The AIDS Committee of Toronto (ACT) has made big staffing reductions to cope with financial pressures caused by four straight years of budget deficits, a memo received by Xtra reveals.
In a memo sent to staff on March 18, executive director John Maxwell writes that ACT has for several years faced a “structural deficit.”
“We have been running deficits due to the fact that most of our government funding is flat (not increasing), does not cover off administrative functions that are necessary for an organization to run, while at the same time, our fundraising revenues have been flat or declining. Yet, we have many ‘fixed’ costs that we cannot change — for example our rent for office space, costs associated with salaries and benefits,” Maxwell writes.
He explains that the repeat annual deficits have dwindled the organization’s financial reserves.
“ACT’s board of directors has made it clear that for the long term stability of ACT, we need to take steps to address this,” he writes.
Kyle Greenwood, ACT’s manager of communications, says the cuts are about fiscal responsibility and will get the organization out of the red. He says the cuts affect the organization’s management, rather than the services it provides.
“It’s had an impact on how we administratively run the agency,” Greenwood says. “There are no programs closing. It obviously is going to involve more work to ensure that we can provide that service.”
In order to stem costs in the short term, the organization is eliminating several staff positions, including the position of manager of programs and services, which Maxwell held before being promoted to executive director last fall. Other managers are being reclassified as directors, and several staffers are having their work hours reduced to four days per week. ACT is also reducing its number of case managers from two to one.
“I . . . did not make these decisions lightly,” Maxwell writes. “We reviewed the level of government and other dedicated funding for positions and programs . . . and we considered the impact a reduction in hours would have on our ability to deliver services.”
News of the staff cuts come less than a month after Maxwell was confirmed as ACT’s new executive director. He had served as interim executive director since October, when Hazelle Palmer resigned. Maxwell told Xtra he came to the permanent post with ideas that could radically change the way the organization serves gay men.
While ACT’s financial picture was rosy until 2008, that year ACT posted a $233,535 deficit. The following year, ACT posted a $238,746 surplus, more than making up for the previous year’s loss. But since then, ACT has posted deficits of $483,978 in 2010, $74,580 in 2011, $9,070 in 2012, and $47,816 in 2013, for a total drawdown from its financial reserves of $615,444 since 2010. ACT maintains an annual operating budget of approximately $4.3 million.
Maxwell notes that the organization has already made moves to cut costs with its vendors and “will explore options to save costs” when its lease comes up on its office space at Church and Carlton streets in fall 2015.
In his letter, Maxwell says that he hopes to be able to reverse ACT’s financial position through a renewed focus on fundraising.
“ACT is a resilient organization, we have been in situations like this in the past,” he writes, “and I am confident that the new investments we are making in fund development through the hiring of a staff person to focus on corporate and foundation giving . . . will ensure that ACT is here to provide responsive and relevant programs to the individuals and communities we serve.”
Maxwell previously told Xtra that he believes that support from the federal government is unlikely to grow and that the days of ACT hosting major fundraising galas like Fashion Cares are over.