In Tough Times, an Endowment Gets the Save

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Shmavonian: New president says P/PV projects will focus on “improving the lives of our most disadvantaged youth.”

The research and practice outfit Public/Private Ventures (P/PV) has laid off staff and rented out office space in response to financial troubles, but it has staved off worse damage by tapping its endowment – an unusual resource for nonprofits.

The Philadelphia-based P/PV laid off four staffers in December, reducing its employee total to 53, down from 80 in May 2007. Altogether last year, the nonprofit says, it eliminated about 12 full-time-equivalent positions.

That’s a rough welcome for P/PV’s new president, Nadya K. Shmavonian, who started last month.

“I don’t anticipate any further position eliminations,” Shmavonian said.

A significant cushion has been provided by an endowment and a venture fund established years ago by the Ford Foundation, initially at $7.5 million. PPV has used about $3.1 million of those funds over the past two years, Shmavonian said, and she expects to use more this year.

“This has been an anxious time for the staff and for the board,” said Board President Matthew McGuire. But with the cuts made, the new president in place and the endowment, “We feel good about where we are.”

Troubles

Created in 1978, P/PV is an unusual creature in the nonprofit field: It is funded by foundations and government agencies not only to conduct research and evaluate programs, but also to examine public policy and to help create and replicate model programs. While it began by working on youth employment, it has expanded to such areas as mentoring, after-school, health and crime (including juvenile justice). Its many funders have included the Ford, Annie E. Casey, Bill & Melinda Gates and Charles Stewart Mott foundations, The Atlantic Philanthropies, and the U.S. Departments of Justice and of Labor.

“There have always been these [financial] ups and downs,” McGuire said. He recalled that staffing was reduced at one point during the tenure of Gary Walker, who served as president for 10 years, starting in the mid-90s.

The most recent president, Fred Davie, said that before he left in April, the financial picture looked so secure that “we had board-approved raises for some of the senior team, and a couple of small bonuses.”

Davie, who ran P/PV for three years, said no layoffs loomed: “We had a budget surplus when I left. We were in good shape.”

Something changed. P/PV says that over the course of the year, the nation’s economic troubles took a toll in several ways.

Shmavonian said some jobs were eliminated because funding for their projects ended, while new projects did not keep up with the expirations. She said P/PV started 62 new projects in 2007 and 59 in 2008, but only 45 in 2009.

McGuire said that with the Obama administration taking office last year, “there were some conversations down in Washington that we weren’t as front and center on as we could have been,” that could have led to some new funding.

That is part of what some see as the larger factor behind the slowdown in funding and projects last year: For eight months, P/PV was run by Executive Vice President Geri Summerville while a search firm helped the organization find a new chief. McGuire stressed that Summerville did a good job, but said:

“Anytime you have a transition, people [funders] sit back. … People want to know who the leader is going to be for four or five years. My sense is, some people said, ‘Let’s wait until we see who the permanent leader is’” before launching new projects with P/PV.

In addition, P/PV had signed leases for its offices in New York and Oakland, Calif., before the severe economic downturn that, among other things, reduced commercial rents. “Our fixed costs are higher than we would like, because of our offices,” McGuire said. “In retrospect, we may not have signed all those leases” if they had known the financial changes lying ahead.

Things aren’t as bad as they could have been. That’s because in 1997, the Ford Foundation gave P/PV $4 million for an endowment and $3.5 million for a new venture fund “to help get new initiatives off the ground,” according to P/PV’s website.

The organization has tapped both funds several times, often for specific projects. In 2008, Shmavonian said, P/PV used $2.4 million from the funds, and last year it used another $713,000.

P/PV said the funds’ combined value in November stood at $6.8 million. The investments have grown since their inception, but it is unclear how much they were affected by the sour economy.

What’s Next

At all three of P/PV’s locations, staffers have been let go and empty offices are being leased out, Shmavonian said. The highest-ranking person laid off in December was Jeffrey Butts, who had left Chapin Hall at the University of Chicago in April to become executive vice president for research. (See Newsmakers for more information.)

The fiscal 2010 budget stands at about $19 million but is open for revision, Shmavonian said. She noted that more than $10 million “is in the form of direct pass-throughs to project sites,” leaving an operating budget of about $9 million – similar to recent years.

Some observers wonder whether this will affect one of P/PV’s signature programs: Amachi mentoring, which last year received a $17.8 million grant from the U.S. Office of Juvenile Justice and Delinquency Prevention to build the capacity of 38 sites around the country. That is mostly pass-through money to the local providers, but the question is whether P/PV can afford to manage the grants and carry out the training with its slice of the federal grant.

As for long-term strategy, Shmavonian’s vision includes refocusing more on youth and young adults. “We want to more systematically look at all current and future program opportunities more clearly through the lens of youth,” she said. “If we’re going to do something innovative, it would be because we’ve identified an area that is particularly relevant to improving the lives of our most disadvantaged youth.”

Contact: P/PV (215) 557-4400, http://www.ppv.org.