The purpose of this letter is to clarify points regarding the financials of Brunswick Family Assistance (BFA) raised in the article of September 8, 2016, entitled ‘Personality conflict’ and financial issues cited before BFA director quits.
The Mission of BFA for the past 35 years (founded in 1981) has been to assist individuals and families in crisis (financial) by providing emergency assistance. During my 4 year tenure as Executive Director (July 1, 2012 until June 30, 2016) we achieved this mission by providing record levels ($299,062 for ‘15) of client direct assistance. This level of assistance is 60% greater than in 2012 and the agency is on target to provide at least the same level this year. All client assistance is based upon documented financial need. Direct emergency assistance is in the form(s) of rental and emergency sheltering, utility (electric, water and gas), and paid to the provider of the service on behalf of the eligible client. BFA also provides indirect assistance in the form of food from our pantry and quarterly USDA commodities distributions, back to school book bags (with an outfit of clothing, including a pair of shoes and requisite school supplies), and Christmas distribution for children and seniors. BFA has provided assistance to approximately 20% of Brunswick County residents.
BFA (a private, nonprofit agency) receives funding from the generosity of the private sector: individuals, faith-based and civic organizations; foundations, and businesses. In 2015, BFA received, 79% of our funds ($723,690) from the private sector and in the same period 21% ($196,204) of funding from the public sector: federal and state (county and municipalities). We are and continue to be good stewards of these funds as attested to in our audited financial statements and our federal 990 filing, available for public review (see the website: brunswickfamily.org).
BFA manages the business using a strategic plan and an annual budget of anticipated future revenue and expenses as a guideline. For this fiscal year, a balanced budget was planned. To date (through August), we are slightly under our budget estimates for revenue (approximately 5%) and over expense projects (approximately 2%). The shortfall in revenue is primarily due to unanticipated funding cuts from the federal government (FEMA for the Emergency Food and Shelter Program). These funds are allocated to all counties in North Carolina and redistributed to various nonprofits (such as BFA) for direct use in client services In 2012, those funds amounted to $30,000 and in 2013, $27,500. In 2014 and 2015 those funds were reduced to approximately $7,500. Even though BFA has been negatively impacted by these significant cuts in federal funds, the Board authorized management to sustain our level of assistance. This decision negatively impacts our “bottom line” by essentially drawing down (or impeding the growth) in our surpluses. The additional funding authorized by the board to make up for the federal funding shortfall was $20,000 in 2014 and $45,000 in both 2015 and in this current year.
This shortfall shall be more than adequately covered by surpluses from prior years and set aside for just such potential mismatches of income/expenses. (Note: during the period of 2012 through 2015, while increasing our assistance to individuals in need, we increased our net equity (surplus) also by 60%). A surplus for a nonprofit (or net income/retained earnings for a profit business) is absolutely necessary to ensure long term viability to cover year to year problems or major uncontrollable events such as a hurricane.
Like all organizations (profit, nonprofit and government), we are subject to market conditions beyond our control. Traditionally we analyze our business performance (financials) on a current year compared to the prior year. Such an analysis is important to understand the true happenings within the business. However, one aspect of BFA revenue, documented historically, is the seasonality of revenue. The summer months are very low months for income. Further, comparing fiscal year 2015 (a record year for revenue) to this year does accentuate variances. That is the reason it is important to use a longer term perspective (2 to 4 years) to understand performance and trends, while being attentive on a daily and monthly basis to monitor performance versus budgets. BFA management analyzes our financial status daily, and reports, in detail, to the board every month.
Now a brief word about bonuses. Many persons may equate bonuses to those corporate fat cats who are publically identified as having received “big” bonuses, often in spite of poor organizational performance. Be assured, no BFA management personnel is highly paid. The small bonuses we did pay (amounting to 5% of total base salaries) could have been eliminated (or perhaps rolled into base salaries). However, bonus plans allow the opportunity to encourage desired behavior and outcomes, above and beyond the normal content of the position. Typically employee reviews are done in the last quarter and bonus or base increases are then determined by a number of factors, including performance against goals and financial ability to pay. One year ago, we hired two Program Managers. As the annual review for me, the Executive Director has always been done around the anniversary date of my hire (summer); I chose to do the annual review of our 3 other salaried personnel at the same time for the following reasons: 1) to have all managers on consistent time sequence and 2) since, a new Executive Director would NOT have been well positioned to evaluate performance. This decision and the performance evaluations and recommended increases were approved.
One final note. Reference was made to “mismanagement” of a HUD grant for a supportive housing program, which resulted in the grant not being renewed. To put this in perspective, this grant impacted 4 individuals and the funds represent 4% of our total income (and expense) budget. It was not mismanaged and in fact a normal review of BFA conducted by the HUD field office of BFA (and other grant recipients) occurred the last 2 weeks of June. BFA passed this review of program management with “flying colors”. The decision to not renew this grant was due more to changes in HUD directives and priorities within the tri county Continuum of Care (COC) to which the BFA grant was situated. The 4 individuals potentially affected, were more than equitably and humanely treated and placed in other desirable housing arrangements.
In conclusion, the employees and volunteers (including board members) who passionately believe in and support the Mission of Brunswick Family Assistance, are deeply distressed that this unnecessary and negative press will adversely impact our fund raising and thereby our ability to fulfill our mission. Without funding, we simply cannot support our neighbors in need. I humbly and respectfully beseech you think and act positively toward BFA. Thank you.
Fred Stephens, retired BFA Executive Director