The parable says not to put all your eggs in one basket. New Chief Financial Officer Jackie Loh of the religious organization Promise Keepers in Denver aims to avoid that problem from the group’s past.
“At present we have two revenue streams,” she said. “In the past, we had only one, primarily with the conference registration.”
In 1996, the shouting voices and raised hands of 1.1 million enthusiastic men filled 22 stadium events, generating $95 million. But as quickly as Moses parted the Red Sea, the organization was destitute and being run by unsalaried volunteers.
The fall was swift and dramatic. Staff went from 470 to 100 today. The budget was $95 million to today’s $26 million. Participants went from a stadium bending 1.1 million to 179,000 last year.
Yet rebound is the language used by Loh who points to conference fees now responsible for just around 50 percent of the organization’s income. That percentage is smaller than the dependence the group previously placed on the events. Last year’s figures reflect an increase of more than 7,000 attendees compared to 2003, with three sold out cities.
“We want to see conference registration bringing in 25 percent of our income,” she said. “Our initiatives focus now on reaching out globally. And if our vision is worldwide, we want the events to pay for themselves.”
Promise Keepers focused on a concept of “Christian Discipleship” that envisioned thousands of men gathering in sports stadiums across the country to worship, pray, and learn together. While the organization that started in 1990 began with just 72 men, the group filled stadiums in seven cities during 1993, with an attendance of almost a quarter of a million and a high of 1.1 million just a few years later.
Today’s organization has undergone changes to better handle the finances, according to Loh. Conferences now occur in arenas with a capacity of just around 10,000. She attributes the better financial picture today to improving costs by streamlining the conference process.
But the expenses are not the heart of the former problem. Loh highlighted the biggest challenge ahead for her. “We want a stable revenue stream in light of all the increased financial scrutiny of our world,” she said.
The laser aim on financial concerns wasn’t always in place, especially when the organization reaped the vast yearly incomes, all placed on the one revenue stream of the conference registration.
The bottom fell out in 1997 when the fast-growing spiritual movement stopped charging conference fees. Staff was cut from 470 to 301. The $59 registration fee provided 51 percent of the group’s income, with an additional 18 percent derived from the sale of Promise Keepers’ resource materials. That means a development strategy for donations supplied only 31 percent of the income.
However, a deeper look at the term resource material shows that 80 percent of these products were sold at conferences. Thus, in effect, conferences provided 65 percent of the total income for the organization.
The result of the revenue cut plunged the organization into a two-month struggle where the budget was cut by $30 million, and Promise Keepers had to put its operations in the hands of volunteers until the financial health returned. Fees were finally reinstated and today are $89, although they still do not cover all costs.
While Dr. Tom Fortson took the helm as president and CEO in October 2003, he served as COO during the difficulty and reflected on the past. “We grew faster than our structure could handle, and we made some mistakes,” he said. “We decided to end the fees to eliminate barriers in attending an event, although the whole process didn’t turn out the way we wanted.”
The memory fails to dim the optimism he holds for a more stable Promise Keepers. “We’re in the process of building up the second stream to have a balance from registration and from donors,” he said.
Fortson sees the ministry as changing, but becoming more stable. Major efforts are under way, although the strategies are still being put into place. Fortson uses the term strategy as much as ministry when he talks about major donors, acquiring names from conference registrants, and looking for long-term donors.
The new ideas are a work in progress and Promise Keepers still finds it difficult to track results. “We’re not sure if donations are coming in because of our strategy or because the person has seen a changed life,” he said.
The financial snapshot shows Keepers’ revenue at $26 million with expenses at $25 million, according to the organization’s Form 990 for 2003, the last one available. Keepers shows assets at $5 million and liabilities at $1.5.
“The fact that you are not spending more than what is brought in says something positive,” said George Lundskow, a religious sociologist at Grand Valley State University in Allendale, Mich. “That the income provides some operating surplus shows management is handling finances.”
However, the snapshot isn’t the complete picture. “In popularity, Keepers has been declining since 1997,” he said. “They can draw about 5,000 men to a conference today, compared to 1996-97 when they drew 50,000 plus to any stadium.”
Lundskow sees a negligible organization, “whose pinnacle is long since past.” He explained that since 1997, “their popularity has dropped off sharply, such that interest is too small to sustain any administration beyond a few office workers.”
So how could a decision to cut charges lead to a drop in popularity? In part, the answers could lie with building systems. “They lacked the sophistication for accounting systems,” said Bob Andringa, president of the Council for Christian Colleges & Universities in Washington, D.C. Back in 1994, he helped Keepers as a consultant from the Denver-based Creative Solutions.
“They would deal each week with a blur of activity as they tried to set up conferences, without time to investigate how other large organizations handled them,” he said. “The scope of things outran the system.”
Such an activity can lead to customer relations glitches. Paul Nelson, president of the Evangelical Council for Financial Accountability in Winchester, Va., saw challenges during that period. “Details can be missed, such as with the registration of hundreds of thousands of people,” he said. “They didn’t have software to handle the work, so they were overloaded on phone systems without giving consistent answers.”
However the public perceived the Keepers, the financial difficulties hit for the most part because of the decision to end the conference fees. “Founder Bill McCartney claimed that he had been told by God to make all conferences free of charge so that anyone could afford to attend them,” said Dr. Dane S. Claussen, associate professor and director of Graduate Programs Department of Journalism and Mass Communication at Point Park University in Pittsburgh, Pa. “McCartney believed that the Keepers would be provided for, but that did not occur as the organization was nearly bankrupt within a period of months.”
