Originally Feb 04, 2009 by Kathleen McLaughlin in Indianapolis Business Journal
The Humane Society of Indianapolis is trying to dig itself out of a deep financial hole in part by repairing relations with the animal-welfare community - a move leaders believe ultimately will boost fund raising.
One step in that process. In early 2009, the not-for-profit plans to offer low-cost spay/neuter services to the public.
“To my knowledge, there is universal support across the board for low-cost spay/neuter,” said David Horth, president of the board of directors.
The Humane Society Won’t make money on the service, but it might appease critics who say the organization hasn’t done enough to address the root of animal-welfare problems: overpopulation.
The organization needs all the goodwill it can generate as it tries to rely on cost-cutting and fund raising to wipe out $3 million in debt at a time the slumping economy is pinching charitable giving.
HSI has been trying to climb out of deficit-spending mode since 2002. Before resigning in June of this year, Executive Director Martha Boden increased annual revenue from $1.2 million to $2.5 million. But that was never enough to cover expenses. HSI ended 2007 with an operating deficit of $971,000. Over the years, the organization covered its losses by tapping $3 million of a $3.4 million line of credit with National City Bank.
HSI’s endowment, which has suffered substantial investment losses, serves as collateral. Consisting of two separate trust funds, the endowment was worth $4.2 million at the end of October. That’s down from $5.19 million at the end of 2007. The Humane Society established the credit line in 2003 as part of a three-year recovery plan. The proposal at that time was to borrow up to $2.3 million.
“The bleeding will be substantially abated in 2008 and completely stopped in 2009,” Horth declared.
Pulling off the turnaround won’t be easy. The Humane Society is trying to reposition itself as a leader in animal welfare at the same time its shelter operates at a much-reduced capacity. The number of employees has declined from 60 a year ago to 35. After implementing a limited-acceptance policy, the shelter is on track to handle about 6,000 animals in 2008, down from 9,000 last year.
A new executive director, John Aleshire, is overseeing a budget of $2.5 million with a projected deficit to $200,000. Horth, a commercial real estate broker, served as interim director until Aleshire began work in September.
“Our goal is to rearrange the debt, reduce the debt, and grow the agency back to full capacity,” he said.
Aleshire is trying to reassure donors that HSI is fulfilling its mission, and hoping the money will follow.
“We are the Humane Society of Indianapolis,” he said. “We must accept and take seriously our role as the leader in animal welfare issues.”
He expects the low-cost spay/neuter service to send a strong signal about the organization’s direction.
“There’s a glaring need in the northwest part of the city, which is right where we’re sitting,” he said. “We have to be about low-cost spay/neuter to be an effective voice of animal welfare.”
Before rolling out the public service, Aleshire must raise an additional $75,000 to $80,000 for equipment and staff time. Once it’s up and mining, the service is supposed to be revenue-neutral. Pet owners will pay $30 to $70. In the meantime, the Humane Society on Jan. 1 will begin to spay and neuter animals from Indianapolis Care and Control’s Harding Street shelter. The city currently pays a private veterinarian for the service.
“We can do it faster, and we can do it cheaper,” Horth said.
Animal welfare activists are giving Aleshire a warm reception.
“I think he’s a strategic thinker, which is something the city has needed for a long time with animal welfare,” said Lisa Tudor, executive director of IndyFeral, a group that traps, fixes and feeds colonies of cats.
Aleshire’s plan is heavy on public relations.
“We’re trying to tell our story more aggressively,” he said. That includes talking up the success stories about adopting hard-to-place pets. He also wants to hold an animal welfare summit with the many grassroots rescue groups in and around Indianapolis.
The Humane Society already had made strides in fund raising. For example, its main event, Mutt Strut, began in 2004, and by 2007 netted more than $245,000. Overall fund-raising revenue, which includes grants and bequests, rose from a little more than $1 million in 2004 to $1.9 million in 2006. It fell to $1.5 million in 2007. In a recession, not-for-profits are going to have to be very efficient in finding cash, said Jessica White, a local fund-raising and management consultant.
“They’re in a good position with John Aleshire there to be able to do that,” she said.
Aleshire’s job as fundraiser is shaping up as a bit of a one-man act. Over the summer, the Humane Society cut 4-1/2 administrative positions, including three directors who worked in fund raising and community relations. The cuts saved $300,000, Aleshire said.
“I’ve asked other staff to wear more than one hat,” he said. “I can do the same thing.”
“I think every dog is adoptable, until the dog gives me a different reason,” he said.
