How to Save PPL without Destroying It

by Maureen Romans, President of Mount Pleasant Friends

February 2008

Revenue

            PPL’s current financial woes are as much a result of falling revenue as of rising expenditures.  According to the 2006 and 2007 Annual Reports, “unrestricted program grants” fell from $647,724 in 2006 to $595,369 in 2007 and “restricted grants” fell a whopping $376,204 (from $822,326 to $446,122) between 2006 and 2007.  In addition, the annual appeal declined by nearly $60,000 between 2006 and 2007.  The good news is that the stock market did well and PPL’s investments rose to $41,633,066 by June 30, 2007, compared with $36,788,100 in 2006.[1]

Expenses

            The two budget busters for the coming fiscal year are the large increases in pension payments ($500,000 for the next 5 years) mandated by the federal government and the continued employment of the children’s specialists whose elimination would gut children’s services at the branches. 

Problem

            Both the loss of corporate and individual support and the increased expenses are occurring at the same time that the city and state governments are undergoing financial meltdowns.  Therefore, PPL is going to have to use its own resources and do a dramatically better job of fund-raising to get through the next few years.

Solutions that don’t work

            Starting with the summer of 2004, PPL has eliminated over 20 positions, leading to major cuts in hours and services, and has threatened to close six branches, mainly in the city’s poorest neighborhoods.  These slash-and-burn techniques do not work as PPL’s community support has eroded with both corporate and individual contributors moving their money to more secure institutions which project images of growth and success rather than decline and disengagement.  Neil Steinberg warned about this problem repeatedly and urged increased attention to fund-raising, but PPL doesn’t appear to have been listening.

            All the proposals before the Board of Trustees represent more of the same and in the long run will badly hurt the library.

Proposal

            Place $3,000,000 from PPL’s discretionary funds (remember they grew remarkably last year ) in reserve to be used over the next three years for the pension payments and children’s specialists exclusively.  In fiscal year 2008-09, these costs will be approximately $850,000; in 2009-10 $875,000; and in 2010-2011 $900,000.

            Replenish these reserve funds with money from new fund-raisers.  Development is not the responsibility of just the Development Office.  It is the responsibility of every trustee and administrator, and ideally every staff member should be encouraged to help even in a small way.  In fact, ask the staff for ideas and suggestions.  There may well be employees who like doing development or have had experience in college, at their churches or children’s schools.  These fund-raisers should be expected to raise a minimum of $200,000 per year.  Other local non-profits can do it - Crossroads raised $330,000 at a ball led by a PPL trustee and the Philharmonic nearly $200,000 with an auction—so PPL with an all-out effort can do as much.  In fact, PPL with its wider constituency should be able to do better. 

            If just this new money ($200,000 X 3 years) were added back to the reserves by the end of three years, there would still be $1,000,000 in the reserve fund to reinvest for other library needs or to pay the final two $500,000 payments to the pension fund.   By 2011 the economic climate in Rhode Island should have improved with the state and city able to help more, and take on some or all of the costs of the children’s specialists.  With the mayor and trustees contacting lapsed corporate donors, even more revenue should be anticipated; and individuals, seeing greater stability at PPL, may also begin to donate more.  Finally, hire additional development people with the understanding they will pay their own salaries through the grants and contributions they bring in.

            PPL’s biggest mistake would be to save every last penny of its investments while destroying the institution.  It makes far better sense to spend some money to get through the next few years while preserving full library services for the people of Providence, which after all is the Library’s mission.