The Association of Fundraising Professionals (AFP) had already eliminated $1 million from its annual budget by January but declining revenues have forced another $700,000 cut, resulting in layoffs of six of its 43 staff members, or about 14 percent.
“This decision was the last step in the process, as senior management has looked at numerous ways to avoid these layoffs,” AFP President and CEO Paulette Maehara wrote in an email to chapter representatives obtained by The NonProfit Times. “Given the size of the shortfall, the reductions that have already been made (including the suspension of the 401(k) contributions for AFP staff, salary freezes for senior staff and numerous reductions to all other budget line items), we had no other option but to evaluate our existing staff,” she said.
The layoffs, which cut across various departments, are effective May 1. The person most visible to members who will be cut is Michael Winn, director of chapter services for the Eastern U.S. Chapters are expected to receive a more detailed plan by Monday, April 27, regarding assigned staff members to each chapter.
Decisions on what positions would be laid off were based on “an assessment of our ability to consolidate job responsibilities of those being laid off and to cover the work with existing staff,” Maehara said in the email. “We sought to make reductions that would have the least effect on direct services to members and chapters.”
Late last year the organization began to see a softening of non-dues revenue, namely in its AFP Jobs Service, an online jobs board, and advertising, Maehara said in a telephone interview with The NPT. Despite what she called a conservative approach to its 2009 budget, a worst-case scenario of another $500,000 in at-risk revenue was realized by February. “It’s not too different from what’s going on elsewhere,” she said. “Reducing staff is always the option of last choice.”
Furloughs were considered but Maehara said the decision was made instead to not carryover vacation days for employees. Employment agreements for staff at the vice president level and above do not stipulate automatic annual pay increases, she said, but normally allow for a cost of living increase and performance increase. Senior staff salaries, however, were frozen and only staff below the vice president level received only a cost of living increase of about 3 percent last year.
Maehara is among three executives listed on AFP’s Form 990 earning more than $200,000 in total compensation. According to the 2007 Form 990, Maehara earned a salary of $378,546 and another $95,193 in employee benefit plan contributions for total compensation of $473,739, which was up about 4.6 percent from 2006.
“We’ve taken what we believe are very measured steps,” Maehara said, so more layoffs are not anticipated this year. She sees “a little light at the end of the tunnel,” with a better than anticipated performance of the annual conference, held recently in New Orleans. The jobs board revenue, which Maehara said is “reflective of the retrenchment in the entire nonprofit sector,” has at least been steady and stopped sliding.
The Arlington, Va.-based organization ran a deficit of nearly $1 million in 2007, according its most recent Internal Revenue Service (IRS) Form 990. The 2008 Form 990 is not yet available as AFP operates on a calendar year.
Expenses were $12.2 million in 2007 compared with revenues of $11.28 million. In 2006, expenses ran $10.79 million to revenues of $10.71 million, a deficit of almost $80,000. Membership revenue increased from $4.56 million to $5.38 million from 2006 to 2007.
Maehara cautioned that the deficit reflected on the Form 990 is a result of non-operating items, including depreciation of $350,000, investment losses of almost $500,000, and GAAP adjustments on rent for AFP’s offices, which it moved into in 2007. Most operating revenues, she added, were on the positive side.
It was a banner year in 2008, with almost 5,000 people attending AFP’s international fundraising conference in San Diego, Maehara said. It was a significant net to the bottom line, which varies depending on where the conference is held. Contingency planning for this year’s event in New Orleans reduced some expenses and the conference did a little better than expected, Maehara said, with about 3,200 attendees. AFP has more than 30,000 members and 200 chapters worldwide.
Budget planning for the 2010 international fundraising conference will begin this summer and Maehara expects a good performance next spring in Baltimore, since the location is within driving distance or is a train ride away for a majority of AFP members.