Nonprofit Fighting a Financial Crisis

The Valley Family Center, a nonprofit organization that provides counseling and educational services to low income families and individuals, is struggling to keep its facility and programs alive after hitting a financial roadblock. After being forced to cut staffing as well as its programming, the organization is now faced with the uncertain fate surrounding its 24,000 square-foot facility in San Fernando, which served some 3,000 individual clients last year. Sister Carmel Somers, executive director of the VFC, said several factors including a bad economy and unforeseen costs contributed to its current state. “We are victims of an economy that has gone haywire,” Somers said. This year, the organization exhausted its savings and was forced to dip into its operating budget to pay its bills, which include a monthly rental expense of $14,500. Since its inception in 1987, the Valley Family Center has provided various programs such as counseling for families and individuals, parenting education and services for victims, children and perpetrators of domestic abuse. Program fees are based on a sliding scale, according to the client’s ability to pay. Somers said the economic downturn has affected its clients’ ability to pay service fees. “In the past, people who were able to pay more offset those who paid less,” Somers said. “Now everyone’s coming in at the bottom (of the sliding scale).” Jay Goldberg, chairman of the board of directors at VFC, said the organization has always been “well managed with sufficient money put away. But it was never an organization that was able to bring in enough revenue to pay all of its bills,” he said. Goldberg said an ideal solution to the organization’s financial instability would be to sell the building to an investor who would be willing to lease it back. VFC officials have met with several potential investors that have shown interest in the buildings, although none could be disclosed. A major component in the nonprofit’s financial crisis was the recent expansion of its San Fernando facility, which has been its home since 1996. After the 1995 murder of Nicole Brown Simpson, ex-wife of professional football player O.J Simpson, the issue of domestic violence moved “front and center,” Somers said. The organization’s services and client base increased at a rapid rate, causing it to outgrow its 10,000-square-foot facility and invest in an expansion project that would double its space. Costs to expand the building were initially quoted at $3.6 million in 2004, when construction began. With the coming of Hurricane Katrina in 2005, costs for wood and steel skyrocketed along with the price tag on the project. The final cost of the building increased to $5.2 million dollars, placing the VFC in an unforeseen financial predicament. “We were on the horns of dilemma,” Somers said. “We had to decide whether to leave or finish the building.” The project was finished in 2007 with the help of a $2.5 million loan from Pacific Western Bank and aggressive fundraising efforts. The daunting task of repaying a substantial loan became magnified as the country’s economy began to take a turn for the worse. Resources that typically served as a financial outlet for the organization began to cut back on their donations and some shifted their focus to other causes that address immediate needs such as shelter and food, Somers said. Services pertaining to mental health have had to take a back seat. “Grants we would’ve received previously for $20,000, we are now getting for $10,000,” Somers said. “We have to find other ways to make ends meet.” This year, the state implemented cuts in aid to crime victims, which further complicated the organization’s financial troubles. Lorena Tercero-Villalba, a licensed therapist at VFC, said VFC staff members are not the only ones being affected by the organizations financial troubles. Due to the cuts in staffing, VFC will be unable to accommodate many of its regular clientele, Tercero-Villalba said. The organization is currently making arrangements to transfer clients to other centers that will see to their needs. “It’s a critical time for everybody,” Tercero-Villalba said.