YMCA to shrink operations in light of $30M debt

With a debilitating debt of more than $30 million threatening its existence, the YMCA of Metropolitan Milwaukee is exploring ways to tighten operations and refocus priorities.

 

If the nonprofit organization does not devise and roll out a restructuring plan soon, it will not have enough funds to operate by this fall, according to Megan Hakes, executive vice president of Reputation Partners, a Chicago, Ill.-based public relations firm representing the Y.

“This is a very serious situation,” Hakes said.

The Y, which has promoted healthy living and social responsibility for more than 155 years in southeastern Wisconsin, currently operates two camps and 10 facilities in the region. The organization has presented a restructuring plan to its banking partners to shrink the scope of its operations.

“What we have proposed is a dramatically smaller, more focused Y,” Hakes said.

The Y is not disclosing the details of its proposition as it has not moved forward on any final decisions, Hakes said. However, the organization is considering closing some of its centers in southeastern Wisconsin and revising its programming, according to Hakes.

“We are looking at all of our programming to make sure we are focused on areas where we can have the greatest impact and…on areas that are central to our mission,” she said.

With a restructuring plan in development, the organization aims to “return the Y to a sustainable footprint well into the future,” Hakes said. That will entail establishing both a new balance sheet and a new operating model “that allows the Y to again more meaningfully reinvest in its centers, reinvest in its programming and reinvest in its people,” she said.

The organization’s massive debt is the result of several factors and “an accumulation of issues built up over time,” according to Hakes.

Along with the lingering effects of the Great Recession, a continuous decline in membership has hurt the Y with an average decrease of five percent per year since 2011. A decrease in philanthropy has also compounded debt totals. According to Hakes, philanthropic contributions are down 25 percent from where they were in 2010.

“We are simply at a point where we must implement a lasting, sustainable solution that will certainly be painful but will hopefully be the right step forward for the Y,” Hakes said.

That solution must be driven by a team effort among banking partners and stakeholders, Hakes emphasized.

“Milwaukee needs a strong Y, but the situation is serious and we can’t go at it alone,” Hakes said. “But if we’re able to overcome these hurdles, there’s so much good that can come from a strong, healthy Y.”

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