March Of Dimes Grappling As 80th Birthday Approaches

September 27, 2017       Mark Hrywna      

Ask anyone older than age 70 why former President Franklin D. Roosevelt’s image adorns the dime and you’ll probably get a correct answer promptly. If your audience is younger than 40, maybe not.

Roosevelt, the founder of the present-day March of Dimes, graces the U.S. 10-cent piece. March of Dimes wasn’t called that when it started in 1938, but rather the National Foundation for Infantile Paralysis. Within 20 years, the charity had helped to discover a vaccine for polio, which afflicted the nation’s longest-serving president. And with polio all but eradicated, March of Dimes changed its mission to encompass birth defects in general. Lesser- known efforts by March of Dimes led to the practice of women taking folic acid and the Apgar score for newborn infants.

The organization will mark its 80th anniversary next year and by then, the White Plains, N.Y.-based charity will be going through yet another battery of significant changes.

Amid declining revenue making balance sheets go red, Stacey Stewart was announced as the next president and CEO almost a year ago. She transitioned into the organization in November before officially assuming duties in January, only the fourth president in the history of March of Dimes.

“There’s a time for everything,” Stewart said during an interview last month. “The board decided if we don’t make a change to transform, we won’t be on a path for growth,” she said.

Former president Jennifer Howse, Ph.D., held the position since 1990 and had a background in academia and medical research as the organization focused on investing in prematurity research centers. Stewart served as executive vice president, community impact leadership and learning at United Way Worldwide until September 2012 when she became U.S. president of United Way Worldwide, ahead of a realignment at the workplace giving organization. She holds an M.B.A. in finance and previously was chief diversity officer and senior vice president for the Office of Community and Charitable Giving at Fannie Mae, as well as president and CEO for the Fannie Mae Foundation.

“It was clear coming in to the organization, we really were primed for significant transformation,” Stewart said. “Every organization has to go through a process to ensure we’re on a strategic focus on mission, with clear, measurable outcomes, about addressing critical priorities that we see,” she said.

To bring expenses in line with revenues, March of Dimes reduced staff within the past year and also closed its pension plan to new employees, effective at the end of 2016.

“It was clear we had been operating in ways that we could do so much more to use our resources more effectively and efficiently,” Stewart said. Each office didn’t need to do back-end functions such as donation processing and administration support, instead those functions have been centralized.

“I think a lot of organizations that have been around awhile are all in the midst of this level of transformation and it is because the world has changed around us,” Stewart said.

March of Dimes has become a much more virtual organization, leveraging technology in different ways, such as video conferencing or an internal Facebook page that allow employees to connect with each other and share information more effectively. “It allows us to connect better but also find ways to be more efficient and communicate better,” said Stewart, adding that it’s also a way to get younger employees to feel more connected to other employees and the mission.

Stacey Stewart

It was clear coming in to the organization, we really were primed for significant transformation. — Stacey Stewart

More than 100 positions have been eliminated since the beginning of the year, bringing the total head count to between 900 and 1,000, including 150 or so at the national office. “That’s been a huge part of getting financial stability back on track,” Stewart said.

March of Dimes has reported revenue deficits each year since at least 2012, ranging from $9 million to $27 million, and last year net assets slipped into the red at $13 million. The reduction in staff in November 2016 incurred about $2.2 million in severance costs, according to financial statements. Certain benefits were eliminated for active and retired employees who didn’t meet eligibility requirements, the impact of which will be seen over the next few years. Some of the change in net assets last year related to changes in the pension and postretirement accounts of $20 million, according to financial statements.

The organization has put its White Plains, N.Y. headquarters up for sale, which should help with cash flow. The 113,000-square-foot facility is located about 30 minutes from Midtown Manhattan.

March of Dimes acquired the 11-acre property in 1970 at a time when employees regularly commuted to the suburban office parks. Today, telecommuting, video conferencing and other technologies make it easier for employees to work remotely. The organization doesn’t need as much physical space and is sitting on a valuable asset that’s not well utilized, Stewart said. An Albuquerque, N.M., office shut down in May, with employees now telecommuting. In all, March of Dimes has 103 offices nationally.

The organization has put its White Plains, N.Y. headquarters up for sale, which should help with cash flow. The 113,000-square-foot facility is located about 30 minutes from Midtown Manhattan.

Stewart declined to go into specifics as to asking price but said there has been significant interest. According to a Westchester County office market report by real estate firm Newmark Knight Frank, the top first quarter sales transactions this year went for $21 million ($117 per square foot for 180,000 square feet) and $15.9 million ($103 per square foot for 155,000 square feet). At the high end of the market, that would be approximately $13.2 million for the campus though it’s unclear how comparable those sales were but it likely would fetch more if it follows recent trends of office parks converting to residential development.

The sale also is an opportunity to think about where the organization’s national presence ought to be, Stewart said. “If you want to be a leading voice for mothers and babies, it makes more sense to be in the capital than White Plains,” she said. The decision to move the national office to Washington, D.C., was made by the board earlier this summer, according to Stewart. The plan is to make it happen in 2018, in conjunction with its 80th anniversary. She is optimistic that the sale could be completed late this year or early next year, with a new office in D.C. by the second or third quarter of 2018.