The proof is in the numbers as to how far the Keepers have fallen, according to Claussen. “They had a budget of $26 million in 1994, $95 million in 1996, and would have been well over $100 million in 1998 if McCartney hadn’t dropped conference admissions fees,” he said.
Today’s leadership with Fortson at the helm promises to offer more stability. “He’s probably a good leader because he didn’t get fired,” Andringa said. “He stayed and kept the ship steady so that people decided they could rely on him.”
The decision might not have been needed had the founder been separate from the role of the CEO. “I advised McCartney not to be CEO,” he said. “Fortson makes sure things get done and has been through the fire.”
Fortson has controlled costs. The federal Form 990 shows a deficit of $15 million in 1997 compared to the present surplus. However, the cost of seats has shot up from $74 in 1997 to $118 in 2004, even though they only charge $89. Still, the bottom line is helped by the shift from the one stream of income that relied on the registration fees.
McCartney recalled the thought process of the heyday. “The fast growth exploded with a budget one year of near $100 million,” he said. “I felt during a prayer session, like the Lord told me the expense was too much for some people, and felt like we needed to make sure everyone could come.”
McCartney is viewed as a charismatic figure. After 13 seasons as head football coach at the University of Colorado, he unexpectedly resigned in 1994. McCartney made a decision to devote his life and career to develop the message of bringing men together. Today he serves as executive with the Christian organization, Road to Jerusalem, in Denver.
“I was trusting in foundations and other groups through an outpouring of spirit because they would see we were not charging,” he said. “I thought that they would come along to support us, but I should have gone to foundations and said, ‘God is calling us’ — maybe they would have responded.”
McCartney stepped down in 2003 to allow the organization to evolve with Fortson. Yet the factors that made him resign revolved around a combination of religious feelings and the health of his wife. “After an event with 10,000 pastors, I felt like the Lord said, ‘step back,’” he said. “It became clear to me that my time was done.”
Nelson sees the story of the Keepers as an example of an organization that is led too completely by a strong visionary. “People who think big, dream big,” he said. “But the organization needs to have a balance by having strong visionaries surrounded by people with skill sets.”
Another factor in the financial picture is the salaries of top officers. Promise Keepers were served by 14 vice presidents in 1996, most of whom earned more than $75,000. President Randy Phillips made $132,000 that year. Promise Keepers had regional offices and 470 employees at the height. The reorganization cut that to 301, and since then the numbers have been falling. Today, the staff numbers 100.
McCartney doubts salaries played a part in the crisis. “I never drew a salary,” he said. “The officers were never paid a salary that was vastly different from other organizations. The major problem was the lack of revenue.”
Fortson’s desire to develop donor strategies corrects the missed opportunities of the past. For example, taking names from conference-goers to use for long-term donations is something the present CEO aims to establish.
“Long-term donor strategy wasn’t part of the mission in the past,” Andringa said. “They wanted to motivate men to be active in their local churches, and that was more important than turning them into donors.”
Questions remain about the organization’s growth potential. Last year, donations made up 41 percent of Promise Keepers revenues. Yet the number through the 2004 conference season, of 71,000 donors, is dwarfed by the staggering figures of men who previously attended events.
Fortson sounded optimistic when he pointed out they are better at negotiating conference costs. He points out that data and recording systems are being outsourced, so the organization can deal with the core of its mission.
“We know technology changes fast, he said. “We could outsource that function rather than negotiate long-term contracts with one vendor.”
Loh joined the optimism with ideas of other alternative revenue streams. “We are thinking of royalties with our resources for men’s ministries,” she said. “We can sell the product and that shows a difference in the thought process between then and now.”
The season’s end press information stressed three sell outs, which matched the previous year. Even a 70 percent capacity in arenas of 10,000 shows a much smaller draw compared to the heydays. But Fortson explained, “the strategy is to obtain a changed life, not a sold out conference.”
On one hand, Fortson seeks to have an integrated fundraising strategy by using e-newsletters to build long-term donations with the educational effort, but he also says he’s not sure how long these strategies will take to develop.
While conferences are planned in cities where churches call for the ministry, the locations are not designed for the revenue potential. “Promise Keepers has been mostly in a holding pattern the last several years,” said Claussen. “It’s putting on a lot fewer events than it did in the mid-1990s, and very little ‘buzz’ exists in the news media, among politicians, or among the general public.”
Board member Dr. Gary Oliver, and a family counseling professor at John Brown University in Siloam Springs, Ark., is concerned about the draw. “Attendance is not what it was in the heyday,” he said. “Sometimes it’s the simple reason that you can only have a new phenomena once, and you can only do something new so many times to keep the crowds coming.”
Other organizations might listen to founder McCartney’s advice. “Whoever is doing work with the Lord’s spirit could see that relying on conferences to sustain you is a fragile and unpredictable method,” he said.
The lesson for nonprofits — “When you’re smothered with money, you make a mistake if you start paying less attention to planning analysis,” said Andringa. “When McCartney announced killing the golden egg, they couldn’t sustain the infrastructure they built back in ‘93 and ‘94.”
Tom Pope, a New York City-based journalist, writes on management issues.