Facing a second year with a deficit, Project Open Hand's executive director told the Bay Area Reporter this week that he has eliminated four staff positions and most clients with HIV will soon have to choose between delivered meals or picking up groceries.
The agency, which provides meals and groceries to people living with HIV/AIDS, the critically ill homebound, and seniors, will implement the food changes July 1. The staff were let go this week, said Kevin Winge, executive director.
The agency is facing a deficit of as much as $728,000 of a $9.8 million budget.
"We're not hemorrhaging," Winge, who began work at the agency in January, said in an interview Tuesday, April 3. "It's not a crisis."
The nonprofit is considering some big changes, however.
"We're not going to stop serving anyone," Winge said, and POH will still accept new clients, but as of July 1, the start of POH's next fiscal year, services will be "tiered."
In the months leading up to July, POH will work with medical providers to identify clients who are living with HIV and have the greatest health issues.
Clients whom medical providers determine to be most critically ill won't see changes in service.
However, HIV clients in better health will be asked to choose between either receiving their daily prepared meals or a weekly visit to their grocery center, where they will receive foods to cook themselves.
People who are in the senior lunch and breast cancer programs, along with clients who are critically ill and homebound, currently receive one service and will not see changes, Winge said.
Winge said that the anticipated deficit is the result of several factors, including a 10 percent increase in clients. The agency had expected 8,650 clients, but is serving about 800 more. Food and fuel costs have also risen, he said, and salaries are about $195,000 over budget.
POH has $2.4 million in reserve, Winge said, and the board of directors has voted to authorize the release of up to $728,000 if it's needed on June 30 to balance the budget for the next fiscal year.
"However, that's a short term solution," Winge said. He said he could "pretty much guarantee" that "barring a miracle, we will absolutely have to use some of that reserve."
The agency strives to have an operating reserve of three months. He said that the board was "comfortable" allowing up to seven years to repay the reserve funds if all $728,000 is used, but he wants to avoid depending on the reserve because dipping into it could become "a slippery slope."
Project Open Hand delivers 2,600 meals a day. It also distributes groceries weekly to about 1,500 people, mostly in San Francisco, but also about 300 in Alameda County. Until this week, the organization had 115 staff. Additionally, there are more than 100 volunteers every day.
About 2,550 people with HIV could be part of the tiered system, Winge said. Most of those aren't currently getting home-delivered meals, and he predicted most would opt for groceries over meals. Similar changes to service will be made for clients in the East Bay.
Winge said that the agency is sending letters to clients this week, and it is also planning town hall meetings with clients, donors, and volunteers.
Over the 2012-13 fiscal year, he said, the agency could see a savings of $300,000 from the change to client services.
He said Project Open Hand will cut the peanut butter project by the end of June, which should save approximately $40,000. The agency has been making its own peanut butter and selling it in several retail outlets, but the program never paid for itself.
In terms of the layoffs, Winge said they were made Monday. Two directors, one manager, and a coordinator were cut.
Jim Illig, POH's longtime government relations director, is one of the people who is being let go. In an interview, he said that his last day would be Friday, April 6.
Illig said he was "completely" surprised by the announcement, but he appeared to be taking the news well.
He said Winge is "a bold new leader, and that's a good thing." He added, "I have no fears about Project Open Hand. I think it's a wonderful organization."
Winge, whose salary is $200,000, said that he is not taking a pay cut.
"I looked at that but I needed to do something bigger and deeper," he said.
He also said that other staff would absorb the duties from those whose positions have been eliminated, and "the bulk of the additional work will fall to me."
POH board President Ed Lamberger said in a statement, "We would never look to balance our budget by programmatic changes alone."
Winge said that he didn't lay off any line staff. He said the savings of the salaries and benefits for the cut positions totaled about $350,000.
That brings the total savings Winge has identified to roughly $700,000. He said they hope to find additional reductions in the operations budget. POH will start budgeting for the 2012-13 fiscal year next week.
For more information, visit http://www.openhand.org.