The New Non-Profit Kingpins
As SDC declines, groups like Community Advocates and Next Door are on the rise.
When a young Joe Volk started working with Community Advocates in 1980, it was a tiny agency helping the homeless with a budget of about $22,000. By last year it had grown into a $16 million organization with a broad umbrella of programs, all overseen by executive director Volk, with most of that growth coming in just the last six years. Community Advocates is now a major player in town.
Its rise has come during the same period that the Social Development Commission or SDC has gone through a near meltdown. It stands as a horror story of how a non-profit can fall apart.
Founded in 1963, SDC was established as Mayor Henry Maier’s way of handling (or some said ignoring) poverty and quickly became the dominant non-profit in town, winning countless federal grants and subcontracting the money to various smaller non-profits. It was the largest anti-poverty social service agency in the state. For 45 years SDC ran the largest Head Start program in the county, serving 3,000 children a year. It was also a major player in the state’s Wisconsin Works or W-2 program.
As far back as the mid-1990s, SDC began to have periodic management problems and board squabbles, but its sheer size and funding clout seemed to carry it along anyway. But in the last two years its problems have begun to catch up to it.
For a couple years, SDC has had vacancies and turnover on its board of directors. Board members had been dissatisfied for some time with the leadership of its longtime CEO Deborah Blanks, who finally retired last January.
Jan Stenlund came in as acting CEO but made it clear she would not serve for long. The board then hired lawyer Hannah Dugan as interim CEO in March. But she resigned after just three months, saying she disagreed with the board’s decision to try to appeal the federal government’s decision to deny a Head Start grant to SDC.
Even as the agency was playing musical chairs with its CEOs, its board members were regularly quitting. “After only two months on the board, Magda G. Peck, founding dean of the Zilber School of Public Health at the University of Wisconsin-Milwaukee, resigned,” reported Georgia Pabst of the Milwaukee Journal Sentinel, who’s done a good job of covering SDC’s problems. Peck had said she “sensed an underlying lack of trust among board members” and “a lack of transparency” and “accountability. ”
In June, Gerard Randall was elected head of the board, becoming the fifth board chair in a year. Randall has been embroiled in considerable controversy over the years, as I’ve previously written.
Randall soon announced that a search was underway for an interim and permanent CEO. But since then nothing has happened on that end, essentially leaving Randall in charge. He has held a number of closed door sessions with board members, while he “refuses to answer any questions posed by the Milwaukee Journal Sentinel concerning the commission, its plans or prospects,” Pabst has reported.
Adding to all this turmoil was the evaporation of SDC funding. After state officials and reports criticized SDC’s work as one of the local administrators of W-2, it was denied funding, a loss of nearly $11 million a year. Next it lost its annual Head Start contract, some $22 million in funding, after federal officials had cited concerns about the health and safety of children served by SDC and problems with its record-keeping and management.
As a result, the organization’s budget has shrunk to about $16 million, down from $50 million in 2012, and the number of employees has dropped from 400 to about 150. How the mighty have fallen.
Instead the Head Start money for Milwaukee went to such groups as Next Door Foundation, the Council for the Spanish Speaking and Milwaukee Public Schools.
Next Door Foundation had already been growing. Its annual federal tax forms show its budget grew by 33 percent since 2008, rising from $7.2 million in 2008 to $9.6 million in 2012. The Head Start grant it received, of $6.9 million, will jack up its annual budget by 78 percent.
As Milwaukee Neighborhood News Service has reported, Next Door has purchased a new facility for its Head Start program, and aims to serve more than 1,000 students. Next Door will also launch an innovative, home-based Head Start program, the first of its kind to target 3- and 4-year-olds in Milwaukee. As part of the program, “bilingual, ‘culturally matched’ staff members will make weekly 90-minute visits to children’s homes 36 weeks a year, leaving materials and instruction for the family,” Next Door’s executive director Carol Keintz explained.
Meanwhile, Community Advocates had taken over another SDC program. About three years ago SDC transferred its Family Support Center for homeless families, located at 31st and Mitchell, to Community Advocates and sold the agency the building for $550,000.
By that time, Community Advocates had been in an expansion mode that went back years. In 2007 it merged with the Milwaukee Women’s Center, which is now operated under the Community Advocates umbrella. In 2009, the organization similarly absorbed Horizons, a women’s drug and alcohol treatment center. In 2010, Community Advocates took over the management of a homeless program that had been run by the Red Cross. In 2010, Community Advocates brought into the fold Justice 2000, a group that works on criminal justice issues (including diversion of lesser offenders out of the traditional courthouse process).
Perhaps the most notable addition, in 2008 Volk approached David Riemer, a former aide and policy advisor to Mayor John Norquist and Gov. Jim Doyle, to head up a new program at Community Advocates, the Public Policy Institute. The idea of a non-profit community group doing research on public issues is quite original. The notion, says Volk, is to find public policy solutions “to issues that effect people who are coming through our door.”
But why all the expansion and absorption of so many other programs and agencies? Volk says it came down to one issue: “We are very mission driven. What we’re seeing is poor people who come in through the door have relatively complicated needs.”
“There have been some growing pains,” Volk says. “Our biggest challenge was keeping the culture of the organization, what was a culture of keeping things relatively simple, without having five sign offs and other complications for those we serve.”
In absorbing so many other programs, Community Advocates has lived up to a goal long pointed to by local foundations, the Greater Milwaukee Committee and other groups: they have argued Milwaukee has too many non-profits and that they should seek mergers and consolidations.
But they haven’t put their money where their mouth is, says Volk: “These kinds of mergers cost money, for accountants and lawyers to handle the consolidation, and for other costs. But ironically, these same groups that have called for this to happen rarely step up to fund this.”
-Much as with Race to the Top funding for schools, where the administration of President Barack Obama tried to leverage education reform with that money, leaders of the federal Head Start program have also called for more accountability and improvements in the program. Thus, for the first time in history, local agencies across the country seeking Head Start funding had to competitively bid for the program. That was death for SDC.
-Gerard Randall has become the man you can depend on to explain nothing. Just as he refused to explain anything about the funding he gets from Milwaukee Public Schools, so he has refused to disclose any details about SDC, a tax-exempt organization that taxpayers in essence subsidize. In both cases, you have to ask why the organizations tolerate this.
-It’s typical for executive directors to jack up their salary proportionately as their organization’s budget has jumped. But while Community Advocate’s budget tripled, rising from $5.2 million in 2007 to about $16 million in 2012, Joe Volk’s total compensation of $130,000 barely increased, rising to $137,000. “At some point,” says Volk, “how much money do I need?”
Update December 10: Questions have been raised about Joe Volk’s leadership, as you’ll note in the comments section below. I later addressed these issues in the second item of this column.