The headquarters sale was one of the outcomes of a strategic realignment study started in 2014 to get a handle on the organization’s physical presence. March of Dimes needed to go through the process to figure out how it could still have a strong presence but in a more effective and efficient way, Stewart said. That was the start, she said, and the organization has continued to re-examine its financial picture on an annual basis.

March of Dimes’ signature fundraising event, March for Babies, is more than 40 years old and while it grossed more than $85 million last year, that was down 7 percent from 2015 and 16 percent from the $110 million a decade ago. Event fundraising events like walks and races are a much more competitive space today compared with even five and 10 years ago, part of the reason for a continued decline in revenue and participation sector-wide.

March for Babies accounts for less than half of contributions to the charity. More than $153 million in contributions were reported last year, down about 17 percent from five years ago, and total revenue is down from $219 million in 2012 to $172 million last year.

The organization aims to diversify revenue beyond events. Stewart emphasized expanding nascent planned giving efforts as well as major giving focused on high net-worth individuals, and growing its digital presence.

The Roosevelt Society was instituted as a new level of giving, with individuals committing at least $50,000 over three years. Stewart is confident the society will reach its goal of 80 members by its 80th anniversary.

Digital engagement will move to a mobile-first strategy for fundraising as well as advocacy. Direct mail will continue to play a significant role, Stewart said, because it’s still very effective but they’re also investing more in digital to reach potential new supporters in their 20s and 30s. It would not be wise to “pivot out of that too quickly,” she added, and instead invest in digital while keeping direct mail in the near term. A big difference might be seen five to seven years out, she added.

An important pillar of diversifying revenue will be to attract new and younger (future) donors. “That’s really an effort to make sure we tie into the strategic work we’ve been doing, go back to making sure we’re clear on the purpose of why we exist, why we matter,” Stewart said. March of Dimes has enlisted several firms in what she called the “R&D stage” to create its “Why” story, including consulting firm EY, B-corporation Purpose, and author/futurist Simon Sinek.

Stewart aims to present not only a new public face but also inspire employees, donors, volunteers to focus on the importance of March of Dimes and its work. The name March of Dimes has been around a long time and has equity, she said, but they are in the process of researching how the brand can be refreshed in a compelling way.

“We want to ensure that we have clarity internally and externally about why we exist, and our vision,” Stewart said. The board is “looking at a lot of options that are fresh, innovative approaches,” she said, though she doesn’t expect a full-blown name change. The organization declined to provide an estimate as to the cost or budget for developing the new brand.

March of Dimes is an interesting case because it was successful in changing since the days when polio was eradicated, effectively solving its original mission.

It’s not easy for nonprofits to change their organizations and missions entirely, according to Kirsten Grønbjerg, Ph.D., Efroymson Chair in Philanthropy at the Lilly Family School of Philanthropy at Indiana University. Nonprofits have a set of values and programs, staff expertise, and fundraising connections, among other things, that are all tied to a particular mission. “When you change that, you endanger those connections. So it is extremely difficult for organizations to do that successfully,” Grønbjerg said.

It’s more common to see peripheral changes. Organizations that originally spawned in response to the HIV/AIDS crisis during the late 1970s and 1980s have changed to an extent in response to advancements in treatment and survival rates in the ensuing years, she said.

The YMCA now goes by simply The Y, and even in the commercial sector, KFC is no longer Kentucky Fried Chicken. “Those more generic names provide greater opportunities for organizations to tinker at the margins without necessarily changing what they’re doing,” she said. March of Dimes dropped Birth Defects Foundation from its name years ago, instead focusing on “healthy babies.” That allowed the organization to stay somewhat connected to their previous purpose but also expand it, she said.

“The problem is, if you really want to make a significant change in mission, it’s almost as if you’re starting a new organization,” Grønbjerg said.

Sometimes transformations are brought on by new technology or changes in the environment. “Organizations have to become savvy at that new technology if they’re going to survive. If they don’t, they’ll just fade away,” she said.

Membership organizations are among those nonprofits that have faced challenges in recent years, Grønbjerg said. “The key factor is you have to expect every year you’re going to lose members,” she said, whether it’s because they die, get sick, move or simply lose interest. “You constantly have to be recruiting new members, very much like donors; you’re going to lose donors and you’re going to lose members,” she said.

“There’s a real tension there. This is where fraternal organizations have had a difficult time. They have become dominated by older people, by that same token, they become less attractive to younger people,” Grønbjerg said. People have a tendency to prefer groups that are somewhat similar to themselves, with similar values to communicate and understand. “Over time, that may be difficult to maintain,” she said. “Having some level of heterogeneity allows you to adjust with the times,” she added.

“It’s pretty universal that people want babies to be born healthy,” Stewart said. But people don’t realize the bigger problem, she added, including 380,000 babies born too sick or too soon, and another 120,000 born with birth defects, often because they’re premature.

“We think we have a compelling story to be told, what it means to have a world in which all babies can be born healthy, and that’s especially true in communities of color,” Stewart said. Among industrialized nations of the world, the United States has some of the worst rates of premature births, infant mortality, and maternal mortality. “That’s where March of Dimes fits, to understand these issues and what’s at stake.”

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