“I have fought the good fight, I have finished the race, I have kept the faith.” – 2 Timothy 4:7
Throughout the pandemic, we have been very careful as to when, and to what extent, we add any expenses to our overall operation. We have also given a great deal of thought as to what each expenditure will produce in return. As Tara Bywater has shared in previous Staying Connected calls, members have been responding well when we add programs, but the challenge continues to be how many active members we are able to attract back into the fold. Regressing to Phase 2 guidelines certainly slowed the process for us, but as we have done throughout these past 13 months, we continue to search for new opportunities to engage our members and the greater community.
Last week, Toko Thompson sent an email to the finance committee of our board of directors to let them know the $4 million loan from the Paycheck Protection Program had officially been deposited into our account. Maybe it was anticlimactic because we had already been approved, but seeing that we actually had $4 million on the books was definitely a jolt of energy for our organization. As Toko points out, this $4 million is a loan from the Small Business Administration at 1% interest with a maturity term of five years. Toko also points out there is a very good chance the loan will be forgivable. Forgiveness is attained if we retain or rehire employees while also maintaining salary levels from before the pandemic (Toko assures me we already satisfy this criteria). Toko will initiate the process to secure forgiveness immediately, in the hopes of discovering if we qualify or not within 30 days. In addition to this $4 million, Toko is working with Moss Adams, a public accounting firm, to secure a tax credit issued by the federal government as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer, per employee, whose business was financially impacted by COVID-19. For 2021, Toko has determined we will qualify for $5.7 million in tax relief under this provision.
Realizing we have an excellent chance to have close to $10 million on our books by the end of 2021, many have already raised the question: how will we spend it? First, I know I cannot get ahead of myself, recognizing there are steps remaining in the process before we secure loan forgiveness and tax relief. In addition, the final determination of the expenditure of the funds will belong to our board of directors. We are also aware of the fact that we deferred nearly $2 million in debt payments last year and have another $2+ million in payments due in 2021. In addition to repaying debt, we know there are very important capital needs throughout our association, and the facility oversight committee will need to carefully assess what needs must be addressed immediately. Understanding that we deferred significant expenses in 2020 to keep our Y afloat is another harsh reality check of the impact this crisis has had on our organization. In the end, $10 million will be dispersed rather quickly. (It is also important to recognize we need to retain a portion of that $10 million as a safety net; as of March, we are still not generating a positive net from our operations.)
Enhancing the Virtual Experience
Notwithstanding the fact that $10 million will only go so far, it is critical we continue to consider potential opportunities in which to invest a portion, with the intent of generating new growth within our operations. This has been our approach throughout the past 13 months – continue to seek new ways to engage our members. The question I am looking to answer is: what area of investment will carry the strongest return? Last week, I heard Toko and Bruce Caudill raise the need for a greater commitment in developing the virtual experience if we want to do it right. Bruce is working with Michael Marquez and the virtual experience team to better define the need. Bruce had already alerted us to the need for better equipment to produce a high-quality experience at a level that will engage our members, and also pointed out the equipment would be expensive. In addition, we would also need dedicated staff to produce and perfect this work.
Serving our School Districts
Brian Flattum has been spending a lot more of his time focused on developing the structure of services required to respond to the needs of school districts. Clover Park, Franklin Pierce, Tacoma, and South Kitsap School Districts have reached out to us in a way we have not seen before. They want the Y to provide services for their students, recognizing that youth have been isolated for over a year and are in need of the social/emotional support they have missed. The fact that the school districts have reached out to us is a huge honor as well as a great opportunity for us to impact youth in a very significant manner. It is also a great opportunity to build a new business model with the schools. Brian is working with Chris Spivey, Tara Harkness, Amber Evans-Wynn, and Kolanye Bykoff to begin with because of the relationship that already exists between the schools and the Center for Community Impact and Child Care. We have a great relationship with the schools because of the work CCI and Child Care have already done, but this opportunity opens the door to a new way of work. This is super exciting and daunting at the same time.
Expanding Early Learning Services
We also know our investment in early learning education is producing great results. Under the leadership of Ashley Perkins and the entire team at our University Place campus and the Puyallup sites, the number of participants continues to increase. We have been looking for alternative sites in Puyallup to replace the mobile units, recognizing we could raise the quality of the program with a nicer facility as well as serve more youth with more space. To this point, none of the spaces we have viewed has been the right opportunity for us to grow the program, but we are in conversations to build a new center. There are potential partners who have reached out to us to explore a new center in Puyallup, but it is probably a couple of years away before it were to become a reality. Nevertheless, we are actively looking for opportunities to grow our footprint in early learning, especially since large amounts of the recovery money is being dedicated to support this arena, on top of there being a significant demand for this service.
The virtual experience, partnering with school districts, and growing our early learning service capacity are three key areas for us to develop. Each will require an investment if we want to expand our operation, but each also has the potential to produce a greater return. We know there are other opportunities to consider. This is an important juncture, one in which we must carefully consider our options – all options. I would like your help in this process. I would like you to discuss it in your groups and for you to share your thoughts as to what you think our top three areas of investment should be. If there are other areas you think we should consider, please make a recommendation. Bring your ideas to the May 7 Staying Connected call.
I continue to be proud of how our team shows up on a daily basis, doing everything you can to advance our Y forward. I am never in doubt as to our future because of this great team and the commitment you continually make to rebuild our Y. You are truly amazing. Thank you for your dedication and devotion; you are the future of this organization.
#StayStrong #StayWithUs