On a recent Friday, Doucette searched for puppies and big dogs to prepare for a busy adoption weekend. He jotted down a long list, including a bloodhound with an upper respiratory infection and a toy dog that was chewing its own fur into a matted clump. Because the adoption floor on Michigan Road already had too many “bully breeds,” many dogs, including a Rottweiler who sat on command, would have to wait.
Doucette made sure to walk through the kennel that houses dogs seized in drug busts. Most are pit bulls. Stopping to put a lab-shepherd mix on his list, he said, “This dog could be forgotten in here.”
To blunt criticism of the Humane Society’s no-stray policy, Aleshire is touting the number of animals Doucette scoops up from the city pound. Aleshire said, “I have fielded, probably, more questions about the stray policy since I’ve been here than any other issue.” Under intense budget pressure, Boden announced in March that the Humane Society would no longer accept strays. In addition, pet owners wanting to give up their dog or cat would have to make an appointment.
The “reservation required” policy was aimed at lowering owner-surrenders, which account for 80 percent of the Humane Society’s animal population. Counselors would talk to pet owners about alternatives to leaving their animals at the shelter, where they might end up euthanized.
Aleshire said he ended the’ “reservation required” policy because it didn’t seem customer-friendly. Shortly after starting work this fall, Aleshire saw three women riding in a minivan show up with a stray dog. He said the staff wanted the women to make an appointment and come back later. “I said, ‘That rule is toast.’ “
Seeing more people drop off pets out of financial hardship, he also eliminated a $20 surrender fee that Boden instituted in 2004.
Most strays are still funneled to Animal Care and Control, which agreed to work more closely with the Humane Society. The city’s shelter has a higher kill rate, and animal-welfare activists have alleged maltreatment and mismanagement. Aleshire took the relationship a step further, announcing Oct. 28 that the Humane Society would no longer go to shelters outside Marion County to stock its adoption floor. Instead, he would look to Harding Street to fill the gaps.
“This is a smart thing for them to do because it’s getting them back to the fundamental purpose we exist, and that’s to save lives,” said Rebecca Stevens, executive director of the Humane Society for Hamilton County.
Aleshire also capped adoption fees at $150. For the past several years, the Humane Society has used a graduated scale, charging as much as $400 for a purebred dog. He said he wants to eliminate any perception that the shelter is a dog boutique.
“These are mutts and cats with needs,” he said.
Horth said the board agreed to cut or eliminate fees, even though it hurts revenue. He noted that the society’s bread and butter is small donations from a base of 13,000 individuals.“The thing that supports us now is philanthropy, and the thing that will always support us is philanthropy,” he said.
While trying to project a more user-friendly image, the Humane Society maintains its right to refuse animals.
By controlling the numbers coming through the door, the Humane Society can use fewer kennel workers, keep animals until they’re adopted, and reduce its kill rate.
In 2007, the Humane Society euthanized 34 percent of the 8,995 animals it took in. Through September of this year, the kill rate is down to 12 percent of 4,741 animals. Aleshire said that’s partly because of the limited-acceptance policy.
In fact, when asked how the organization ended up $971,000 in the red last year, Horth said, “We held onto the open-acceptance model a year too long.”
Darcie Kurtz, who runs a small group that tries to improve conditions for dogs in low-income neighborhoods, said the Humane Society’s renewed emphasis on hard-to-place dogs makes up for its not taking strays.
“It does seem to me they’re being a little more open about taking a variety of dogs, and taking dogs out of bad situations and giving them a chance,” said Kurtz, president and founder of Friends of Indianapolis Dogs Outside, or FIDO. “I feel that’s what a humane society should he doing.”
For the past two years, the Humane Society has helped find homes for dogs FIDO rescued, The most recent success story was Star, a pit bull with an infected leg that was ultimately amputated. Star’s care cost roughly $1,500, including staff time, Aleshire said.
“The feeling was they were doing us a huge favor by taking these dogs,” Kurtz said, “Now I feel they want to do it.”
October: Martha Boden, a business consultant from Minneapolis, begins as executive director, making $90,000 a year.
December: Income increases to more than $2 million, but operating deficit is nearly $660,000.
December: Income rises again to $2.76 million; year ends with a deficit of $415,294.
June: Boden resigns. Board President David Horth becomes interim manager.
August: John Aleshire, executive director of Little Red Door, is hired to replace Boden, making $93,500. Aleshire presides over a $2.5 million budget with a $200,000 deficit.
October: Aleshire announces that HSI will stop traveling to shelters outside Marion County to stock its adoption floor. He caps adoption fees at $150.
Source: IBJ research