Sunday, November 9, 2008

REPORTER'S NOTEBOOK: Nonprofits tap turnaround pros | Crain's Detroit Business

REPORTER'S NOTEBOOK: Nonprofits tap turnaround pros | Crain's Detroit Business

November 09, 2008 8:00 PM

REPORTER'S NOTEBOOK: Nonprofits tap turnaround pros

By Sherri Begin Welch
Using a turnaround expert in a for-profit business, especially among automotive companies, is nothing new.

But nonprofits also are beginning to tap them in the face of continual declines in funding and ever-rising demand for services.

Local firms that provide operational consulting for nonprofits include UHY Advisors MI Inc., Plante & Moran P.L.L.C. and Fred Leeb & Associates L.L.C./Nonprofit Management Group L.L.C. under managing director Fred Leeb.

“This is going to be happening more and more as a result of the pie getting smaller,” because of declines in government, private and individual support, Leeb said.

Leeb and his partner, Geni Giannotti, originally worked as consultants at Southfield-based turnaround firm Alex Partners.

The Starfish Family Services board of directors contacted them after operating in the red for several years.

“Starfish was facing some cash flow issues, and the board wasn't getting the timely and accurate reporting we would have liked two to three years ago,” said Chairman Bill Mitchell, retired founder of MB Associates in Southfield.

“Through all of that, Starfish continued to do a terrific job for all of its clients,” Mitchell said.

“They just put mission in front of margin for a while.”

Leeb and his team worked with Founder and CEO Ouida Cash, who'd planned to retire but became increasingly ill as she battled leukemia.

Cash was 100 percent behind the idea of working with a turnaround consultant, Mitchell said. Eventually, she stepped aside and Leeb became interim CEO of the agency.

With assistance from Leeb and his team, Starfish increased its level of government reimbursement through more detailed accounting, implemented tighter controls over expenditures and was able to secure more favorable credit terms with its lenders.

Starfish and Property Link for Nonprofits Inc., which holds its property, expects to post excess funds of more than $600,000 for fiscal 2008 ended Sept. 30, said CFO Anne-Marie Smith.

That's up from reported losses of $417,607 in 2005 and $1.5 million in 2004, according to its 990 tax forms.

For their work at Starfish, Leeb and Giannotti recently won the Turnaround of the Year award from the Turnaround Management Association, Michigan (Detroit-Grand Rapids) Chapter. Mitchell also was awarded for his leadership from the Association of Fundraising Professionals .

“Very often, nonprofit executives don't have experience with times like these,” Leeb said.

“They've been fighting the battle of having lower revenue, but now I think they are going to have to do something differently.”

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