 16th, the Y.M.C.A. of Metropolitan Chicago quickly moved to make three of those closures permanent for struggling Y.M.C.A. locations by May 29th: the Leaning Tower Y.M.C.A. in Niles, the Lattof Y.M.C.A. in Des Plaines, and the Kroehler Family Y.M.C.A. in north Naperville. These three locations suffered from pre-existing conditions, namely deficits, that made the decision to close them essential to the greater health of the Y.M.C.A. when the pandemic hit. These locations were losing money for the greater Y.M.C.A. of Metropolitan Chicago before the pandemic, and their losses only compounded significantly when the shutdown occurred. They are a prime example of how a pre-existing condition can immediately grow to jeopardize an organization when disaster strikes. It also exemplifies how making difficult, but corrective, decisions can quickly halt the outflow of resources caused by these conditions.

These three Y.M.C.A. centers have been operating at a loss for several years, mainly due to the rising costs of maintaining aging buildings, but also because of declining membership and program enrollment. They were not shut down immediately in hopes of building back membership and possibly restoring the buildings. The idea of operating at a loss in order to continue to serve a handful more individuals seems acceptable in the absence of an economic and public health crisis. Adding in the pandemic and economic fallout, the organization lost thousands of dollars over those closed facilities and much more over the previous years. A large organization like the Y.M.C.A. may seem too big to fail, but losses like these combined with the fact that they’re ineligible for PPP loans because they employ over 500 employees reveal their vulnerability. Before the pandemic, affiliates were typically operating on margins of 3% or less, and now Y.M.C.A. revenues are down 30% to 50% nationwide. With these thin margins, operating several branches at a loss places the larger network at risk. This example shows how a seemingly minor pre-existing condition can quickly spin out of control.

Conclusion

While losing these community centers that support fitness, community gatherings, youth mentorship, and so much more is disappointing, the Y.M.C.A. of Metropolitan Chicago must remember its responsibility to the greater community. The leadership has a responsibility to its mission and community to continue serving in a consistent and stable manner. If the organization takes risks by holding on to failing portions of its network, it jeopardizes the greater network of Y.M.C.A.s. Endangering the long-term health of the organization compromises the Y.M.C.A.’s mission to a greater degree than having to restructure a small portion of its service offerings due to the closure of three locations.

Need help crafting your organization’s strategic plan? The expert consultants at NMBL Strategies possess over 30 years of nonprofit and small business leadership experience. Reach out today to NMBL Strategies to learn how we can help develop a unique strategic plan to place your organization on the path to success.

TALK to NMBL Strategies!

Featured